2.4 THE SPECIALISED ANTI-TERRORIST CONVENTIONS
2.4.4 Terrorist financing and Security Council Resolution 1373 (2001)
99 The AEDPA 1996, 28 USC § 1605(a)(7), which amended the US FSIA 1976, is the only piece of national legislation that allows for claims in tort in cases of State sponsored terrorism.
100 1998 Terrorist Bombings Convention, Art 5, and 2000 Terrorist Financing Convention, Arts 6, 11, 13, 14.
101 18 ILM (1979), 1422.
102 1979 Convention on the Physical Protection of Nuclear Material, Arts 2 and 3.
103 Ibid,Arts 7–11.
104 Op cit,Report of the Secretary General, p 8.
Crime (CATOC)106exemplifies this connection between terrorism and organised crime, but despite the acknowledged and manifest links between the two,107the insertion of terrorist acts in the definition of organised crime was finally avoided.
Nonetheless, some groups such as the Colombian FARC and the Taliban, who at the time sheltered Al-Qaeda in Afghanistan, were known to cultivate and traffic illicit narcotic substances.108 In other instances, terrorists had formed alliances with organised criminal rings in order to conduct trafficking of arms, drugs and women, launder illicit proceeds and infiltrate legitimate banking and commercial markets.
Council Resolution 1333 determined that proceeds from narcotics strengthened the Taliban’s capacity in harbouring terrorists and imposed a sanctions regime.109
In January 2000, the General Assembly of the UN opened for signature an International Convention for the Suppression of the Financing of Terrorism.110This Convention makes it an offence to directly or indirectly, unlawfully and wilfully:
provide or collect funds with the intention or knowledge they are used, in full or in part, to carry out acts described in the various anti-terrorist conventions; commit other criminal acts with the aim of intimidating a population; or compel a government to do or abstain from a certain act.111The Convention establishes a distinct offence of terrorist financing, which is constituted by ‘directly or indirectly, unlawfully and willfully provid[ing] or collecting] funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part’, in order to carry out an offence described in any one of the nine counter-terrorist treaties, or to commit any other violent act with the intent of intimidating a population or of compelling a government to act in a certain way.112While the criminalisation of funding of acts falling within the ambit of previous counter-terrorist treaties requires ratification of those treaties by the State concerned, that is not the case with regard to ‘other violent intimidating acts’, as described in sub-para 1(b). This wide definition may well encompass offences encountered in the nine counter-terrorist treaties. For example, the provision of financial assistance by an individual who is a national of country A, with the aim of kidnapping a Head of State, becomes an international offence only if country A has ratified both the 2000 Terrorist Financing Convention and the 1973 Convention on the Prevention and Punishment of Crimes Against Internationally
105 GA Res 49/60 (9 December 1994); the Vienna Declaration and Program of Action, adopted at the World Conference on Human Rights, emphasised that the linkage between terrorism and drug- trafficking aims at the ‘destruction’ of human rights and democracy, UN Doc A/CONF 157/23 (14–25 June 1993).
106 40 ILM (2001), 335.
107 Second session of theAd Hoc Committee (8–12 March 1999), UN DocA/AC 254/4 Rev 1 (10 February 1999).
108 SC Res 1214 (8 December 1998).
109 SC Res 1333 (19 December 2000).
110 GA Res 54/109 (25 February 2000); see V Morris and A Pronto, The Work of the Sixth Committee at the Fifty-Fourth Session of the UN General Assembly’, 94AJIL(2000), 582, p 585; see also EC Council Recommendation of 9 December 1999 on Co-operation in Combating the Financing of Terrorist Groups (OJ C373, 23 December 1999).
111 2000 Terrorist Financing Convention, Art 2(1). It is also an offence to participate in, organise or direct, act in a common purpose (Art 2(5)), or attempt (Art 2(4)) any of the offences described in Art 2(1).
112 Art 2(1)(a) and (b); Art 2(d) of the 1999 Convention of the Organisation of the Islamic Conference (OIC) on Combating International Terrorism Terrorist Convention, states,inter alia,that ‘all forms of international crimes, including illegal trafficking in narcotics and human beings, money laundering, aimed at financing terrorist objectives shall be considered terrorist crimes’.
