The existing financial intelligence tools and their limitations in early detection of terrorist financing activities
| DOI | https://doi.org/10.1108/JMLC-07-2021-0075 |
| Published date | 23 August 2021 |
| Date | 23 August 2021 |
| Pages | 843-863 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Hussain Syed Gowhor |
The existing financial intelligence
tools and their limitations in early
detection of terrorist financing
activities
Hussain Syed Gowhor
Department of Security Studies and Criminology, Macquarie University,
North Ryde, Sydney, Australia and Bangladesh Post Office,
Government of Bangladesh NBR, Rajshahi, Bangladesh
Abstract
Purpose –This paper aims to inform the readers about the existing financial intelligence tools that are
being used by financialintelligence units. It tries to demonstrate, with the help of a literaturereview, what the
limitations of these tools are and how these limitationshinder the potential of the financial intelligence tools
for early detectionof terrorist financing activities.
Design/methodology/approach –The literature review method was adopted to discuss the financial
intelligence tools, their limitations and the implications of the limitations for early detection of terrorist
financingactivities.
Findings –It was found that although the financial intelligencetools were introduced with a view to detect
terrorist financingactivities early, there are some inherent limitations of the toolsrelating to technical design
featuresand operational procedures that hinder early detectionof terrorist financing activities.
Research limitations/implications –The existing financial intelligence tools need to be repaired by
removingthe inherent limitations of the tools.
Practical implications –The financial intelligence unitsshould take into cognizance the importance of
early detection of terrorist financing activities for preventing terrorist attacks and need to redesign the
existingtools in such a way that make these toolseffective for early detection of terrorist financing activities.
Social implications –Peace will be established in society by preventing terrorist attacks through early
detectionof terrorist financing activities.
Originality/value –The originality of the paperlies in identifying the limitations of the existing financial
intelligencetools for the early detection of terrorist financing activities.
Keywords Limitations, Early detection, Financial intelligence tools, Terrorist financing activities
Paper type Literature review
1. Introduction
The concept of financial intelligence originatedin “the 1989 Paris Summit of the Group of 7
(G-7) countries”(Rudner, 2006, p. 47).The initial aim of financial intelligence was to control
the spread of money launderingcrime (Rudner, 2006). However, after the 11 September 2001
terrorist attack in the USA, the role of financial intelligence was redefined to deal with the
issue of terrorism financing (Rudner, 2006). As a simple concept, the definition of financial
intelligence is unanimouslyaccepted amongst the scholars in the field of terrorismfinancing
The author is thankful to Dr Alex Simpson of the Department of Security Studies and Criminology at
Macquarie University for his valuable opinion on the draft of the paper.
Financial
intelligence
tools
843
Journalof Money Laundering
Control
Vol.25 No. 4, 2022
pp. 843-863
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-07-2021-0075
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
(Schott, 2006). Financialintelligence is defined as the “processed financial information where
such processing follows a definitive analytical rigour”(Sathye and Patel, 2007, p. 393). The
process consists of several steps, such as collection, evaluation, collation, integration and
analysis (Sathye and Patel, 2007). Similar definition of financial intelligence has also been
provided by other scholars,such as Unal and Altun (2020) and Rudner (2006).
2. The importance of financial intelligence tools in combatting terrorism
Financial intelligence tools work as an intervention in the financial system that enables
early detection of terrorist financing activities. The intervention function of the financial
intelligence tools is the detection mechanism that acts as a sensor for identifying terrorist
financing-relatedtransactions.
The interventional role of the financial intelligence tools makes them important in
combatting terrorism. Because of the interventional role, the financial intelligence tools have the
potential to combat terrorism in two ways. First of all, these tools have the potential to work as
early warning signals of future terrorist attacks. The early warning signals can be generated by
the unusual, abnormal suspicious transactions reports and other financial intelligence tools. For
example, Levitt (2011) describes that in July 2006, a terrorist conspiracy of a group of British
citizens under the banner of Al-Qaeda who had planned for a liquid explosive detonation aboard
10 airlines destined to travel from the UK to the USA and Canada was successfully foiled due to
the early warning signals generated by the financial intelligence tools. The Washington
Institute of Near East Policy (2007) reports that the financial intelligencetools could successfully
capture the early warning signals of the imminent terrorist attack, which was generated
through the Bletchley Park-style intervention in the financial system. Bletchley Park was an
English country house, which later became the principal centre of intelligence during the Second
World War. The term Bletchley Park-style intervention is used allegorically to signify the
spectacular success that was similar to that of the Bletchley Park, which significantly shortened
the duration of the Second World War through early intelligence intervention through quick and
efficient decoding (Jonathan, 2014). Such intervention resulted in the detection of the use of
multiple financial accounts of a suspected Al-Qaeda terrorist for the purposes of:
Disbursing money for purchasing and supplying explosives.
Procuring high resolution maps over the internet.
Purchasing air tickets for international travel of the conspirators.
Using international courier for taking delivery of the explosives.
Secondly, these tools have the potential to nip a terrorist conspiracy in the bud. For example, the
intelligence and law enforcement agencies of a country may obtain information about a
forthcoming terrorist attack in a railway station through various means, such as detection of
trigger activities, detection of the person of interest and tipping-off by renega des of terrorist
groups (Gill and Phythian, 2018). However, this knowledge does not “enable specifictacticalor
operational interventions to prevent the terrorist attacks”(Gill and Phythian,2018, p. 198) because
this information cannot resolve the uncertain conundrum re lating to the terrorist attacks. The
conundrum revolves around the questions, such as who will attack, when they will attack, how
will they attack, where will they attack and how much resources would be required to carry out
the attack (Bello and Harvey, 2017;Hamin et al.,2016;Innes, 2006). Financial intelligence can help
to solve the riddle that revolves around the questions just mentioned becausethis information are
discernible from financial transaction data (Rudner, 2006). That is why the intelligence agencies
need to take help of financial intelligence to thwart any imminent attack, which can be done by
preparing an intelligence estimate by the intelligence and law enforcement agencies as to what
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