Global Counter-Terror Finance Efforts are Still Failing

The attacks last Friday in Paris looked well planned and co-ordinated. They also looked well funded. These were not acts perpetrated by a lone actor; they were acts involving at least eight trained attackers with, it appears, a support network and funding to match. These were actors who rented vehicles, had established roots in France and Belgium, and who, simply put, lived their lives availing themselves of many of the same financial tools we all use, leaving financial footprints.

François Molins, chief prosecutor of Paris, noted, ‘We have to find out where [the attackers] came from... and how they were financed.’

It is this latter point, the identification of financing, that the international community needs to address urgently, assessing the extent to which, fifteen years after 9/11, the global effort to disrupt terrorist finance is failing.

Too many barriers and inefficiencies prevent those dealing with financial information – including banks, remittance companies, and law enforcement – from extracting the value that could enhance the efforts of the security services to protect their citizens.

Financial analysis, as we will surely witness once again in the investigation of the Paris attacks, has an ability to reveal much about such attacks: it uncovers patterns of movement, support networks and connections. But smart financial analysis also has the ability to reveal anomalous activity that, if identified and investigated, may help prevent atrocities such as those visited on the citizens of France last week.

Two critical factors are lacking in the global CTF architecture: productive public–private sector partnership and information-sharing. These issues must be prioritised urgently by the global leadership that gathered this past weekend under the banner of the G20 in Turkey in the shadow of the attacks in Paris.

Finance is global: it operates across borders with little or no control. Finance is also almost instant. Those that execute financial transactions for their customers process millions of transactions every day and, whilst laws in most countries require banks and other financial institutions to report ‘suspicious transactions and activity’, separating suspicious transactions from those that are entirely benign is no easy task. In the UK alone, over 350,000 suspicious activity reports are filed with the UK’s Financial Intelligence Unit each year.

It is this background that reveals the continued failings of the global effort to counter terrorist financing.

There have been many calls to arms: former US President George W Bush emphasised the importance of cutting off terrorist financing in immediate aftermath of 9/11; former UK Chancellor Gordon Brown envisioned a ‘modern Bletchley Park’ for tackling terrorist finance; EU Council President Donald Tusk called on Sunday for the G20 to take up their ‘special responsibility’ to address terrorist financing; and the G20 have reportedly taken ‘important steps’ in this regard.

Initiatives, at times controversial, such as the Terrorist Finance Tracking Program administered in Europe by Europol or the European Union’s FIU.net, seek to bring together financial intelligence to combat terrorism.

But whereas finance is global, with little regard for borders and national legal idiosyncracies, the countering of terrorist finance is, despite international conferences and rhetoric, siloed and highly restricted by domestic data-protection and privacy laws. If the international community wishes to achieve a step-change in tackling terrorist financing, these shortcomings must be urgently addressed.

With this challenge in mind, the following three actions should be immediately considered by global leaders:

• Within the EU and global security partner nations such as Canada, Australia and the US, active and dedicated sharing of financial intelligence must be enacted and prioritised. In the EU, consideration should be given to centralising financial intelligence, perhaps at Europol, which already has a dedicated focus on counter-terror finance. On the global stage, the Egmont Group (the central co-ordinating body of national financial intelligence units) needs more resources and more capability to play its role as a key central information and analysis hub
• The Financial Action Task Force (FATF), the global standard setter for anti-money laundering and counter terror finance, should be instructed to undertake an urgent assessment of the barriers that restrict public–private partnership and information-sharing. Recognising the value of information-sharing and partnership, the FATF often calls for improvements to be made, but it needs to focus explicitly on identifying and addressing the impediments that prevent its calls from being met
• The private sector, primarily banks and remittance companies, should be empowered more effectively to play the front-line security role delegated to them by national law-enforcement agencies. Barriers to information-sharing between banks should be reduced and greater effort should be spent by the authorities on educating the private sector with the information they need to identify the financial footprints that can support governments in tackling terrorism.

Ultimately, until financial information is shared effectively between private-sector actors, until states empower their private-sector financial institutions with the information they need to play the security role which has been delegated to them and until nations more effectively share financial information with each other, the effort to disrupt terrorist financing will remain restricted whilst the threat it seeks to identify and disrupt will continue to operate freely across borders.

For too long, global leaders and policy-makers have called for the creation of a ‘hostile environment for terrorist financing‘. Yet this CTF rhetoric has not been matched by action: there has been little attempt to address the meaningful issues that might finally create an effective global CTF architecture.