Hostname: page-component-cd9895bd7-jkksz Total loading time: 0 Render date: 2024-12-26T06:55:07.417Z Has data issue: false hasContentIssue false
  • English
  • Français

Is It Time to Reform the Counter-terrorist Financing Reporting Obligations? On the EU and the UK System

Published online by Cambridge University Press:  06 March 2019

Nicholas Ryder
Nicholas Ryder*
Affiliation:
Financial Crime at Bristol Law School and Faculty of Business and Law at the University of the West of England, Bristol

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This Article critically considers the effectiveness of the European Union's (EU) counter-terrorist financing (CTF) strategies. In particular, it concentrates on the use of financial intelligence gathered from the submission of suspicious activity reports (SARs) by reporting entities to Member States Financial Intelligence Units (FIU). The Article identifies a series of weaknesses in the United Kingdom's (UK) reporting regime: Defensive reporting, increased compliance costs, and the definition of suspicion. It concludes by making a series of recommendations that are aimed at improving the effectiveness of the EU and UK CTF reporting obligations.

Type
Articles
Information
German Law Journal , Volume 19 , Issue 5 , October 2018 , pp. 1169 - 1189
Copyright
Copyright © 2018 by German Law Journal GbR 

References

1 See Press Release, President George Bush, President Freezes Terrorists’ Assets (Sep. 24, 2001) (on file with author).Google Scholar

2 Press Release, Office of the Press Secretary, Fact Sheet on Terrorist Financing Executive Order (Sep. 24, 2001), (on file with author). It is not the purpose of this Article to provide a detailed commentary on the Financial War on Terrorism. For a more detailed examination on the subject please see Nicholas Ryder, The Financial War on Terror: A Review of Counter-Terrorist Financing Strategies Since 2001 30–62 (2015).Google Scholar

3 Nat'l Commission on Terrorist Attacks Upon the U.S., The 9/11 Commission Report 172 (2004) [hereinafter The National Commission].Google Scholar

4 John Roth, Douglas Greenburg & Serena Wille, Nat'l Commission on Terrorist Attacks Upon the U.S, Monograph on Terrorist Finanacing 53 (2004) [hereinafter The Monograph].Google Scholar

5 Id. at 26.Google Scholar

6 The Monograph, supra note 4, at 132.Google Scholar

7 31 U.S.C. § 5311 (2012).Google Scholar

8 The Annunzio-Wylie Anti-Money Laundering Act of 1992, § 1517(b), Pub. L. No. 102–550, 106 Stat. 3762 (1992) (introducing the obligation to submit a suspicious activity report).Google Scholar

9 The Monograph, supra note 4, at 141.Google Scholar

10 Hearings Before the Subcomm. on Fin. Inst. of the Comm. on Banking and Currency, 91st Cong. 170 (1970) (statement of Eugene Rossides, Former Assistant Secretary, Treasury for Enforcement and Operations).Google Scholar

11 See generally Levi, Mike & Reuter, Peter, Money Laundering, 34 Crime & Just. 289 (2006).Google Scholar

12 See generally Podgor, Ellen, Criminal Fraud, 48 Am. U. L. Rev. 729 (1999).Google Scholar

13 See generally Hughes, Sarah, Policing Money Laundering through Funds Transfers: A Critique of Regulation under the Bank Secrecy Act, 67 Ind. L.J. 283 (1992).Google Scholar

14 See generally Tarlow, Barry, RICO Revisited, 17 Ga. L. Rev. 291 (1983).Google Scholar

15 See generally Schwartz, Joshua, Liability for Structured Transactions under the Currency and Foreign Transactions Reporting Act: A Prelude to the Money Laundering Control Act of 1986, 6 Ann. Rev. Banking L. 315 (1987).Google Scholar

16 See generally Hall, Matthew, Note, An Emerging Duty to Report Criminal Conduct: Banks, Money Laundering, and the Suspicious Activity Report, 84 Ky. L. J. 643 (1995–1996).Google Scholar

