Part 7: Investigation and enforcement (Sub‐group 3: Implications of investigations and enforcement: international cooperation aspects)

DOIhttps://doi.org/10.1108/13685200310809608
Date01 July 2003
Publication Date01 July 2003
Pages269-288
SubjectAccounting & finance
Part 7
Investigation and Enforcement
Sub-group 3: Implications of investigations and enforcement:
International cooperation aspects
INTRODUCTION
This part is primarily devoted to the impact of
initiatives on the operational areas of investigation
and enforcement. Detailed reference has already
been made to, inter alia, terrorist-related legislation,
and the eect on banks and ®nancial institutions.
The Group felt that consideration should be given
to the cause and eect on the key aims of intelligence
gathering, leading to disruption of terrorist activities
(these activities include training, funding, operations,
and recruitment), and arrest and prosecution. It was
felt that the relatively low level of seizure of terrorist
property should not be allowed to overshadow the
signi®cant success in disruption by the authorities.
There are, however, many areas of con¯ict between
and within the areas of intelligence gathering, and
investigation and enforcement. When counter-
terrorist operations started, aims included considera-
tion of `turning' terrorists, and, inter alia, disruption
of terrorist operations. Con¯icts arise when arrests
publicise these tactics, although it was felt that
whilst prosecution of terrorist activities may be
`impractical' for this reason, the successful prosecu-
tion of peripheral activities (theft, smuggling, tax
evasion, etc) must be regarded as a positive alter-
native. Members of the group also felt that there
should be a greater involvement of lawyers,
accountants, and also more liaison with the private/
commercial sectors.
Earlier in 2001, the Financial Action Task Force
(FATF) had identi®ed the following major sources
of terrorist funding:
drug tracking,
extortion and kidnapping,
robbery,
fraud,
gambling,
smuggling and tracking in counterfeit goods,
direct sponsorship by states,
contributions and donations,
sale of publications (legal and illegal), and
legitimate business activities.
FATF's pre-11th September discussions concluded
that with the decline in state sponsorship of terrorism,
terrorist groups increasingly resort to criminal activ-
ity to raise the funds required. The world has now
moved on. Consequently, FATF has decided to
expand its mission to focus on combating terrorist
®nancing as well as money laundering. This makes
redundant previous disagreements about funds
raised by terrorist organisations from non-criminal
activity and whether this could strictly be said to con-
stitute money laundering. There is still disagreement
about the need for special legislation. Some FATF
experts believed existing legislation adequate for
dealing with terrorist money laundering while
others thought terrorist money laundering to be a
distinct variety of money laundering that required
special measures. The origin of terrorist funds is
often quite legal, but the purposes to which they
are put are not. They thus can behave dierently
from funds derived from illicit business in that
they do not have to be moved around quite so
quickly. They can be invested and accumulate
before being diverted to illicit purposes. This has
led to the growth of perfectly legal business
enterprises that in eect wholly or partly belong to
terrorist organisations.
1
In the context of the issues raised above, it was
decided by the sub-group to concentrate on the key
areas listed below as a remit for discussion.
Investigation powers Ð are the investigation
powers that practitioners currently have adequate,
or do they need to be expanded in some areas?
(The Group de®ned practitioners as members of
all agencies engaged in counter-terrorist work:
Police, Special Branches, Security Service, Secret
Intelligence Service, Customs and Excise, Special
Forces etc).
Page 269
Journal of Money Laundering Control Ð Vol. 6 No. 3
Journalof Money Laundering Control
Vol.6, No. 3, 2003, pp. 269± 288
#HenryStewart Publications
ISSN1368-5201
Terrorist ®nance oences Ð is the law
suciently comprehensive?
Measuring success Ð how should success in
relation to the interdiction of terrorist property
be measured, whether this be by con®scation,
forfeiture, freezing assets, etc?
Culture Ð why is the traditional special branch
ocer weak in the area of ®nancial investigation,
and what can be done to remedy the situation?
Organisational structures Ð if the interdiction
of terrorist property is made a priority, how do
structures need to be adjusted to re¯ect this?
Resources Ð are there sucient resources to do
the job?
International Ð what are the implications of
11th September for international cooperation in
the area of terrorist ®nance investigations?
INVESTIGATION POWERS
Background
The powers available when investing terrorist ®nan-
cing are set out in the Terrorism Act 2000,
2
which
consolidated and developed earlier legislation, and
3
The 2001 Act re¯ected the need for enhanced
powers following the events of 11th September.
The police powers conferred by the 2000 and 2001
Acts are additional to powers available at common
law or by virtue of any other enactment, and shall
not be taken to aect those powers. They would
include powers available to police and other law
enforcement ocers under proceeds of crime legisla-
tion where the terrorist ®nances were interwoven
with the proceeds of non-terrorist crime, and to
obtain authorisation under the Regulation of Investi-
gatory Powers Act to intercept telephone communi-
cations.
The de®nition of a terrorist investigation in the
Terrorism Act 2000 includes two direct references
encompassing the ®nancing of terrorism Ð `an act
which appears to have been done for the purposes
of terrorism'' and ``the resources of a proscribed
organisation'' '. The improved de®nition of terror-
ist property
4
and the duty to disclosure provided
where a person believes or suspects that another
person has committed an oence under the Act
based on information which comes to his attention
in the course of a trade, business or employment,
5
creates a signi®cant demand for terrorist
investigations.
The legislation recognises that speci®c powers of
investigation are necessary if this commitment is to
be addressed eectively. These powers are contained
in the Terrorism Act 2000 as follows:
Schedule 4 Part I, which relates to restraint orders;
Schedule 5 which provides power to obtain
information; and
Schedules 6 and 6A which relate speci®cally to
®nancial information.
The original powers in the 2000 Act have been
amended by provisions of the Anti-terrorism,
Crime and Security Act 2001 which also introduced
freezing orders.
Power to restrain terrorist property
The original power to restrain terrorist property con-
tained in Schedule 4 of the 2000 Act prevented some-
one accused of a terrorist oence selling property
they own, manage or control. This meant that until
someone was charged with a terrorist-related oence
or charges were imminent the suspect property could
be disposed of even though in due course it could be
subject to forfeiture. The Anti-terrorism, Crime and
6
amended this power to allow the
use of restraint orders at any time after an investiga-
tion has started. This change provides time for inves-
tigators to advance investigations prior to charging
where persons are aware of the police action.
Power to obtain a search warrant to
seize and retain any relevant material
7
This power authorises a police ocer to enter the pre-
mises speci®ed in the warrant, to search the premises
and any person found there, and to seize and retain
any relevant material which is found on a search.
To seize and retain relevant material a police ocer
must have reasonable grounds for believing that it
is likely to be of substantial value, whether by itself
or together with other material, to a terrorist investi-
gation, and must be seized in order to prevent it from
being concealed, lost, damaged, altered or destroyed.
A search warrant will not authorise the seizure and
retention of items subject to legal privilege.
While under normal circumstances applications for
search warrants are made through the courts, special
procedures are provided for urgent cases. Under these
procedures a police ocer of at least the rank of
Page 270
The Funding of Terror

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