Qatar’s progress towards preventing terror finance through the abuse of charitable status and the financial sector

Author:Jon Truby
Position:College of Law, Qatar University, Doha, Qatar
Pages:500-516
SUMMARY

Purpose This paper aims to track Qatar’s progress in preventing abuse of charitable status or of its financial regulations to prevent terror finance. Design/methodology/approach Qatar’s progress towards meeting the demands of the Central Themes will thus be summarised and explored. This paper tracks its history in response to evolving Financial Action Task Force (FATF) standards, ... (see full summary)

 
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Qatar’s progress towards
preventing terror nance
through the abuse of charitable
status and the nancial sector
Jon Truby
College of Law, Qatar University, Doha, Qatar
Abstract
Purpose – This paper aims to track Qatar’s progress in preventing abuse of charitable status or of its
nancial regulations to prevent terror nance.
Design/methodology/approach – Qatar’s progress towards meeting the demands of the Central
Themes will thus be summarised and explored. This paper tracks its history in response to evolving
Financial Action Task Force (FATF) standards, and considers how Qatar can take measures to enhance
their reputation.
Findings – Qatar’s efforts were found to be sustained but these still fall short of emerging standards.
This paper advocates for higher standards.
Originality/value This original paper and novel approach is useful to policymakers and
researchers of AML/CTF law. It is particularly timely in advance of the 2017 mutual evaluation of
Qatar. It advances the ndings of on another article written by the author.
Keywords Money laundering, Qatar, AML, Charities, Counter-terror nance,
Financial action task force
Paper type Research paper
1. Introduction
In 2015, Qatar’s neighbours Kuwait and Saudi Arabia were both victims of bomb
attacks claimed by Islamic State in Iraq and Syria (ISIS) or Islamic State in Iraq and the
Levant (ISIL) (The Independent, 2015a,2015b), a stark reminder of the growing and real
threat posed by terror groups. To some extent, the growth of these apocalyptic
(McCants, 2014) organisations initially happened because money owed from donors to
a terror organisation which took advantage of the lax Anti-Money Laundering/Counter
Terror Finance (AML/CFT) rules or enforcement thereof across a range of jurisdictions.
This enabled the development of a semi-mercenary army which was able to develop its
own illicit sources of income through bank looting and exploitation of seized oil elds, as
well as a range of extortion, ransom, human trafcking, drugs and arms smuggling and
theft activities (FATF, 2015, pp. 12-26).
Had more rigorous and effective AML/CFT rules been in place in different countries,
foreign donations would have owed less freely into the hands of terrorists to build a brutal
and self-sustaining expansive war machine. Some donations made their way through
organisations appearing as having charitable or non-prot purposes (FATF, 2015, pp. 18-20)
and others were transferred or legitimised through abuse of the nancial sector (FATF, 2015,
pp. 27-231). These were some of the platforms that enabled the growth of these groups until
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
JMLC
19,4
500
Journalof Money Laundering
Control
Vol.19 No. 4, 2016
pp.500-516
©Emerald Group Publishing Limited
1368-5201
DOI 10.1108/JMLC-08-2015-0031
they became a major and imminent threat requiring an unprecedented response (ISIS/Daesh,
2015). It was possible to prevent these platforms from being abused in the countries and
organisations from where the funds were raised and owed, and the failure to prevent it has
had catastrophic consequences for all victims. These are contemporary examples of some of
the risks associated with a weak AML/CFT programme.
The intergovernmental body, the Financial Action Task Force (FATF) on Money
Laundering[1] has spent the past 26 years progressively working to prevent abuse of the
nancial system through illicit funds by assisting countries to establish rigorous AML/CFT
programmes of regulation, supervision and enforcement. Seeking to establish its nancial
sector, Qatar has politically committed itself to reaching FATF standards and has made
signicant progress, although it has not yet reached full compliance. This article explores, in
thorough detail, the measures Qatar has taken from a nation initially with few AML/CFT
regulations, to safeguard its nancial sector from money laundering and to prevent abuse of
charitable status. It tracks its history in response to evolving FATF standards, and considers
how Qatar can take measures to enhance the reputation of its nancial sector whilst
preventing funds from falling into the hands of terror organisations. International
cooperation is emphasised as a measure for this, as this has repeatedly been recommended
by evaluators of Qatar’s compliance. Qatar’s efforts was found to be sustained but these still
fall short of emerging standards. The article concludes by looking to the future and
advocating higher standards not only in Qatar’s legal system but also in its nancial
institutions to reach the highest global standards. All of these thematic areas are selected
based on some of the areas highlighted by international and regional evaluators as where
Qatar ought to focus.
2. Background and methodology
2.1 Central Themes
As a measure to prevent money laundering of illicitly earned cash, in 1990, FATF
introduced international standards on anti-money laundering which contained three
Central Themes (B–D) (FATF 40/1996, 1996). At the time, it was not universally
envisioned that this would incorporate anti-terror nancing, which became included in
subsequent revisions of the standards and specically following the 11 September 2001
attacks[2]. Illicit funds including those from illegal drugs were found to be contributing
to terror networks, and measures had to be put in place to prevent the transfer of funds
to terror groups (US Department of State, 2016). The evolution of the standards is
charted in “Measuring Qatar’s compliance with international standards on money
laundering and countering the nancing of terrorism”[3].
Qatar’s progress towards meeting the demands of the Central Themes will thus be
summarised and explored within the context of the key challenges facing them. This will be
carried out by drawing attention to the legislative and enforcement measures focused on
charities and the nancial sector in Qatar, to establish what has been achieved.
2.2 Financial Action Task Force
Since its establishment in 1989, FATF has worked to develop global standards for
AML/CFT and to develop supervision mechanisms for monitoring those standards. It
has set and consistently updated standards, and has organised evaluations of
jurisdictions’ compliance with those standards.
501
Preventing
terror nance

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