Monday, March 2, 2015
Terrorism is an increasingly global problem that requires concerted global action by a united international community. The ISIL phenomenon shows a new type of terrorist organisation with unique funding streams that are crucial to its activities; cutting off this financing is therefore critically important. Given its mandate, the FATF has a particular responsibility to develop a coordinated and decisive response to fight not just terrorist financing, but ultimately, terrorism. The UN Security Council Resolution 2199, passed on 12 February, welcomed the FATF’s October 2014 statement, and the February 2015 G20 Finance Ministers’ statement echoed the need for a renewed focus by the FATF on terrorist financing. This was further reinforced by the French Minister of Finance and Public Accounts, Mr. Michel Sapin, during his opening speech at the FATF Plenary meeting.
The FATF has now published a report on the Financing of the terrorist organisation Islamic State in Iraq and the Levant (ISIL). This significant report will contribute to the international discussion to update global efforts to counter terrorist financing. The report demonstrates that ISIL is essentially living off the capital illicitly generated by the territory it occupies, primarily by looting banks, exploiting oil fields and robbing economic assets. ISIL can be stifled by frustrating its ability to generate funds from these activities and by preventing it from obtaining funds from other sources and activities.
Using the findings of the FATF report on the sources and methods of financing of ISIL, the FATF and the FATF-Style Regional Bodies (FSRBs) will work together with international organisations to develop proposals to strengthen all counter-terrorism financing tools and report back to the G20 by October 2015.
Making sure the legal and institutional frameworks are in place
FATF and FSRBs will take additional steps to make sure that all members implement measures to freeze terrorist funds and stop terrorist financing. As a priority, the FATF will immediately review whether all its members have implemented measures to cut off terrorism-related financial flows, in accordance with the FATF Recommendations. All members are required to:
- Criminalise the financing of individual terrorists and terrorist organisations.
- Freeze terrorist assets without delay and implement ongoing prohibitions.
- Establish the capacity to develop robust designation proposals on individuals that meet the UN designation criteria.
The FATF will put pressure on any country who has failed to implement these measures and will include this in its report to the G20 in October 2015.
It is essential in combating global terrorism that all countries do not just establish laws and regulations to disrupt terrorist financing, but that they also ensure that they are working effectively. They must also actively use them in a whole-of-government approach that focuses on combating key terrorist financing risks, including by:
- implementing targeted financial sanctions regimes and developing the capacity to propose designations to the United Nations Security Council, and issue third country requests that meet designation criteria.
- identifying their terrorist financing risks and developing more effective ways to detect, disrupt, deter and prosecute terrorist financing.
- protecting their non-profit sector from the risk of terrorist abuse. The FATF is updating its best practices paper to help countries respond more effectively to terrorist abuse of this sector.
- taking steps to identify and target individuals, including travellers, who are suspected of terrorist financing involvement, by using PNR (Passenger Name Record of air travellers), for example, in order to stop, restrain and enable confiscation of illicit cross-border transportation of cash.
- devising effective mechanisms to identify, monitor and take action against unregulated money value transfer services, and strengthening the transparency of financial flows.
- empowering FIUs and other competent authorities to improve the exchange of financial and other relevant information domestically and internationally in a timely manner. The ability to detect, analyse and share information about financial flows is essential to financial investigations. For terrorist-related cases, governments should be able to obtain relevant information from all sources more rapidly. To achieve this, countries should
- strengthen inter-agency communication among financial intelligence units, law enforcement and intelligence services
- encourage spontaneous exchanges of information among countries.
The FATF will focus on developing proposals to take forward these measures.
Additional work on terrorist financing
The FATF report Financing of the terrorist organisation Islamic State in Iraq and the Levant (ISIL) also identified a number of significant and emerging terrorist finance risks, including kidnapping for ransom, non-profit organisations, foreign terrorist fighters, social networks, among others, which all played a role in the financing of this terrorist organisation. Over the course of the next three months, the FATF will conduct further research in identifying and analysing these risks, and determine what more needs to done to prevent financial and economic sectors from being abused for terrorist financing for new and emerging threats. The FATF will discuss the findings of this work at its June 2015 Plenary.
In September 2015, the annual Joint Experts Meeting will be held in collaboration with GAFILAT and will have as its main theme the ‘financing of terrorism’.