Introduction to fighting Terrorism Financing
The fight against the financing of terrorism has been at the top of the anti-terrorist agenda since the attacks of 9/11. The effort has involved both strengthening existing (primarily) money laundering legislation and a new approach based on lists of designated individuals and organizations.
One core problem is the lack of consensus surrounding the definition of terrorism itself, the second core problem is the lack of cooperation between international institutions and governments.
Why is it important ?
Terrorists need money and other assets, for weapons but also training, travel and accommodation to plan and execute their attacks and develop their various organization. Disrupting and preventing these terrorism-related financial flows and transactions is one of the most effective ways to fight terrorism. Not only can it prevent future attacks by disrupting their material support, the footprints of their purchases, withdrawals and other financial transactions can provide valuable information for ongoing investigations.
Global fight against terror can not forget that. Finance is an essential strength of terrorist organizations, by cutting and disrupting these flows one’s can combat terrorism effectively.
In 2015, the scope and nature of terrorist threats globally intensified considerably, with terrorist attacks in many cities across the world, and the terrorist threat posed by the so-called Islamic State of Iraq and the Levant (ISIL/Da’esh), and by Al-Qaeda and their affiliated terrorist organizations.
Despite its loss of territory, ISIS continues to have access to resources enabling it to carry out or inspire terrorist attacks around the world. Al-Qaeda and affiliate terrorist groups continue to pose threats. Funds flow cross-border to providing resources for nationally designated organizations, and many jurisdictions continue to suffer from persistent attacks from small cells and radicalized lone wolves, drawing inspiration from a range of dangerous ideologies.
Terrorists regularly adapt how and where they raise and move funds and other assets in order to circumvent safeguards that jurisdictions have put in place to detect and disrupt this activity. Identifying, assessing and understanding terrorist financing risks is an essential part of dismantling and disrupting terrorist networks, as well as the effective implementation of the risk-based approach of counter terrorist financing measures.
The black terror economy: a complex and robust chain that needs to be destroyed
The banking sector and since a few years, the blockchain and its cryptocurrencies, are attractive means for terrorist groups seeking to move funds globally because of the speed and ease at which they can move funds internationally. The low value of funds often used by terrorist financiers, and the sheer size and scope of financial flows gives terrorist organizations and their financiers the opportunity to blend in with normal financial activity.
Importantly, for many jurisdictions, the banking sector is subject to the most robust AML/CFT requirements (relative to other financial institutions)… but it seems like it is not enough yet.
Moreover, Terrorist organisations such as ISIS, al-Shabaab and al-Qaeda have relied on natural resources in their area of control (oil, gold, charcoal, talc, lapis-lazuli, etc.) as a source of income. Supply chains in source, transit and endues jurisdictions may be vulnerable to exploitation. Countries that are rich in natural/environmental resources, and particularity those with active terrorist organizations operating, will need to consider the TF risks associated with exploitation of such resources. In doing so, jurisdictions would typically consider (among other information): the transport routes and locations of extraction, trade, handling and export of the natural resources, and the strength of regulations for dealers in precious metals and stones.
As for a fact, Money Value Transfer Services (MTVS) has been exploited to move illicit funds and is very vulnerable to terrorism financing. In conflict affected jurisdictions where access to banking services is limited and terrorist groups operate, remittance providers may be the primary financial institution through which consumers can engage in cross-border funds transfer activity. Moreover, the cash-intensive and informal nature of some remittance services can expose such entities to TF risks. Sad and extensive experience also highlights that engagement with diaspora communities is important in order to identify how such communities transfer money into, or out of, the jurisdiction. This is particularly the case for local or foreign populations that may be more sympathetic to foreign terrorist groups and ideologies.
To put in a nutshell, fighting terrorism financing is the core struggle against terror. It is a continuously evolving threat, so jurisdictions must evolve with it. The very changing nature of TF threats and vulnerabilities means that relevant information sources which countries will need to consult when assessing TF risk will change to some extent over time. It is more than vital and crucial that efforts to assess risk include community engagement, and consider broader criminal networks and activities, which terrorist groups often build on, draw on to raise, and move, funds or other assets.