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Terrorist Finance. Kabul, Afghanistan April 2006. History of Financial Transparency. “Follow-the-Money” U.S. Bank Secrecy Act - 1970 Creation of “financial intelligence” G-7 Creation of FATF – 1988 FATF 40 Recommendations Egmont Group of Financial Intelligence Units - 1995.

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Terrorist finance l.jpg

Terrorist Finance

Kabul, Afghanistan

April 2006


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History ofFinancial Transparency

  • “Follow-the-Money”

  • U.S. Bank Secrecy Act - 1970

  • Creation of “financial intelligence”

  • G-7 Creation of FATF – 1988

  • FATF 40 Recommendations

  • Egmont Group of Financial Intelligence Units - 1995


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What is Financial Intelligence?

  • Many different examples:

  • Records of large cash deposits

  • Cross-border currency reports

  • Large cash purchases

  • Casino reports

  • Suspicious Transaction Reports


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Purpose of Financial Intelligence

  • Gives investigators a “paper-trail”

  • Key tool in the War on Narcotics

  • Useful in other “predicate offenses” for money laundering

  • Money laundering is the “inverse partner” of terrorist finance


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Osama bin Laden:

“Attempts to find and freeze assets will not make any difference to al-Qaida or other jihad groups. Al-Qaida is comprised of modern, educated young people who are as aware of the cracks in the western financial system as they are of the lines in their own hands. These are the very flaws in western financial system which is becominga noose for it.”


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September 11Totals for 19 Hijackers

Deposits $303,481.63

Disbursements $303,671.62


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Other Terrorist Attacks

  • 1998 U.S. Embassy bombings in Kenya and Tanzania - $50,000

  • 2000 attack on USS Cole in Aden - $10,000

  • 2002 bombings in Bali – $50,000

  • 2003 attacks in Istanbul - $40,000

  • 2004 attacks in Madrid – about $10,000

    Source: United Nations


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War on Terrorist Finance:Response to Date

  • Designations

  • UN 1267 Committee’s “Consolidated List”

  • Results:

    $112 million “blocked” by December 2001

    $150 million – cumulative – by January 2006

    $60 million actually “seized”

    Effective?


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Response - continued

  • Charities

  • Cash

  • Rules/Regulations/Reporting Requirements



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We have ignored Informal Value Transfer Systems

  • Hawala

  • Misuse of international gold trade

  • Diamond/gem trade

  • Commodity/narcotics exchange

  • Trade-based value transfer

  • Common denominator:

    TRADE




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The Afghan-Gold Connection

The golden age of crime

Why international drug traffickers are

invading the global gold trade

World Report, November 1999

In Gold We Trust

Wired, January 2002

U.S. Islamic Cash Outlets Investigated

‘Hawalas’ Suspected in Terror Funding

The Washington Post, November 2001

Al Qaeda’s Road Paved With Gold

Secret Shipments Traced Through a Lax System in United Arab Emirates

The Washington Post, February 2002


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Laundering of Diamonds/Gems

  • Diamond/Gem “Pipeline”

    point of origin to sale

  • Mining,

    trading,

    cutting,

    polishing,

    retailing


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Laundering along “Pipeline”

  • Striking similarities to money laundering

  • Illicit diamonds “placed, layered, and integrated”

  • Facilitated by smuggling, corruption, porous borders

  • Neither the Kimberly Process nor proposed anti-money laundering rules for diamond dealers will be effective in combating the laundering of diamonds



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Afghan Narcotics/Commodity Exchange


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Questions?

John Cassara


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