Criminalization of Terrorism Financing

Write about Terrorism Financing?

Terrorist financing and money laundering raises an important issue in most of countries regarding the detection, prevention and prosecution. Different terrorist groups get the financial support from the act of terrorism financing. The governments of the States maintain the list of terrorist organiations. The States will employ laws for preventing the money laundering, which helps those organizations financially (Irwin et al. 2014).

The money laundering and terror financing laws are exercised worldwide. Terrorist groups use sophisticated techniques to launder money and finance terrorism, such as, financial dealings using the financial institutions and related entities like financial advisors, service providers as intermediaries, etc. Money laundering is a profit-making crime, which includes drug trafficking, tax evasion, corruption, fraud, market manipulation. To control the terrorist financing, the United Nations (UN) made frequent efforts by signing various international treaties, to fight against finance which helps terrorism (Othman and Ameer, 2014).

Terrorist groups find support from many countries, individuals or organisations, and the criminal activities by which they generate revenue. The funds raised in the means of money laundering by the terrorist. Therefore, the banks and the financial organisations are able to track and identify the financial activity of the terrorist organisations.

The key issues in financing the terrorists are money laundering and terrorism financing. To stop the money laundering and terrorist financing, we can emphasize five areas, such as,

The criminalization of terrorist financing

The improvement of international and domestic cooperation

Value transfer system

Non-profit organizations, and

The freezing of assets (Irwin, Choo and Liu, 2012)

We are discussing the areas as follows:

The researchers of the criminalization of terrorism financing faced difficulty to establish any rule which criminalizes the act of funding previously defined as comprehensive. Terrorism financing was separated from the actual terrorism and defined as a separate legal offence. This act of separation provides greater powers to the authorities to prevent the terrorism (Walters et al. 2012).

Terrorist financing and acts perceived by some people who believes to be justified politically by their aims. This perception distracts their attention that they cannot assume the act as a crime, and they effectively engages in national and international combat of terrorism and its related financing. Determination of effectiveness of the legislation for criminalizing terrorism financing is a difficult task. Criminalization of terrorist financing is supposed to be the preventive effect as the provisions of terrorist financing recently introduced. Beyond the investigations and conviction, number of prosecutions, or the assets would be confiscated under the criminal laws for terrorism financing, the indicators should consider these as assess effectiveness. There should be an assessment of effectiveness under any jurisdiction which should include evaluation (Hamin, Othman and Kamaruddin, 2014).

International and Domestic Cooperation

When all the relevant agencies evolved with an understanding of the topic of terrorism financing, shrted information between each other and have a common agenda, then there is a need for international and domestic cooperation. The transparent and corruption free economies are fully equipped with appropriate regulatory, anti money laundering and institutional frameworks. These economies give fully effective global and local effort to prevent the terrorism financing. Several assessor bodies discovered that a lot of important domestic agencies have lack of staffs, are not trained and requires permission and powers regarding the terrorism financing issues. The well-developed domestic agencies must give the permission and have powers to deal with the terrorist financing with the intention of building effective global regime and partnerships of public and private area (Hayes, 2013).

Measurement of the effectiveness of international cooperation and national coordination is very difficult. There is a very less research to identify all of the obstructions in the national system that has obstructed the international cooperation. States are not able to use all the effective legal instruments included in the conventions available for the mutual legal extradition and assistance in handful cases of suspected financial terrorism (Halonen, 2012).

The terrorist groups and terrorists use many methods for disposal of funds move around worldwide. These groups can use the formal financial methods or any unregulated channels, or move the cash across the borders. There are evidences to show that the groups of terrorists exploited the international trade systems to shift value from one place to the other for the illegal purpose. The individuals and organizations, sometimes within the same organization, could make these illegal transactions. There are some private donors, who donated value for illegal purposes. The transfer of values plays an important role to bring the terrorists together (Camacho, 2013).

When any financial organization detected such a suspicious transaction, they should report it to the respective authority. The respective authority should take the appropriate action to analyse such transactions and determine the involvement of the terrorism financing. States should take the responsibility to build the border control agents to control the cross border cash transactions. Prompt and early detection of of risks can be made by new technologies. The authorities may decide which technology should be used for the detection. The regulators, financial institutions and international financial institutions should provide the guidelines for best practices and aware about the terrorism financing to mitigate the risk (Dean, Thompson and Keatinge, 2013).

Value Transfer System

Non-profit organizations (NPO) describe the surplus of entities from the domicile associations of the societies, which gather money for supporting the relief work worldwide. NPOs are one of the ways, which used by the terrorist organizations for terrorism financing. States already implemented some controls aiming to limit the risk carried by the NPOs. However, the effectiveness of the existing measures or the level of risks is remains unclear. States uses the financial authorities, institutions and the NPOs as the key tools or instruments to protect the financial sectors from abuse (Pok, Omar and Sathye, 2014).

The States should recognise the NPOs themselves involved in terrorism financing and the NPOs exploited by the terrorist financiers. The types of abuse should determine before any action is enforced to NPOs. If an individual is suspected, there is no reason to shut down the NPO. The States should take action proportionate to the action of the NPO and reflect the specific risk (Brzoska, 2014).

One of the effort to interrupt with the global terrorism is freezing the assets of the designated entities and persons. The United Nations Security Council targeted the specific groups or parties and confiscated the assets. This effort became weak globally as many countries have no legal framework to confiscate the property or money of the terrorists. Sometimes, despite having legal framework, there is no implementation (Cooper, 2014).

