FATF Takes on Terrorists' Finances

7 November 2001
Like many governmental bodies, the Financial Action Task Force on Money Laundering recently introduced measures aimed at stopping terrorist financing.

On Oct. 29 and 30, the FATF met in Washington D.C. to expand its mission beyond fighting international money laundering. The group agreed to a set of recommendations that urge countries to take greater care in reporting suspicious transactions linked to terrorism and pay closer attention to non-profits that may be used to park terrorists' cash.

The new recommendations don't target Internet gambling specifically, but one financial crimes expert said that while the FATF already has I-gaming recommendations in place, online betting is of great interest to policy makers, especially in the wake of Sept. 11.

"Internet gambling is a source of great concern, especially from the offshores onto onshore," said Fletcher N. Baldwin, a law professor at the University of Florida. "Internet gambling is going to have to be dealt with in a much more vigorous way. That's a very good way to hide money, incidentally."

FATF President Claire Lo called on all countries--not just the group's 29 member states--to adopt the recommendations.

"Implementation of these special recommendations will deny terrorists and their supporters access to the international financial system," she said.

The recommendations require the group's member states to

  • immediately ratify and implement the relevant United Nations policies;
  • criminalize terrorist financing, acts and organizations;
  • freeze and confiscate terrorist assets;
  • report suspicious transactions linked to terrorism;
  • give other countries as much assistance as possible in investigating terrorists' finances;
  • impose anti-money laundering requirements on alternative remittance systems;
  • make customer identification measures for international and domestic wire transfers stronger;
  • and ensure that non-profit organizations are not used to finance terrorism.

The group called on all its members to have the recommendations implemented by June 2002, when the FATF will discuss its next steps, including the possibility of countermeasures against jurisdictions that don't take action against terrorist financing. Baldwin, however, doesn't think the recommendations will have much of an impact.

"The Financial Action Task Force since 1990 has been beating its head against the wall with enormous recommendations," he said.

The professor does, on the other hand, think the terrorist attacks on New York and Washington, D.C. may inspire the political motivation to rule Internet gambling illegal in the United States. Baldwin said Congress members such as Sen. Jon Kyl, R-Ariz., and Rep. Bob Goodlatte, D-Va., who have introduced anti-Internet gambling bills in the past, may now be able to gather enough support to get their bills passed. Goodlatte reintroduced his bill to the House of Representatives last week.

"Our state department tells us once again the United States is the largest money laundering system in the world," Baldwin said. "You want to put your money in a very stable economy, but…because of the incredible tragedy, there is now a degree of political will to go after this money including Internet gambling, and I think Kyl now will be successful."

Anne Lindner can be reached at anne@rivercitygroup.com.