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Terrorist Financing and Information Sharing: A Little Less Conversation, a Little More Action Please

Tom Keatinge
Commentary, 10 March 2016
Centre for Financial Crime and Security Studies, Organised Crime, Terrorism
The most recent G20 communiqué repeats the need for high-level commitment to greater information sharing for tackling terrorist financing. But without action to address the real and perceived barriers to effective sharing, little will actually be achieved.

In recent months, and particularly since November’s terrorist attacks in Paris, no multilateral gathering has been complete without calls for greater collaboration between states in the fight against terrorism – especially in the effort to disrupt terrorist financing.

These calls for information sharing have become a mantra, repeated by all who urge that more must be done to combat terrorist activity. The value of greater information sharing between states themselves and between states and their financial services industries is unquestioned. However, the way in which this information sharing should be achieved is not explained; and the barriers to such information sharing, whilst occasionally acknowledged, are entirely unaddressed.

Consider the evidence. In the immediate aftermath of the Paris attacks of November 2015, the communiqué of the G20 meeting in Turkey expressed commitment to ‘tackling the financing channels of terrorism, particularly by enhanced cooperation on exchange of information’. This was followed by an emergency gathering of the global anti-money laundering and counter-terrorist-finance standard setter, the Financial Action Task Force (FATF), that undertook to adapt its strategy to enhance ‘operational information sharing’ to counter terrorist financing. It also boldly committed to work with the Egmont Group (the unifying body of national financial intelligence units FIUs) ‘to overcome information-sharing obstacles and consider updating the international standards on effective information sharing.’

Next, at the special meeting of finance ministers at the UN Security Council in December, the Council passed Resolution 2253, which recognises ‘the importance of information sharing within and between governments’ and encourages member states ‘to exchange information expeditiously’. At that same meeting, the president of the FATF, Je-yoon Shin, underlined the findings of its emergency meeting noting that ‘Our most important conclusion is that there is a need for better, more timely, information sharing: between agencies within jurisdictions; between jurisdictions; and with the private sector.’ Importantly, he highlighted that ‘different data protection laws mean that one of our largest sources of intelligence, the banks, are often prevented from sharing information across borders within their own organisations, let alone with each other or with the authorities.’ 

The Egmont Group has also underlined the importance of information sharing, committing to work ‘closely with the FATF to overcome information-sharing obstacles and consider updating the international standards on effective information sharing’, ‘supporting the improvement of the information-sharing aspect of cooperation between FIUs and domestic agencies mandated to combat terrorist financing’, and ‘improving cooperation among FIUs internationally by removing existing obstacles to information sharing and developing tools and practices to facilitate multilateral exchanges and joint analysis.’ Most recently, the latest meeting of G20 finance ministers and central-bank governors in Shanghai committed to intensify efforts ‘to tackle all sources, techniques and channels of terrorist financing and… enhance our cooperation and exchange of information.’

This sentiment is entirely understandable. Terrorists and their financing seemingly move effortlessly across borders, paying no heed to the national barriers that appear to prevent the free flow of information between those seeking to disrupt them. Laws drafted to combat terrorist financing often seem to conflict with those created to protect data and personal privacy. Whilst carve-outs for security exist, interpretations vary and guidance is lacking. And, where the private sector is concerned, reputation and client confidentiality are often favoured even when pathways to sharing appear clear but voluntary.

As things currently stand, well-intentioned though calls for information sharing might be, global leaders must realise that without the support of a dedicated, properly resourced initiative to determine and address barriers; reconcile security and privacy demands; and facilitate sharing between states, between national governments and their financial institutions, and within the private sector itself, such calls from global leaders will remain unanswered.

So what should be done? As a number of multilateral fora have suggested in recent months, it is the FATF that holds the key to advancing this most challenging and most consistently neglected aspect of enhancing the effectiveness of the global effort to combat terrorists and their financing. The FATF has already completed a rapid review of 199 jurisdictions to determine the extent to which they have implemented the basic FATF recommendations related to countering terrorist finance. But as the FATF well knows, technical compliance does not guarantee effectiveness. 

The FATF has also announced its intention to conduct an analysis across all its members in order to review the challenges faced in sharing information. One of the FATF’s key responsibilities is to review the anti-money-laundering and counter-terrorist-finance capabilities of its member states. Given the universally agreed importance of information sharing in tackling all forms of illicit finance, and the emphasis placed on information exchange and co-operation in the FATF’s existing recommendations, the lack of such an existing analysis seems an unfortunate oversight.

Whilst such an analysis is a start, the FATF needs to be supported by the leadership of its members, by the G20, and by global representatives of the financial services industry (such as the Wolfsberg Group) to take its analysis further and undertake a rapid assessment not just of challenges but also of the extent to which information sharing actually occurs at all levels. Good models exist already, and bodies such as Europol assist, but even a cursory review reveals that systematic and effective sharing of information to disrupt terrorist finance remains rare.

The identification of inefficiencies and national and international barriers (perceived or real) to information sharing is urgently needed if the repeated calls from global leaders are to become more than simply paragraphs in grand yet meaningless communiqués.

Author

Tom Keatinge
Director, Centre for Financial Crime and Security Studies, RUSI

Tom Keatinge is the Director of the Centre for Financial Crime and Security Studies at RUSI, where his research focuses on matters at... read more

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