When the State freezes or confiscates the money or property of an individual, that person has the right to inform and able to see the evidence against him. The procedure for designation is also being informed to the individual. Government should issue the guidance on the domestic level for unfreezing. States also consider for the national help desk relating to the issue of freezing or unfreezing for the financial institutions. In this regard, the participation of the private sector is also necessary. The State should avoid the problems created by its regulation upon the financial institutions which may conflict with the regulations of the other country. A national policy mechanism should be maintained by the State to guarantee the implementation of freezing compulsion and distribute a list to the financial institutions and the organizations that are able to identify the  assets of the terrorists. The terrorist list of one country may be distributed to the other countries (Png, DeFeo and Hicks, 2015).

An international NGO/charity organization wanted to open a bank account in Nigeria through Bank A. Bank A while investigate, found that the NGO and one director was involved in a case of terrorist financing. A Suspicious Transaction Report was filed with the Nigeria Financial Intelligence Unit. On analysis of the statements and transactions of the NGO, inconsistency found in the account. There was regular deposits and withdrawals in those areas where terrorist activities occured by some persons not connected with the NGO. Funds transferred by a foreigner from a foreign jurisdiction known as the state sponsor of terrorism.

Non-Profit Organizations

Investigations established that the NGO operated in Nigeria for a long time and maintained many bank accounts. The respective NGO is affiliated by an NGO that supported terrorist groups including Al Qaeda. Finally, it was proved that the charity operations of the NGO actually supported the Hamas, an extremist organization of Palestine.

This case illustrated the vulnerability of charities and NGOs to terrorist financing as they are able to move their funds in various locations (Freeman, 2011).

Conclusion

The occurrence of terrorism and its financing is indisputable. To raise funds, the terrorists and the terrorist organisations use illegitimate and legitimate means. The funds are used for their personal maintenance and for their families. The terrorists use to move the cash by all sorts of formal and informal ways (Parker, 2014). Surveillance and security of several national and international borders are very weak. This is one of the reasons of flourishing the terrorism day by day. There is lack of law enforcement, the security and intelligence services are short of capability and efficiency that are challenging the terrorists and the terrorism financing.

References

Brzoska, M., 2014. Consequences of Assessments of Effectiveness for Counterterrorist Financing Policy. Administration & Society, p.272.

Camacho, A.R., 2013. Modelling the Risk Profiles of Clients in the Fight Against Money Laundering and Terrorism Financing. International Journal of Business and Economics, 12(2), pp.97-120.

Cooper, K.A., 2014. A critical examination of the anti-money laundering legislative framework for the prevention of terrorist finance with particular reference to the regulation of alternative remittance systems in the UK(Doctoral dissertation, University of Leeds).

Dean, A., Thompson, E. and Keatinge, T., 2013. Draining the Ocean to Catch one Type of Fish: Evaluating the Effectiveness of the Global Counter-Terrorism Financing Regime. Perspectives on Terrorism, 7(4).

Freeman, M., 2011. The sources of terrorist financing: Theory and typology.Studies in Conflict & Terrorism, 34(6), pp.461-475.

Halonen, L., 2012. Catch Them If You Can: Compatibility of United Kingdom and United States Legislation against Financing Terrorism with Public International Law Rules on Jurisdiction. Emory Int’l L. Rev., 26, p.637.

Hamin, Z., Othman, M.B. and Kamaruddin, S., 2014. Watching the Watchers: The Financial Action Task Force (FATF) and the Gatekeeping Role of Lawyers under the Anti-Money Laundering and Anti-Terrorism Financing (AML/ATF) Regime in Malaysia. In 4th International Conference on Law and Society (ICLAS IV), Auditorium, Academic Building, UniSZA (Vol. 10).

Hayes, B., 2013. How international rules on countering the financing of terrorism impact civil society. CIVICUS (2013), State of civil society, pp.117-126.

Othman, R. and Ameer, R., 2014. Institutionalization of risk management framework in Islamic NGOs for suppressing terrorism financing: Exploratory research. Journal of Money Laundering Control, 17(1), pp.96-109.

Parker, M., 2014. Cicero, money and the challenge of’new terrorism’: is counter terrorist financing (CTF) a critical inhibitor? Should the emphasis on finance interventions prevail? (Doctoral dissertation, University of St Andrews).

Png, C.A., DeFeo, M. and Hicks, T., 2015. Design and implementation of a capacity development program–experience with combating money laundering and financing of terrorism in Mongolia. Journal of Money Laundering Control,18(4), pp.488-495.

Pok, W.C., Omar, N. and Sathye, M., 2014. An Evaluation of the Effectiveness of Antiâ€Âmoney Laundering and Antiâ€Âterrorism Financing Legislation: Perceptions of Bank Compliance Officers in Malaysia. Australian Accounting Review, 24(4), pp.394-401.

Samantha Maitland Irwin, A., Raymond Choo, K.K. and Liu, L., 2012. Modelling of money laundering and terrorism financing typologies. Journal of Money Laundering Control, 15(3), pp.316-335.

SM Irwin, A., Slay, J., Raymond Choo, K.K. and Lui, L., 2014. Money laundering and terrorism financing in virtual environments: a feasibility study.Journal of Money Laundering Control, 17(1), pp.50-75.

Walters, J., Smith, R.G., Davis, B., Choo, K.K.R. and Chadwick, H., 2012. The anti-money laundering and counter-terrorism financing regime in Australia: Perceptions of regulated businesses in Australia, The. AIC reports. Research and Public Policy series., p.83.