Combating terrorist financing: general report of the Cleveland Preparatory Colloquium.

• Author: Passas, Nikos
• Position: The World Conference on Combating Terrorist Financing

The Case Western Reserve University School of Law's Institute for Global Security Law & Policy and the International Association of Penal Law sponsored the "World Conference on Combating Terrorist Financing" from April 10-11, 2008. The symposium, hem at the Case Western Reserve University School of Law in Cleveland, Ohio, was part of the Preparatory Colloquium for the Eighteenth International Congress of Penal Law. Representatives from each country participating in the Colloquium were asked to submit a "country report" summarizing laws aimed at combating terrorist financing in their respective countries. This General Report synthesizes the individual country reports and provides overall recommendations about how to combat terrorist financing around the world. The General Report considers country reports from the following countries: Argentina, Austria, Belgium, Brazil, Croatia, France, Germany, Guinea, Italy, Hungary, Japan, Poland, Romania, and the United States.

INTRODUCTION

The international community accorded high priority to the issue of terrorist finance in the 1990s as evidenced by the General Assembly Resolution 51/210, (1) and more importantly, by the International Convention for the Suppression of the Financing of Terrorism. (2)

It is beyond doubt that financial controls against the financing of terrorism are useful and necessary. They perform a number of functions, including the reduction of possible harm caused by terrorist operations and attacks. Financial controls also facilitate the monitoring of militant activities so that preventive actions can be taken. They also enable the reconstruction of events and the detection of co-conspirators who can then be pursued. Moreover, the knowledge that all types of financial activities are under scrutiny forces extremist groups to make frequent tactical changes and engage in communications, which generates valuable opportunities for intelligence gathering.

The Convention for the Suppression of the Financing of Terrorism gained new life after the September 11, 2001 attacks in the United States of America. In the aftermath of 9/11, numerous initiatives and measures supplemented this convention. What was previously known as anti-money laundering (AML) speedily expanded to also include countering terrorist finance (AML/CFT).

The new acronym reflected the consideration of the two types of activities as similar in at least many important respects, thereby justifying not only the parallel treatment of money laundering and terrorist finance for policy responses but also the application of largely the same legislative and regulatory tools against both activities. As seen in national reports received, this occasionally identical treatment gives rise to difficulties and calls for a thoughtful reconsideration of existing national and international measures.

National CFT laws and measures grew in number, scope and geographic application due to Financial Action Task Force (FATF), U.N., E.U., and other initiatives, including some springing from national levels. Lists of designated suspected terrorists were created and circulated and assets of those named in such lists were frozen, including those of non-profit organizations. Laws were introduced regarding terrorist finance and material support for terrorism.

Several heated debates accompanied these developments, including the process by which suspects' names are placed on a designation list and how should the names of those found innocent be removed from them. In some instances, the process of removal is unclear, while no judicial or other legal process addresses the status of a suspect on such lists; that is, there is frequently no criminal or other charge, no court proceeding and, in essence, no means for a judicial determination of guilt or innocence of named suspects.

Nevertheless, the effects of executive decisions made on the basis of not fully known or transparent criteria and evidence are devastating for those affected. Concerns about due process and transparency are reflected in recent lawsuits, court rulings, opinions and authorities in a significant number of U.N. member states. (3) They are also echoed in the national reports received for this project, which accompany calls for a fundamental rethinking and redesign of the international and national CFT arrangements on the basis of long-standing, universal principles of criminal and human rights law as well as on the basis of evidence and facts relative to the financing of terrorism in general and with respect to particular extremist groups.

Unfortunately, the factual questions on terrorism finance are hard to answer due to the lack of systematic collection and analysis of reliable information at national and international levels. This problem has led to a collective call from the national representatives for the creation of a database. (4)

The following countries sent reports that have been taken into consideration: Argentina, Austria, Belgium, Brazil, Croatia, France, Germany, Guinea, Italy, Hungary, Japan, Poland, Romania and the United States. (5) In addition, we have received a report on the European Union. Moreover, an oral presentation on the situation in Mexico at the preparatory colloquium and reporting on other countries from external sources have also been considered.

In broad terms, this paper follows answers to the general questions raised in the questionnaire and which could be addressed during the forthcoming Congress.

1. EMPIRICAL ASPECTS

   Authors of national reports had difficulties in finding information on the number of cases or methods of terrorism finance in their country. While most countries collect statistics on suspicious activity/transaction reports (SAR/STR), the dearth of detailed information affects law-making, policy and international cooperation. With the exception of very few countries, which offered some descriptions of suspicious activities, there is no concerted initiative to find out how the financing of terrorism takes place, how often, whether methods have changed overtime, for what amounts and for which particular terrorist groups.

   Although the Belgian and Romanian reports outlined several transactions and cases, these were not proven terrorism finance cases, but rather, requests for investigation from other governments on the basis of undisclosed information and reported suspicious transaction (STRs), which need to be followed up and confirmed. If this does not occur, the continuing repetition of such reports may serve to perpetuate certain preconceived ideas. Romania appears to take this issue seriously and seeks to take into account empirical and scientific methods in the fight against terrorism. Media and other accounts are frequently unsupported, sensational and biased. Intelligence is not always correctly interpreted or corroborated leading to errors in accurately identifying financiers of terrorism. Hungary reported, for example, that it expelled one of its own citizens only to discover subsequently that the case was unfounded.

   France, on the other hand, has reported that most terrorism finance (TF) cases can be characterized as "micro-finance," whereby terrorist operations are funded for comparatively petty crimes. This reality, however, contrasts sharply with TF measures that are generally devised to target very high amounts of money, because they are modelled largely after money laundering measures (see below).

   The United States reports the existence of a "Terrorist Finance Tracking Program," which aims at identifying and disrupting terrorist networks. Yet, even there, law enforcement agencies do not systematically collect and analyze data on terrorists' use of all possible mechanisms and methods. So, there is no information on the number of detected terrorism financing cases and no breakdown of such cases by funding source, including non-Western and informal networks. As a result, controllers cannot conduct a complete and systematic analysis of trends and patterns from their own case data, which undercuts risk assessment and prioritization efforts.

   So, even the few national reports that refer to some modus operandi do not rely on any comprehensive and systematic effort to collect and analyze verified information. Rather, they refer to suspected cases, anecdotal intelligence and unconfirmed connections to terrorism. Imperfect knowledge and stereotypes undermine policy-making and thereby security, the rule of law, and justice.

   In the light of concerns and issues raised throughout the international community, there is an urgent need for evidence-based threat assessments and appropriate legal responses. We need a systematic effort to collect, validate, and make available empirical data that clearly illustrate the nature of terrorism finance and the ways in which laws or other measures are implemented to address the threats. As a result, the creation of a publicly available database is called for. This type of initiative would be able to furnish valid information, enable evidence-based policies, and make an extremely useful contribution to enhanced security.

2. RATIFICATION OF UNIVERSAL AND REGIONAL INSTRUMENTS; LEGAL AND INSTITUTIONAL NATIONAL FRAMEWORK

   All countries that reported have ratified the United Nations 1999 International Convention for the Suppression of the Financing of Terrorism and many of the other universal terrorism conventions. Under this convention, the offense of terrorist financing is committed, if one "by any means, directly or indirectly, unlawfully and willfully, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out an act which constitutes an offence within the scope of and as defined in one of the treaties listed in the annex," (6) or by any act "intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the...