17 See generally Rueda, Andres, International Money Laundering Law Enforcement and the USA Patriot Act of 2001, 10 Mich. St. U. Det. C. of L. J. of Int'l L. 141 (2001).Google Scholar

18 See generally Mitsilegas, Valsamis & Gilmore, Bill, The EU Legislative Framework Against Money Laundering and Terrorist Finance: A Critical Analysis in Light of Evolving Global Standards, 56 Int'l & Comp. L.Q. 119 (2007).Google Scholar

19 See generally Groussot, Xavier & Popov, Ziva, What's Wrong with Olaf—Accountability, Due Process and Criminal Justice in European Anti-Fraud Policy, 47 Common Mkt. L. Rev. 605 (2010).Google Scholar

20 See generally Alexander, R.C.H., Insider Dealing and Money Laundering in the EU: Law and Regulation (2007).Google Scholar

21 See generally Austin, Janet, Insider Trading and Market Manipulation Investigating and Prosecuting Across Borders (2017).CrossRefGoogle Scholar

22 See generally Markham, Jerry, Law Enforcement and the History of Financial Market Manipulation (2014).Google Scholar

23 See generally Gunaratna, Rohan, Inside Al Qaeda: Global Network of Terror (2002).Google Scholar

24 See generally Gurule, Jimmy, Unfunding Terror: The Legal Response to the Financing of Global Terrorism (2008).Google Scholar

25 See generally Ryder, supra note 2.Google Scholar

26 See generally Ryder, supra note 2.Google Scholar

27 See The National Commission, supra note 3.Google Scholar

28 Normark, Magnus & Ranstrop, Magnus, Understanding Terrorist Finance- Modus Operandi and National CTF Regimes 8 (2015).Google Scholar

29 See generally Baum, Dan, Smoke and Mirrors: The War on Drugs and the Politics of Failure (1997).Google Scholar

30 See Ryder, Nicholas, Money Laundering—An Endless Cycle? A Comparative Analysis of the Anti-Money Laundering Policies in the United States of America, the United Kingdom, Australia and Canada 8–39 (2012) (providing a more detailed discussion of international anti-money laundering legislative provisions).Google Scholar

31 See Directive 91/308, of the European Council on the Prevention of the Use of the Financial System to Launder Money, 1993 O.J. (L 166); Directive 2001/97/EC, of the European Parliament and of the Council of 4 December 2001 Amending Council Directive 91/308/EEC on Prevention of the Use of the Financial System for the Purpose of Money Laundering, 2001 O.J. (L 344).Google Scholar

32 See Financial Action Task Force, The 40 Recommendations (2004).Google Scholar

33 Sproule, D.W. & St-Denis, Paul, The UN Drug Trafficking Convention: An Ambitious Step, 27 Canadian Y.B. of Int'l L. 263, 281–82 (1990).Google Scholar

34 Nelen, Hans, Hit Them Where it Hurts Most? The Proceeds-of-Crime Approach in the Netherlands, 41 Crime, L. & Soc. Change 517 (2004).Google Scholar

35 G.A. Res. 55/25, United Nations Convention Against Transnational Organized Crime art. 7(1)(a) (Jan. 8, 2001).Google Scholar

36 Id. art. 7(1)(b) (extending these measures through Article 14 of the United Nations Convention Against Corruption).Google Scholar

37 Financial Action Task Force, The FATF Recommendations: International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation 12–17 (2012).Google Scholar

38 Id. at 14–15.Google Scholar

39 Id. at 16–17.Google Scholar

40 Id. at 18–19.Google Scholar

41 Alexander, Kern, Multi-National Efforts to Combat Financial Crime and the Financial Action Task Force, 2 J. of Int'l Fin. Mkts. 182 (2000).Google Scholar

42 Id. Google Scholar

43 See Directive 91/308, of the European Council on the Prevention of the Use of the Financial System to Launder Money, 1993 O.J. (L 166).Google Scholar

