The Financial Action Task Force (FATF) has spearheaded the global campaign against money laundering since it was established in 1989 by the G7 and the European Commission. After 9/11, its responsibilities were widened to include the fight against financing terrorism. It has identified the tricks of the terrorist trade, such as dummy companies set up to house assets and run bank accounts, or charities that are used with or without their knowledge and consent, to collect, transfer and pay out money. Terrorist funds are mixed into businesses, which may or may not be otherwise legitimate, and shipped from country to country using wire transfers, underground moneychangers and black market operators.
In several European countries, police have found front companies in activities as diverse as publishing, real estate and fisheries. US investigators have found delicatessens doubling as fund collection centres, with multimillion transfers broken down into hundreds of smaller transactions in a bid to slip through normal banking channels.
The worldwide proliferation of informal, unlicensed money remittance schemes is another problem. Although they might help migrants as an essential way of transferring money home, they are vulnerable to criminal and terrorist exploitation. For example, several remittance structures were set up to serve the needs of some 750,000 migrants and refugees from Somalia. One of these, Al Barakaat, was later identified as a funding channel for Al-Qaida.
The Financial War on Terrorism is a practical guidebook for legislators, financial regulators and others involved in interdicting the financing of terrorists and their organisations. It sets out a stepby- step roadmap, including the FATF’s revised and updated recommendations on measures required to block criminal financial activity and help put terrorists out of business.
©OECD Observer No 242, March 2004