Unfunding Terror

Unfunding Terror

The Legal Response to the Financing of Global Terrorism

Jimmy Gurulé

The book begins with a discussion of how shutting down the pipelines of funding is as important as dismantling the terrorist cells themselves. Next, the book covers the various means and methods used by terrorist groups to raise money, and examines how money is transferred globally to finance their lethal activities. The principal components of the legal strategy to disrupt the financing of terrorism are then discussed and evaluated. Unfortunately, the author concludes that the legal regime has met with mixed results, and finds that the sense of urgency to deprive terrorists of funding that existed following 9/11 has since dissipated. As a result, international efforts to freeze terrorist assets have dramatically declined. Moreover, the US Department of Justice has suffered several embarrassing and disappointing legal defeats in prosecuting major terrorist financiers. The author provides numerous recommendations to Congress, the Executive Branch, and the UN Security Council for strengthening the legal regime to deny terrorists the money needed to wage global jihad, acquire weapons of mass destruction, and launch another terrorist attack on the scale of 9/11.

Chapter 7: Engaging the Financial Sector to Prevent the Financing of Terrorism

Jimmy Gurulé

Subjects: law - academic, corruption and economic crime, finance and banking law, politics and public policy, terrorism and security


7. Engaging the financial sector to prevent the financing of terrorism By requiring financial institutions to concentrate enhanced due diligence and suspicious activity monitoring on terrorist financing and money laundering schemes . . . [anti-money laundering/terrorist financing provisions] enable financial institutions to provide a much more effective first line of defense against money laundering, terrorist financing, and other financial crime.1 U.S. Department of the Treasury, 2003 National Money Laundering Strategy USE OF THE TRADITIONAL BANKING SYSTEM TO TRANSFER TERRORIST FUNDS Terrorist financiers use various methods to collect and transfer funds to support jihadist activities throughout the world. The major methods used to move terror money include the traditional banking system, alternative remittance systems such as hawala, and bulk cash couriers.2 Contrary to popular belief, terrorists use banks and other financial institutions to transfer funds. Deposit-taking institutions are particularly attractive because they provide an extensive range of financial services. For example, wire transfers offer terrorists many advantages: ‘Speed, distance, minimal audit trail, and increased anonymity amid the enormous daily volume of electronic fund transfers are all major benefits.’3 Additionally, monetary wire transfers are much safer than attempting to smuggle bulk cash across international borders. Physically transporting large quantities of cash by courier runs the risk of border and customs officials confiscating the funds, or having the money stolen by criminals. Also, banks provide wide geographic availability either through their foreign branch offices or through correspondent accounts with foreign banks.4 Finally, large sums of money can be transferred instantaneously...

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