44 See Mitsilegas, supra note 18.Google Scholar

45 G.A. Res. 49/60, Annex (Dec. 9, 1994).Google Scholar

46 G.A. Res. 51/210 (Dec. 17, 1996); see also G.A. Res. 45/121, Eighth United Nations Congress on the Prevention of Crime and the Treatment of Offenders (Dec. 14, 1990).Google Scholar

47 G.A. Res. 52/165, para. 3 (Dec. 15, 1997); G.A. Res. 53/108, para. 11 (Jan. 26, 1999).Google Scholar

48 International Convention for the Suppression of the Financing of Terrorism, arts. 2(1)(a)(b), 4, Dec. 9, 1999, 2178 U.N.T.S. 197.Google Scholar

49 See Leong, Angela, Chasing Dirty Money: Domestic and International Measures Against Money Laundering, 10 J. Money Laundering Control 145 (2007).Google Scholar

50 S.C. Res. 1269, para. 4 (Oct. 19, 1999).Google Scholar

51 See Cabinet Office, The UK and the Campaign Against International Terrorism—Progress Report 24 (2002).Google Scholar

52 S.C. Res. 1373, para. 1 (Sept. 28, 2001).Google Scholar

53 See Kruse, Anders, Financial and Economic Sanctions—From a Perspective of International Law and Human Rights, 12 J. Fin. Crime 218 (2005).Google Scholar

54 The White House, Progress Report on the Global War on Terrorism 6 (2003).Google Scholar

55 Directive 2005/60/EC, of the European Parliament and of the Council of 26 October 2005 on the Prevention of the Use of the Financial System for the Purpose of Money Laundering and Terrorist Financing, 2005 O.J. (L 309) (repealed).Google Scholar

56 Alexander, Richard, Reputational Issues Arising Under the EU Third Money Laundering Directive, 27 Company Law. 373 (2006).Google Scholar

57 Directive 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, 2015 O.J. (L 141) (EU).Google Scholar

58 See Levitt, Matthew, Stemming the Flow of Terrorist Financing: Practical and Conceptual Challenges, 27 Fletcher F. World Aff. 63, 64 (2003).Google Scholar

59 Bantekas, Ilias, The International Law of Terrorist Financing, 97 Am. J. of Int'l L. 315 (2003).Google Scholar

60 Chase, Alison, Legal Mechanisms of the International Community and the United States Concerning State Sponsorship of Terrorism, 45 Va. J. Int'l L. 41 (2004).Google Scholar

61 See Basile, Mark, Going to the Source: Why Al Qaeda's Financial Network is Likely to Withstand the Current War on Terrorist Financing, 27 Stud. in Conflict & Terrorism 183 (2004).Google Scholar

62 House of Commons, Report of The Official Account of the Bombings in London on 7th July 2005 23 (2005).Google Scholar

63 Alldridge, Peter, Money Laundering Law 215 (2003).Google Scholar

64 Lowe, Peter, Counterfeiting: Links to Organised Crime and Terrorist Funding, 13 J. Fin. Crime 255 (2006).Google Scholar

65 Witness, Global, Broken Vows: Exposing the “Loupe” Holes in the Diamond Industry's Efforts to Prevent the Trade in Conflict Diamonds (2003).Google Scholar

66 Linn, Courtney, How Terrorists Exploit Gaps in US Anti-Money Laundering Laws to Secrete Plunder, 8 J. Money Laundering Control 200 (2005).Google Scholar

67 Doshi, Vldhi, Elephant Campaign: How Africa's ‘White Gold’ Funds the al-Shabaab Militants, The Independent Newspaper (Feb. 3, 2014), http://www.independent.co.uk/voices/campaigns/elephant-campaign/elephant-campaign-how-africas-white-gold-funds-the-alshabaab-militants-9102862.html.Google Scholar

