rules against financing of terrorist activities

In this blog post, Danish Mahmood talks about the rules regarding the financing of Terrorist Activities.

‘Missiles May Kill Terrorists, But I Am Convinced That Good Governance Will Kill Terrorism’Ban Ki- Moon, United Nations Secretary-General[1]

Among the various evils that plague humanity like inflation, overpopulation, global warming, recession, illiteracy, poverty and unemployment, terrorism is unquestionably a subject on top of every country’s agenda which is affected by it.

Terrorism – Meaning & Cause

The attacks of September 11th 2001 in New York City and Washington DC, or in April 1995 the bombing in Oklahoma City or the hostage-taking at the Munich Olympics in 1972 to the rise of Salafi jihadist unrecognized state Daesh, just to name a few, the world has witnessed a number of horrific events permanently etched in humanity’s narrative.

The definition of the word terrorism has undergone variation over a period of time. The Oxford English Dictionary defines terrorism as –

“Government by intimidation as carried out by the party in power in France between 1789-1794″.[2]

Ordinary usage of the term would fairly imply terrorism to be a co-ordinated act of violence against innocent for petty gains usually linked to an outcome of a historical event serving political, religious or ideological purposes.

Considering the nature and circumstances of the events related to terrorism in today’s time, the definition of the word terrorism usually refers to intimidation of elected governments. Likewise, the usage of the term ‘terrorist’ is subjective and depends on the socio-political dynamic of the place and time.

For instance, without going into the merits of the case, Bhagat Singh was viewed as a terrorist at the time of his death by the British. In today’s time, he is regarded as a national hero and is seen as a revolutionary socialist.

According to the Global Terrorism Index 2016 [3], which is produced by the Institute for Economics and Peace, providing a comprehensive summary of the key global trends and patterns in terrorism, it was stated that the cause of terrorism is dependent on the level of development in a region.

For instance, in the OECD countries, socio-economic factors such as youth unemployment, militarization, levels of criminality, access to weapons and distrust in the electoral process are the most statistically significant factors correlating with terrorism. On the other hand, in developing countries, the history of conflict, levels of corruption, acceptance of the rights of others and group-based inequalities are more significantly related to terrorist activity.

Further commenting on the scenario in India, which has observed severe casualties from terror-related activities notable being the attack on the Parliament in 2001, the Mecca Masjid bombing in Hyderabad in 2007 to the coordinated series of attacks in Mumbai in November 2008 and the April 2010 Maoist attack in Dantewada in Chhattisgarh, the Global Terrorism Index 2016 reports that terrorism in India is largely characterized by communist, Islamists and separatist groups, emphasizing on the number of casualties by these groups mentioned in descending order.

Communist terrorist groups are by far the most frequent perpetrators and the main cause of terrorism deaths in India. The majority of Maoist attacks occurred in the provinces of Bihar, Chhattisgarh, Jharkhand and Odisha.

The dispute with Pakistan over Jammu and Kashmir is the main source of Islamist terrorism in India. The two deadliest Islamist terrorist groups in 2015 in India were Lashkar-e-Taiba (LeT) and HizbulMujahideen, which are also operating in Pakistan, Afghanistan and Bangladesh.

Writing about the menace caused by the separatist groups, the Global Terrorism Index 2016 states that India’s north-east region has for the last three decades seen continual ethno-political unrest from ethnic secessionist movements. The deadliest of these groups in 2015 were the Garo National Liberation Army and the United Liberation Front of Assam (ULFA).

With direct and indirect impact of terrorism in terms of lives lost, injuries, property damage and the physiological after effects of extremism is constantly on the rise, it is significant to understand the rules/steps/policies taken to tackle the funding Terrorist organizations by governments and inter-governmental organizations.

Finance may be the most powerful weapon of war [4]. It moves armadas, armies, and squadrons. It funds troops and artillery. It endows suicide bombs and improvised explosive devices[5]. It pays for special forces and mercenaries. It underwrites cease-fires and purchases surrenders. Finance is the weapon that makes all other weapons of war possible.[6]

The forms of financing of terrorism vary accordingly. It comprises not only the financing of the terrorist acts as such but also any support to the criminal network. Terrorist organizations require significant funding, both for the actual undertaking of terrorist acts but also to other issues – to maintain the functioning of the organization, to provide for its basic technical necessities, as well as to cover costs related to spreading related ideologies.[7]

For any terrorist organization to survive and operate effectively, some of the key ingredients are ideological motivation, terrorist infrastructure with seamless recruitment mechanism, regional/international mobility, access to arms, ammunition, explosives and above all, reasonably assured sources of finance. Amongst these, it is believed that assured availability of financial resources is one of the most critical links in the entire network that sustains terrorism globally.[8]

A glance at a few of the most important policies which have been taken at a global level to tackle the menace of terrorist funding.

  • Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member[9] jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

  1. The FATF is, therefore, a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
  2. The FATF has developed a series of Recommendations[10] that are recognized as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.
  3. The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.
  4. In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.[11]
  •  International Convention for the Suppression of the Financing of Terrorism

The International Convention for the Suppression of the Financing of Terrorism is a 1999 United Nations treaty intended to criminalize acts of financing acts of terrorism.

Article 2.1[12] defines the crime of terrorist financing as the offense committed by -“any person” who “by any means, directly or indirectly, unlawfully and wilfully, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out” an act “intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organization to do or to abstain from doing any act.”[13]

  • United Nations Security Council through its Resolution 1373

United Nations Security Council through its Resolution 1373 required States to undertake a number of measures for the purpose of preventing and suppressing terrorist financing and established for the first time a Counter-Terrorism Committee (CTC)[14].

Section 1 begins with, “decides that all States shall,” indicating both a mandatory language and universal applicability. Four policies follow –

  1. Preventing and suppressing the financing of terrorist acts.
  2. Criminalizing terrorist funding (direct and indirect).
  3. Freezing assets of terrorists and any participants or accomplices.
  4. Prohibiting citizens from financially aiding terrorists.[15]

In an analysis of the resolution[16], the resolution being a product of Chapter VII, the legally binding nature of the resolution represents the only significant enforcement mechanism outside of ‘naming and shaming’ (i.e. identifying non-compliant members and publicly excoriating them) and was observed as having precedential value and represented a novel development in international law.

In September 2006, all Member States of the General Assembly for the first time agreed on a common strategic framework to fight the plague of terrorism and organizing, instigating, facilitating, participating in, financing, encouraging or tolerating terrorist activities: the UN Global Counter-Terrorism Strategy[17].

The Strategy is a unique instrument to enhance the efforts of the international community to counter terrorism along four pillars:

  1. Addressing conditions conducive to the spread of terrorism.
  2. Preventing and combating terrorism.
  3. Building Member States’ capacity to prevent and combat terrorism and to strengthen the role of the United Nations system in this regard.
  4. Ensuring the respect for human rights for all and the rule of law as the fundamental basis for countering terrorism.

There are a number of tools existing at European Union level to address the concern of terrorist activities and its financing. The Fourth Anti-Money Laundering package, also known as the 4th Anti-Money Laundering Directive (Fourth AMLD)[18], adopted in May 2015, will help strengthen and improve –

  • Cooperation between Financial Intelligence Units[19].
  • Improve awareness of and responsiveness to any weaknesses and money laundering and terrorist financing risks.
  • Bring about a coordinated European policy to deal with non-EU countries which have inefficient Anti-Money Laundering/Combating the financing of terrorism (AML/CFT) regimes.
  • Ensure full traceability of fund transfers both within the European Union and to and from the EU.

This package takes into account the Financial Action Task Force’s standards (FATF)[20], the international standard-setter in the field, and goes further on a number of issues to promote the highest standards for anti-money laundering and to counter terrorism financing.[21]

Moreover, The EU concluded with the U.S. an agreement on access to transfer of financial data in the framework of the US and is called the Terrorist Finance Tracking Program (‘TFTP Agreement’)[22] which is in force since August 2010. The Terrorist Finance Tracking System enables identification and tracking of terrorists and their support networks through targeted searches run on the financial data provided by the Designated Provider (SWIFT).[23]

It is an EU-US Agreement on the exchange of financial information ensures the protection of EU citizens’ privacy and gives the U.S. and EU law enforcement authorities a powerful tool in the fight against terrorism.

Speaking on the Indian perspective, various Governments have tried to develop well-established strategies and institutional mechanism to effectively deal with terrorist financing.

It may be noted that the issue of terror financing attracts provisions of a host of legislations including:

  • The Unlawful Activities (Prevention) Act – 1967

This law is now the main anti-terrorism law in India. Major changes were made to it in 2008 after the Mumbai attacks, creating new offenses related to terrorism. This law also allows the government to declare that a group is an ‘unlawful association’ or a ‘terrorist organization’, and make membership or support of that group a crime. It covers crimes such as committing or helping with acts of terrorism, terrorism financing and membership of groups that have been banned by the Government under this law.[24]

  • The Prevention of Money Laundering Act – 2002

The Anti-Money Laundering (AML) measures are controlled through this legislation. The Act implements the Political Declaration[25] adopted by the Special Session of the UN General Assembly, 1999 which called upon the Member-States to adopt money-laundering legislation and program. RBI, SEBI and IRDA have been brought under the PML Act and therefore, it will be applicable to all financial institutions, banks, mutual funds, insurance companies, and their financial intermediaries. The agency monitoring the AML activities in India is called Financial Intelligence Unit (FIU-IND) and compliance is required by all financial intermediaries.[26]

  • Foreign Exchange Management Act – [FEMA] 1999

This Act partly liberalized the control on foreign exchange in 1999 and replaced the criminal framework for breaches of the controls (contained in the previous Foreign Exchange Regulation Act, 1973 – FERA) with provisions for administrative and civil sanctions.

