Terrorism financing and the threat to financial institutions
| Date | 11 October 2011 |
| DOI | https://doi.org/10.1108/13685201111173811 |
| Published date | 11 October 2011 |
| Pages | 334-345 |
| Author | Jeffrey Simser |
| Subject Matter | Accounting & finance |
Terrorism financing and the
threat to financial institutions
Jeffrey Simser
Civil Remedies for Illicit Activities Office, Ministry of the Attorney General,
Toronto, Canada
Abstract
Purpose – The purpose of this paper is to explore countering the financing of terrorism and its
impact on financial institutions.
Design/methodology/approach – Actual examples of terrorist financing are considered, as well as
the international and Canadian framework for financial institutions.
Findings – The system for countering the financing of terrorism can be improved to lower costs and
risks to financial institutions and to enhance actionable intelligence. A balance must be sought
between the objective, actionable intelligence and the mechanism used to advance that objective.
Research limitations/implications – There is limited research on terrorism financing and little
statistical data.
Practical implications – Some simple and modest reforms to the framework are suggested; policy
makers need to consider their goals and revaluate the existing framework.
Originality/value – There is little writing in this area. This paper would be of interest to financial
institutions, regulators, law enforcement and the intelligence community.
Keywords Financial institutions, Terrorism,Money laundering, Anti-money laundering,
Terrorist financing, Countering financing of terrorism, Assetforfeiture, Financial intelligence units
Paper type Research paper
Today there are about 200 million people working and living outside their home country [...]
together in one place they would be the world’s fifth most populous country. Remittances
were estimated at more than $300 billion in 2007 alone (Mavin, 2008).
Combating or countering the financing of terrorism (CFT) involves finding relatively
small sums in an ocean of money[1]. How does a banker in Paris or Toronto know
whether she is looking at one of the countless remittances from the Pinoy Diaspora or
funding for Abu Sayyaf? That question lies at the heart of the impact of CFT on financial
institutions. The question is additionally complicated given that the quantum of
terrorist money in use seems relatively modest. The bombing of the London transit
system in 2005 cost an estimated $15,000 (all figures in this paper are US$ amounts); the
2000 attack on the USS Cole in Yemen cost $10,000 as did the 2004 train bombings in
Madrid; even the notorious 9/11 attack cost less than $500,000 to carry ou t[2]. Financial
institutions face a great challenge in identifying patterns that would distinguish
terrorist cells from other legitimate clients, particularly in the context of billions of
transactions. Closer examination reveals that the amounts are higher: outside of specific
activities, a terrorist organization requires money to sustain infrastructure. This paper
examines CFT and the impact on financial institutions.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
The views expressed in this paper are those of the author personally and do not represent the
views of the Government of Ontario or of the Ministry of the Attorney General.
JMLC
14,4
334
Journal of Money Laundering Control
Vol. 14 No. 4, 2011
pp. 334-345
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111173811
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