68 Maclean, William, Shabaab Finances Face Squeeze After Kenya Attack, Reuters (Sep. 26, 2013), http://www.reuters.com/article/2013/09/26/us-kenya-attack-shabaab-funding-idUSBRE98P05Z20130926.Google Scholar

69 See Rep. of the Monitoring Group on Somalia and Eritrea Pursuant to Security Council Resolution 2060 (2012): Somalia, U.N. Doc. S/2013/413 (2013).Google Scholar

70 McCoy, Terrence, Paying for Terrorism: Where Does Boko Haram Gets its Money From? The Independent Newspaper (June 6, 2014), http://www.independent.co.uk/news/world/africa/paying-for-terrorism-where-does-boko-haram-gets-its-money-from-9503948.html.Google Scholar

71 Inter Governmental Action Group Against Money Laundering in West Africa, Threat Assessment of Money Laundering and Terrorist Financing in West Africa 94 (2010).Google Scholar

72 Financial Action Task Force, supra note 37.Google Scholar

73 Moloney, Ed, A Secret History of the IRA (2002) 291.Google Scholar

74 Biersteker, Thomas & Eckert, Sue, Introduction in Countering the Financing of Terrorism 1 (Thomas Biersteker and Sue Eckert eds., 2008).Google Scholar

75 “The McVeigh Tapes: Confessions of An American Terrorist,“ NBC News (Apr. 15, 2010), http://www.nbcnews.com/id/36135258/ns/msnbc_tv/#.VDJpOU10zIU.Google Scholar

76 Remarks of Under Secretary for Terrorism and Financial Intelligence David Cohen Before the Center for a New American Security on “Confronting New Threats in Terrorist Financing,“ U.S. Dep't of Treasury (March 4, 2014), https://www.treasury.gov/press-center/press-releases/Pages/jl2308.aspx.Google Scholar

77 Wallack, Todd & Healy, Beth, Tsarnaev Brothers Appeared to Have Scant Finances, Boston Globe (Apr. 24, 2013), http://www.bostonglobe.com/metro/2013/04/23/tsarnaev-brothers-appeared-have-scant-finances/ZbNBuN2Gcz8IOFddKDIU0N/story.html.Google Scholar

78 See Robinson, Jeffrey, Brown's War Just Doesn't Add Up: You Can't Kill Terrorist With a Calculator, The Times Newspaper (Feb. 14, 2006), http://www.thetimes.co.uk/tto/law/columnists/article2049933.ece.Google Scholar

79 Waszak, John, The Obstacles to Suppressing Radical Islamic Terrorist Financing, 36 Case Western Res. J. Int'l L. 673 (2004).Google Scholar

80 Brandon, Ben, Terrorism, Human Rights and the Rule of Law: 120 years of the UK's Legal Response to Terrorism, Crim. L. Rev. 981, 982 (2004).Google Scholar

81 Prevention of Terrorism (Temporary Provisions) Act 1989 c. 4, § 9 (Eng.) (repealed).Google Scholar

82 Id. §§ 9, 11.Google Scholar

83 Id. § 13.Google Scholar

84 Criminal Justice (Terrorism and Conspiracy) Act 1998 c. 40, § 4(3) (Eng.) (repealed).Google Scholar

85 Terrorism Act 2000 c. 11, §§ 15–9 (Eng.).Google Scholar

86 The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (Eng.).Google Scholar

87 Terrorism Act 2000, s.19.Google Scholar

88 Proceeds of Crime Act 2002, c. 4, §§ 330–32 (Eng).Google Scholar

89 Elagab, Omer, Control of Terrorist Funds and the Banking System, 21 J. of Int'l Banking L. & Reg. 40 (2006).Google Scholar

90 Terrorism Act 2000 c. 11, sch. 6 (Eng.).Google Scholar

91 Id. Google Scholar

92 Id. Google Scholar

93 Id. Google Scholar

94 Id. Google Scholar

95 Leong, Angela, Financial Investigation: A Key Element in the Fight Against Organised Crime, 27 Company Law. 219 (2006).Google Scholar