The act provides for a heightened role of the Reserve Bank of India in regulating the transactions by specifying that the Reserve Bank, in consultation’ with the Central Government, may specify –

  1. “Any class or classes of capital account transactions which are permissible.
  2. Limit which foreign exchange shall be admissible for such transactions.”[27]
  • Conservation of Foreign Exchange and Prevention of Smuggling Activities Act– 1974

The act provides for preventive detention in certain cases for the purposes of conservation and augmentation of foreign exchange and prevention of smuggling activities and for matters connected therewith, is one such legislation, which is a powerful instrument in the hands of the Central Government. It is a preventive detention law relating to economic offenses.

The Act was enacted to provide for preventive detention in certain cases for the purposes of conservation and augmentation of foreign exchange and prevention of smuggling activities and for matters connected therewith.[28]

Moreover, in addition to the above-mentioned acts, The Unlawful Activities (Prevention) Amendment Bill, 2011 was introduced on December 29, 2011, by the Minister of Home Affairs.

According to the statement of objects and reasons, the Bill amends the Unlawful Activities (Prevention) Act, 1967 to make it more effective in preventing unlawful activities and meet commitments made at the Financial Action Task Force (an intergovernmental organization to combat money laundering and terrorism financing).

The Bill enlarges the scope of punishment for raising funds:

  • Under the original Act, if a person raises or provides funds, knowing that such funds are likely to be used to commit a terrorist act, he shall be punishable with imprisonment of not less than five years and a fine.
  • Under the Bill, raising funds likely to be used (in full or in part) to commit a terrorist act or for the benefit of terrorists shall be punishable irrespective of whether the funds have been raised from legitimate or illegitimate sources.
  • The Bill clarifies that raising funds shall include production or circulation of counterfeit Indian currency. It also states that ‘participating, organizing or directing’ fund raising activities shall constitute an offence.[29]

It is also worth a mention that a special Combating Financing of Terrorism (CFT) Cell has been created in the Ministry of Home Affairs since 2011 to coordinate with the Central Intelligence/Enforcement Agencies and the State Law Enforcement Agencies for an integrated approach to tackle the problem of terror funding. Also, a Terror Funding and Fake Currency Cell has been set up in the National Investigation Agency to investigate Terror Funding cases.[30]

As can be observed from the aforementioned rules/policies reproduced with respect to India and globally and laying emphasis on the quote mentioned in the beginning of the article, even though the intentions by means of legislations, resolutions, research papers, etc. are in place to tackle the hazard of terrorism, what needs to be worked upon and emphasized on is the result/outcome of the same in countering this hazard and the level of public participation.

To a common regular man, reading the newspaper which is filled with instances of such acts committed daily, it becomes imperative that the Government and Judiciary along with a renewed assistance of the citizens commit to eradicate this vice of mindless hate mongering so that a change is visible.

The year 2015 saw the total number of deaths decrease by ten percent, the first decline since 2010.[31]

This is definitely a positive first step, however, we should not base our consensus and perception on surveys alone. What we need is a revolution which is visible, a change in our collective thinking, for the case in point when the next time I go out to a public place anywhere in the world, the thought of being attacked or killed by brainwashed armed men won’t be playing at the back of my head.

What do you think? How terrorist activities can be tamed? Drop your views & share the article.

 

 

