Terrorist Finance

1
Terrorist Finance

• Kabul, Afghanistan
• April 2006

2
History ofFinancial Transparency

• Follow-the-Money
• U.S. Bank Secrecy Act - 1970
• Creation of financial intelligence
• G-7 Creation of FATF 1988
• FATF 40 Recommendations
• Egmont Group of Financial Intelligence Units -
  1995

3
What is Financial Intelligence?

• Many different examples
• Records of large cash deposits
• Cross-border currency reports
• Large cash purchases
• Casino reports
• Suspicious Transaction Reports

4
Purpose of Financial Intelligence

• Gives investigators a paper-trail
• Key tool in the War on Narcotics
• Useful in other predicate offenses for money
  laundering
• Money laundering is the inverse partner of
  terrorist finance

5
Osama bin Laden

• Attempts to find and freeze assets will not
  make any difference to al-Qaida or other jihad
  groups. Al-Qaida is comprised of modern,
  educated young people who are as aware of the
  cracks in the western financial system as they
  are of the lines in their own hands. These are
  the very flaws in western financial system which
  is becominga noose for it.

6
September 11Totals for 19 Hijackers
Deposits 303,481.63
Disbursements 303,671.62
7
Other Terrorist Attacks

• 1998 U.S. Embassy bombings in Kenya and Tanzania
  - 50,000
• 2000 attack on USS Cole in Aden - 10,000
• 2002 bombings in Bali 50,000
• 2003 attacks in Istanbul - 40,000
• 2004 attacks in Madrid about 10,000
• Source United Nations

8
War on Terrorist FinanceResponse to Date

• Designations
• UN 1267 Committees Consolidated List
• Results
• 112 million blocked by December 2001
• 150 million cumulative by January 2006
• 60 million actually seized
• Effective?

9
Response - continued

• Charities
• Cash
• Rules/Regulations/Reporting Requirements

10
Saddams
11
We have ignored Informal Value Transfer Systems

• Hawala
• Misuse of international gold trade
• Diamond/gem trade
• Commodity/narcotics exchange
• Trade-based value transfer
• Common denominator
• 
  TRADE

12
Hawala
13
Hawala Markings on Currency Seized in Iraq
14
The Afghan-Gold Connection
The golden age of crime Why international drug
traffickers are invading the global gold
trade World Report, November 1999
In Gold We Trust Wired, January 2002
U.S. Islamic Cash Outlets Investigated Hawalas
Suspected in Terror Funding The Washington Post,
November 2001
Al Qaedas Road Paved With Gold Secret Shipments
Traced Through a Lax System in United Arab
Emirates The Washington Post, February 2002
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Laundering of Diamonds/Gems

• Diamond/Gem Pipeline
• point of origin to sale
• Mining,
• trading,
• cutting,
• polishing,
• retailing

17
Laundering along Pipeline

• Striking similarities to money laundering
• Illicit diamonds placed, layered, and
  integrated
• Facilitated by smuggling, corruption, porous
  borders
• Neither the Kimberly Process nor proposed
  anti-money laundering rules for diamond dealers
  will be effective in combating the laundering of
  diamonds

18
Colombian Black Market Exchange
19
Afghan Narcotics/Commodity Exchange
20
Questions?

• John Cassara