96 Terrorism Act 2000 c.11, sch. 6(5) (Eng.).Google Scholar

97 Id. Google Scholar

98 Rees, Gareth & Moloney, Tim, The Latest Efforts to Interrupt Terrorist Supply Lines: Schedule 7 to the Counter-Terrorism Act 2008, Crim. L. Rev. 127 (2010).Google Scholar

99 Goldby, Myriam, The Impact of Schedule 7 of the Counter-Terrorism Act 2008 on Banks and Their Customers, 13 J. of Money Laundering Control 352 (2010).Google Scholar

100 Bank Mellat v. HM Treasury [2013] UKSC 39 (Eng.).Google Scholar

101 Terrorism Act 2000 c.11, § 19 (Eng.).Google Scholar

102 R v. Da Silva [2006] EWCA (Crim) 1654 (Eng.); see also K v. Nat'l Westminster Bank [2006] EWCA (Civ) 1039 (Eng.); Shah v. HSBC [2010] 3 All ER (EC) 477 (Eng.).Google Scholar

103 Joint Money Laundering Steering Group, Prevention of Money Laundering/Combating Terrorist Financing 2011 Review Version 133 (2011).Google Scholar

104 Serious Organised Crime Agency, The Suspicious Activity Reports Regime Annual Report 2008 15 (2008).Google Scholar

105 Serious Organised Crime Agency, The Suspicious Activity Reports Regime Annual Report 2010 4 (2011).Google Scholar

106 Serious Organised Crime Agency, The Suspicious Activity Reports Regime Annual Report 2011 (2012).Google Scholar

107 Serious Organised Crime Agency, The Suspicious Activity Reports Regime Annual Report 2012 (2013).Google Scholar

108 Nat'l Crime Agency, The Suspicious Activity Reports Regime Annual Report 2013 5 (2014).Google Scholar

109 See National Crime Agency, The Suspicious Activity Reports Regime Annual Report 2017 (2018).Google Scholar

110 Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating the Financing of Terrorism: The United Kingdom of Great Britain and Northern Ireland 250 (2007).Google Scholar

111 R v. Montila [2005] 1 All ER 113 (Eng.).Google Scholar

112 R v. Rezvi [2002] 1 All ER 801 (Eng.).Google Scholar

113 Crown Prosecution Service v. Richards [2006] EWCA (Civ) 849 (Eng.).Google Scholar

114 Lodhi v Governor of Brixton Prison [2002] EWHC (Admin) 2029 (Eng.).Google Scholar

115 R v. Hussain [2002] EWCA (Crim) 6 (Eng.).Google Scholar

116 Serious Organised Crime and Police Act 2005 c.4, § 95 (Eng.).Google Scholar

117 Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, Aug. 11, 1990, ETS No 141.Google Scholar

118 The Money Laundering Regulations 1993, SI 1993/1933 (Eng.).Google Scholar

119 The Money Laundering Regulations 2003, SI 2003/3075 (Eng.).Google Scholar

120 The Money Laundering Regulations 2007, SI 2007/2157 (Eng.).Google Scholar

121 The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (Eng.).Google Scholar

122 See The Terrorism (United Nations Measures) Order 2001, SI 2001/3365; The Terrorism (United Nations Measures) Order 2006, SI 2006/2657; The Terrorism (United Nations Measures) Order 2009, SI 2009/1747; and The Terrorist Asset-Freezing (Temporary Provisions) Act 2010 (Eng.).Google Scholar

123 The Terrorism (United Nations Measures) Order 2001, SI 2001/3365.Google Scholar

124 The Terrorism (United Nations Measures) Order 2006, SI 2006/2657.Google Scholar

125 The Terrorism (United Nations Measures) Order 2009, SI 2009/1747.Google Scholar

126 United States Department of State, Country Reports on Terrorism 88–89 (2016).Google Scholar

127 Europol, European Union Terrorism Situation and Trend Report 2017 12 (2017).Google Scholar