Changes in methods of freezing funds of terrorist organisations since 9/11. A comparative analysis
| Published date | 04 May 2012 |
| DOI | https://doi.org/10.1108/13685201211218234 |
| Pages | 210-236 |
| Date | 04 May 2012 |
| Author | Yoram Danziger |
| Subject Matter | Accounting & finance |
Changes in methods of freezing
funds of terrorist organisations
since 9/11
A comparative analysis
Yoram Danziger
Supreme Court of Israel, Jerusalem, Israel
Abstract
Purpose – This article seeks to examine approaches to combating the “scourge of international
terrorism” by targeting the financial resources of terrorist organizations and their supporters.
Design/methodology/approach – The article begins with the disputed issue of how to define a
“terrorist”, “terrorism”, “terrorist organizations” and “acts of terrorism”. In a global financial system,
differences between the definitions of those terms could have significant implications because
terrorists have the means and will to operate their financing infrastructure from the least effectively
regulated jurisdictions. There are many methods by which terrorists finance both their organizations
and specific attacks. By concentrating on three examples of recent terrorist activity, namely the 9/11
attacks in New York, the 7/7 bombings in London, and the transfer of funds from the “Union of Good”
to Hamas to fund terrorist attacks in Israel by means of a certain charitable association, the article
illustrates the problems facing legal regimes seeking to limit terrorist funding.
Findings – The article notes a broad convergence in the methods of those jurisdictions when
combating the financing of terrorism.
Originality/value – The paper provides a discussion of financial resources of terrorism from a legal
professional in an area where terrorism is a real danger.
Keywords Terrorism, Comparative, Finance,Enforcement, Lists, Israel
Paper type General review
Introduction
This article will examine various approaches to combating the “scourge of international
terrorism”[1] by targeting the financial resources of terrorist organisations an d their
supporters[2]. It will begin with the much-disputed issue of how to define a “terrorist”,
“terrorism”, “terrorist organisations” and “acts of terrorism”. Thereafter, the article will
describe briefly the many methods by which terrorists finance both their organisations
and specific attacks, before turning to the attempts taken “to disrupt terrorism by
choking off funding”[3]. I will examine specific terrorist activities which are illustrativ e
of the issues of terrorist financing. The activities that will be considered are the
9/11 attacks in the USA, the 7/7 bombings in the UK, and the transfer of property and
funds from the “Union of Good” terrorist funding network through a certain charitable
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
The author acknowledges with gratitude the assistance of Stephen Kosmin BA (Cantab.), BCL
(Oxon.), LLM (UPenn), Barrister (Middle Temple), Attorney at Law (New York) and
Hagit Horowitz LLM (Hebrew University), Attorney at Law (Israel) with the drafting of this
article and thanks the 29th Cambridge International Symposium on Economic Crime for the
invitation to participate in this conference.
JMLC
15,2
210
Journal of Money Laundering Control
Vol. 15 No. 2, 2012
pp. 210-236
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201211218234
association in Israel to Hamas. These terrorist enterprises differed in their funding
methods and their scale. In considering these examples, the article will examin e different
forms of terrorist financing, the problems faced in attempting to prevent future funding
and the capacity of the legal regimes examined to respond to the many forms terrorist
financing can take.
Defining a “terrorist”, “terrorism”, “terrorist organisations” and “acts of
terrorism”
A preliminary matter that must be addressed is how to define “terrorist”, “terrorism”,
“terrorist organisations”, and “acts of terrorism”. The importance of these definitions
stems from the use of lists of terrorists as a central strand of legal regimes that target
terrorist funding.
International law
The main international treaty regime concerning the financing of terrorism prior to the
9/11 attacks was the International Convention for the Suppression of the Financing of
Terrorism 1999 (“ICSFT”). At the time of its conclusion there was no comprehensive
definition of terrorism in international law. The ICSFT therefore sought to provide a
definition of “terrorism”. Reference was made to annexed treaty regimes, which set out
acts to be regarded as constitutive of terrorism for the purposes of the ICSFT[4].
Alternatively, an “offence” for the purposes of the ICSFT included the intentional
provision or collection of funds to carry out:
[...] [a]ny other 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[5].
This alternativedefinition of “terrorism” is therefore centredupon the highly contentious
notion of the “purpose” pursued by the perpetrators (Cassese, 2006, pp. 933, 943). It is
noteworthy thatin order to constitute an offence under Article 2 of theICSFT “terrorism”
is restricted to where the commission of the act has an international element[6].
No formal universal definition of the term “terrorism” emerged in the wake of the
9/11 attacks when the Security Council developed the international law regime relating
to terrorist funding[7]. As Scheppele (2011, pp. 353, 366-67) has noted:
[...] [the Security Council] did not provide a definition of terrorism because no such definition
exists in international law. Terrorism is an irreducibly political offense, and not surprisingly
where politics are involved, disagreements can run deep[8].
The result is that “terrorism” is differently defined in different jurisdictions. Although
there may be no comprehensive definition in international treaty law, “terrorism” ha s
been defined in certain regional treaties[9]; however space precludes a more detailed
examination of these regional regimes. Important for the purposes of this paper are the
definitions applicable in the USA, the UK and Israel.
The law in the USA
The law in the USA similarly lacks a single comprehensive definition of “terrorism”[10].
At times it is given a statutory definition such as in §2656f(d)(2) of Title 22 of the US
Code:
Methods of
freezing funds
211
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