World Economy

Over 70 States Commit to Fight Terror Financing

Participants agreed to fully criminalize terror financing through effective and proportionate sanctions, while France pushed for international coordination and more transparency in financial transactions
IMF Chief Christine Lagarde (L) listens as French Economy Minister Bruno Le Maire (2L) speaks during the “No money for terror” conference in Paris on April 26.IMF Chief Christine Lagarde (L) listens as French Economy Minister Bruno Le Maire (2L) speaks during the “No money for terror” conference in Paris on April 26.

More than 70 countries committed Thursday to bolster efforts in the fight against terrorism financing associated with Daesh (the Arabic acronym for the self-styled terrorist group Islamic State) and Al-Qaeda.

Participants at the ministerial conference dubbed “No money for terror. Terrorism financing: the other war against Al-Qaeda and Daesh”, at the Organization for Economic Cooperation and Development in Paris, agreed to “fully criminalize” terror financing through effective and proportionate sanctions “even in the absence of a link to a specific terrorist act,” AP reported.

The two-day event was convened by French President Emmanuel Macron to coordinate efforts to reduce the terror threat in the long-term.

Daniel Lewis, executive secretary of the intergovernmental Financial Action Task Force, said he is hoping that words will be put into action. “When we have information–for example the UN list of individuals and entities financing terrorism–we need to make sure measures like asset freezing are implemented fully and quickly,” Lewis told the Associated Press.

Participants called for better information-sharing between intelligence services, law enforcement, financial businesses and the technology industry. They also agreed to improve the traceability of funds going to non-governmental organizations and charity associations.

Participants included some countries that have once accused each other of funding terrorism, notably in the Persian Gulf Arab countries.

France has pushed for international coordination and more transparency in financial transactions. But it has recognized how sensitive the issue is, and saw the conference as a first step for coordinated action.

The French organizers noted that Daesh military defeats on the ground have not prevented the group from pursuing its terrorist activities, along with Al-Qaeda–especially in unstable regions of Afghanistan, Malaysia, the Philippines, Yemen, Egypt and sub-Saharan Africa.

 Beyond Cash Economy

Terror groups don’t only rely on the cash economy–they’re using increasingly hard-to-track tools like prepaid cards, online wallets and crowdfunding operations. Daesh has also invested in businesses and real estate to ensure its financing. Daesh revenues alone were estimated at $2.5 billion between 2014 and 2016, according to the French president’s office.

Though most of the attacks in western countries do not cost a lot of money, a French official said terror groups “behave like big organizations” in that it “costs a lot to recruit, train, equip people and spread propaganda.” The official was speaking anonymously under the presidency’s customary practice.

The French counterterrorism prosecutor Francois Molins told FranceInfo radio that Daesh uses micro-financing techniques to collect a great number of small amounts of money. Work with the financial intelligence unit helped identify 416 people in France who have donated money to Daesh over the last two years, he said.

Money, he said, went to “320 collectors mostly based in Turkey and Lebanon from whom militants in Iraq and Syria could receive funds.”

Funding to extremist groups in the Middle East Arab states once flowed freely across the region’s informal money-transfer shops and in donations made in mosques when traveling clerics issued special appeals during sermons.

In recent years, the US and other western nations have encouraged Middle Eastern nations to close off such sources. However, allegations over extremist funding in part sparked a near-yearlong boycott of Qatar by four Arab states. Qatar denies funding extremists, though it has faced western criticism about being lax in enforcing rules, as has Saudi Arabia.

 Direct Economic Effects

Christine Lagarde, managing director of the International Monetary Fund, at the same ministerial conference said: “This conference provides a good model of how countries can work together to engage in collective action in the fight against terrorism financing,” reported.

“Terrorism destroys lives. Terrorist attacks can also have direct economic effects. These heinous acts often have a devastating impact on investor and consumer confidence, and affect key sectors of the economy, such as financial markets and tourism.

“During the discussions, I stressed that there are still challenges to the effectiveness of counter-terrorism financing efforts. These include improving our understanding of terrorism financing risks, making better use of financial intelligence, and enhancing domestic and international cooperation.”

Fintech was another area explored during the conference. It can be used to promote and fund terrorism through the anonymity of crypto-assets. But leveraged effectively, fintech can also be a powerful tool to fight terrorism and its financing.

US Treasury Secretary Steven Mnuchin, Saudi Foreign Minister Adel al-Jubeir and Qatari Foreign Minister Sheikh Mohammad bin Abdel-Rahman Al-Thani were also present at the conference.

Participants agreed to hold a similar conference next year in Australia.


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