Setting global CFT standards: a critique and suggestions

DOIhttps://doi.org/10.1108/13685200610681805
Pages281-292
Publication Date01 Jul 2006
AuthorNikos Passas
SubjectAccounting & finance
Setting global CFT standards:
a critique and suggestions
Nikos Passas
Northeastern University, Boston, Massachusetts, USA
Abstract
Purpose – The purpose of this paper is to raise the question of whether the combating the financing
of terrorism (CFT) arsenal following the attacks of 11 September 2001 was developed and applied too
fast, to the point of being unnecessarily costly, ineffective, unfair and even counterproductive.
Design/methodology/approach – An outline of two private sector contributions follows two
illustrations of areas in which CFT policies may be resting on shaky assumptions, missing their
targets and rendering the international community more vulnerable to extremist actions: the
regulation of cross-border fund transfers and commodities trade.
Findings – Many of the control functions have been de facto outsourced to the private sector without
proper guidance and accountability.
Originality/value – The paper goes beyond a mere critique of current regulatory and control
arrangements to suggest concrete ways in which the private sector can support the objectives of CFT
policies more efficiently and productively.
Keywords Terrorism, Crimes,Financial control, Laws and legislation,United States of America
Paper type Research paper
Before the attacks of the 11 September 2001, the issue of terrorist finance was nowhere
near the top of the policy agendas at national or international levels. The United
Nations 1999 Convention for the Suppression of the Financing of Terrorism had not
been ratified by the USA or the majority of member states. In fact, only four countries
had ratified it by that milestone date. Even anti-money laundering (AML) measures
were coming under criticism as high-level US government officials expressing concern
about the cost-benefit equation and utility of AML requirements on the financia l sector.
All this changed dramatically with a flurry of activity against terrorism, including a
host of measures designed to “starve the terrorists of funding, turn them against each
other, rout them out of their safe hiding places, and bring them to justice” (Presiden t
George W. Bush, 24 September 2001)[1]. International and national measures were
introduced in a hurry in pursuit of this objective: we saw a very speedy ratification of the
UN convention, reporting requirements on progress in implementing combating the
financing of terrorism (CFT) programs, FATF special recommendations, World Bank
and IMF assessment and evaluation practices incorporating terrorist finance, new laws
and executive orders aiming at the identification, freeze and seizure or confiscation of
assets suspected of belonging to or supporting designated terrorist organizations.
A question raised in this paper is whether the CFT arsenal was developed and
applied too fast, to the point of being unnecessarily costly, ineffective, unfair and even
counterproductive. My argument is that many of the control functions have been
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
Research on which this paper is based was sponsored by a US National Institute of Justice grant
for a study of “Terrorist Finance and the Nexus with Transnational Organized Crime:
Commodities Trade and the Social Organization of al Qaeda Groups,” grant no. 2003-DT-CX-0001
Setting global
CFT standards
281
Journal of Money Laundering Control
Vol. 9 No. 3, 2006
pp. 281-292
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200610681805

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