Protected Persons, Including Diplomatic Agents.113The effect of sub-para (1)(b), however, is to establish such an act as an offence under the 2000 Terrorist Financing Convention, where it is understood that the kidnapping in question was either intended to intimidate the civilian population or compel a government to do or abstain from doing a certain act.114As regards the definition of ‘financing’, it was pointed out during the deliberations in the Sixth Committee that, while the Convention focused on the financing of the most serious terrorist acts, all means of financing were covered, including both ‘unlawful’ means (such as racketeering) and
‘lawful’ means (such as private and public financing, financing provided by associations).115The Convention obliges parties to take appropriate measures in order to identify, detect, freeze, or seize terrorist-related funds as well as the proceeds derived from such offences.116A number of intergovernmental bodies, as well as domestic enforcement agencies have called or imposed stricter client identification on financial institutions, as well as an obligation to file Suspicious Transactions Reports (STRs). The so called ‘Know Your Client’ (KYC) principle, which has been derived from counter-money laundering procedures, requires that financial institutions verify in as much detail as possible all their clients, whether these are natural or legal persons.117
Following the 11 September 2001 terrorist attack in the US, the Security Council adopted Resolution 1373 on 28 September 2001. This establishes a general—that is, not specifically directed against Al-Qaeda and their associates—financial regime which: criminalises all activities falling within the remit of terrorist financing; obliges States to freeze all funds or financial assets of persons and entities that are directly or indirectly used to commit terrorist acts or that are owned and controlled by persons engaged in, or associated with, terrorism; obliges States to prevent their nationals (including private financial institutions) from making such funds available, thus imposing strict client detection measures, requirements relating to the filing of STRs, and subordination to other intergovernmental institutions in order to receive the names of designated terrorist organisations or individuals;118and imposes substantive and procedural criminal law measures at the domestic level, including an obligation to co-operate in the acquisition of evidence for criminal proceedings.119In order to implement and monitor the terms of the Resolution, the Council decided to establish a subsidiary organ, the Counter-Terrorism Committee.120Member States were obliged to report to the Committee, within 90 days, on the steps they had taken to implement
113 13 ILM (1979), 41.
114 Report of the Ad Hoc Committee established by GA Res 51/210 (1996), GAOR 54th Session, UN Doc A/54/37/Supp No 37 (5 May 1999), p 3.
115 Ibid.
116 2000 Terrorist Financing Convention, Art 8(1).
117 Ibid,Art 18(1)(b)(ii) requires, with regard to legal persons, the following: proof of incorporation, including information concerning the customer’s name, legal form, address, directors, and provisions regulating the power to bind the entity. Sub-paragraph 1(b)(iv) further requires that ‘financial institutions maintain, for at least five years, all necessary records on transactions, both domestic or international’.
118 Operative para 1; although in practice this also includes national law enforcement authorities, such as the FBI, CIA and OFAC (Office of Foreign Assets Control).
119 Operative para 2.
120 Operative para 6.
the Resolution. By late May 2002 the Committee had received more than 150 reports from States,121as well as reports from the Organisation for Security and Co-operation in Europe (OSCE)122and the European Union.123
In practical terms, both the 2000 Convention and Resolution 1373 must be construed in accordance with the findings and Recommendations of the OECD’s Financial Action Task Force (FATF). The FATF had warned about the channelling of funds to terrorists from money laundering, underground remittance systems(hawala), disguised charities and trusts. Most of these activities are difficult to detect, and so it is the duty of financial or other institutions to implement appropriate monitoring mechanisms (such as KYC and the filing of STRs). At an extraordinary plenary, held on 29 and 30 October 2001, the FATF expanded its mandate to encompass terrorist financing—apart from money laundering. During the plenary it was agreed that the FATF would issue Special Recommendations on Terrorist Financing. These commit members to: ratify counter-terrorism treaties; criminalise terrorist financing;
freeze and confiscate terrorist assets; report suspicious transactions; provide related assistance to other countries; impose anti-money laundering requirements on alternative remittance systems; strengthen customer identification measures in international and domestic wire transfers; ensure that non-profit organisations cannot be misused to finance terrorism.124The Special Recommendations, which although not binding are of extremely persuasive value, were followed by an Action Plan that included the completion of a self-assessment exercise by all FATF members. This included: the issuance of additional FATF Guidance for Financial Institutions in Detecting Terrorist Financing;125the identification of and measures to be taken vis- à-vis jurisdictions that lack appropriate measures; regular publication of frozen terrorist assets; provision of technical assistance to non-FATF members.