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Terrorist Financing

The Failure of Counter Measures

Nick Ridley

For over a decade international efforts by law enforcement, government and financial regulatory authorities have been deployed in combatting terrorist financing, in good faith and with dedication beyond reproach. This book surveys the methods of financing of numerous terrorist groups and organisations – including the Chinese and Asian dimension – and considers why ultimately international efforts to combat the financing of terror are failing. Nick Ridley expertly illustrates the scale of the problem by first outlining the strategies of anti terrorist financing, the pre and post 9/11 differences in scope and extent of terrorist attacks, the financial support and the national and international efforts to implement and carry out countermeasures. He then goes on to set out a detailed analysis of the apparent failure of such counter measures to date.
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Chapter 5: Delayed recognition and underestimation of modus operandi

Nick Ridley


In this chapter, in considering the modus operandi for terrorist financing whose recognition was delayed, the analysis will consider one of the simplest criminal modus operandi for moving monies – that of cash couriers –, then move on to a more sophisticated financial instrument for accumulating and deploying monies, the stored value card, then to the exploitation of international trade documentation, and finally to the still underestimated vulnerability in the insurance industry. As was stated in Chapter 2, after the attacks of 9/11, the UN Security Council passed Resolution 1373, calling upon and exhorting (indeed, given the intense climate of the times, ordering) countries to combat terrorist financing; the Financial Action Task Force (FATF), within a month of 9/11, indicated in its Eight Special Recommendations for the guidance of countries on which areas and modus operandi of terrorist financing countries should focus. The Special Recommendations were comprehensive and covered the necessity for updating and ratifying of anti-terrorist financing Conventions. They called on states to criminalize the financing of terrorism; specified financial intelligence exchange and bank transaction reporting systems, and – radically – called for international freezing and seizing of suspected terrorist assets. They also focused attention on terrorist use of the formal and informal banking systems and methods of transferring monies, including wire transfer institutions.

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