References –

[1] http://www.un.org/press/en/2015/sgsm16691.doc.htm
[2] Jenny Teichman, Philosophy, Vol. 64, No. 250 (Oct., 1989), pp. 507
[3] http://static.visionofhumanity.org/sites/default/files/Global%20Terrorism%20Index%202016_0.pdf
[4] See, e.g., IAN BREMMER & CLIFF KUPCHAN, TOP RISKS 2015 8–9 (2015) (discussing the weaponization of finance); NICK RIDLEY, TERRORIST FINANCING: THE FAILURE OF COUNTER MEASURES 1 (2012) (asserting that money is an “essential component” of terrorist organizations); JUAN C. ZARATE, TREASURY’S WAR: THE UNLEASHING OF A NEW ERA OF FINANCIAL WARFARE 1 (2013) (“[M]oney is what fuels the operations of the world’s rogues.”); ShimaBaradaran et al., Funding Terror, 162 U. PA. L. REV. 477, 480–82 (2014) (describing the sums of financing needed by terrorist organizations).
[5] See, e.g., JOHN ROTH ET AL., NAT’L COMM’N ON TERRORIST ATTACKS UPON THE U.S., MONOGRAPH ON TERRORIST FINANCING: STAFF REPORT TO THE COMMISSION 19–30 (2004) (describing the financing necessary for terrorist activity, including Central Intelligence Agency estimates that al Qaeda spent approximately $30 million annually in the lead up to the September 11th attack).
[6] See, e.g., S.C. Res. 2255, ¶ 6, 18, U.N. Doc. S/RES/2255 (Dec. 22, 2015) (alluding to the importance of financing in warfare); FIN. ACTION TASK FORCE, TERRORIST FINANCING 7 (2008), http://www.fatf-gafi.org/media/fatf/documents/ reports/FATF%20Terrorist%20Financing%20Typologies%20Report.pdf (“Funds are required to promote a militant ideology, pay operatives and their families, arrange for travel, train new members, forge documents, pay bribes, acquire weapons, and stage attacks.”); JIMMY GURULÉ, UNFUNDING TERROR: THE LEGAL RESPONSE TO THE FINANCING OF GLOBAL TERRORISM 3 (2008) (highlighting the importance of finance in the war on terrorism)
[7] Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL),http://www.coe.int/t/dghl/monitoring/moneyval/Implementation/Financing_terrorism_en.asp
[8]RamanandGarge, Combating Financing of Terror: An Indian Perspective

http://www.vifindia.org/sites/default/files/combating-financing-of-terror-an-indian-perspective.pdf
[9] http://www.fatf-gafi.org/about/membersandobservers/
[10] First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant, and they are intended to be of universal application.
[11] http://www.fatf-gafi.org/about/
[12] United Nations 1999 International Convention for the Suppression of the Financing of Terrorism (Terrorist Financing Convention)

[14] https://www.un.org/sc/ctc/
[15] https://documents-dds-ny.un.org/doc/UNDOC/GEN/N01/557/43/PDF/N0155743.pdf?OpenElement
[16] “Making the World Safe for Democracy”: UN Security Council Resolution 1373, the International Imposition of Counterterrorism Policies, and the ‘Arenas of Power’ Model, An Article by Edward Grodin, http://blogs.cornell.edu/policyreview/2012/03/15/making-the-world-safe-for-democracy-un-security-council-resolution-1373-the-international-imposition-of-counterterrorism-policies-and-the-arenas-of-power-model/
[17] https://www.un.org/counterterrorism/ctitf/un-global-counter-terrorism-strategy
[18] DIRECTIVE (EU) 2015/849 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 May 2015

on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32015L0849&from=EN
[19] These are public authorities that exist in every Member State. They gather and analyse information about any suspicious transactions spotted by banks for instance or any relevant information when it comes to money laundering or terrorism financing. If their analysis of a file shows enough evidence for criminal prosecution, they transmit the file to law enforcement authorities for further action.

europa.eu/rapid/press-release_MEMO-16-209_en.pdf
[20] http://europa.eu/rapid/press-release_MEMO-12-246_en.htm?locale=en
[21]Questions and Answers: Action Plan to strengthen the fight against terrorist financing , Strasbourg, 2 February 2016

europa.eu/rapid/press-release_MEMO-16-209_en.pdf
[22] http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/crisis-and-terrorism/tftp/index_en.htm
[23] europa.eu/rapid/press-release_MEMO-16-209_en.pdf
[24] http://nyaaya.in/law/359/the-unlawful-activities-prevention-act-1967/#doc
[25] http://www.unodc.org/unodc/en/money-laundering/
[26] http://www.legalserviceindia.com/articles/mlau.htm
[27] Foreign Exchange Management Act, ch.2(a)-(b).

http://www.commonlii.org/in/journals/NALSARStuLawRw/2008/11.pdf
[28] Derek P. Jinks, “the anatomy of an institutionalized emergency: preventive detention and personal liberty in

India”, Michigan Journal of International Law, 22 MUlL 311.
[29] http://www.prsindia.org/billtrack/the-unlawful-activities-prevention-amendment-bill-2011-2159/
[30]http://pib.nic.in/newsite/PrintRelease.aspx?relid=132881
[31] http://static.visionofhumanity.org/sites/default/files/Global%20Terrorism%20Index%202016_0.pdf

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