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CONTENTS:

NEWS HIGHLIGHTS OF THE WEEK:

1. World
2. Africa
3. Americas
4. Asia Pacific
5. Europe
6. Middle East
7. South Asia
8. Cyberterrorism and Information Warfare
9. Finance
10 Human Rights
11. Law and Legal Issues
12. Transportation
13. Weapons of Mass Destruction
14. Recently Published

FEATURE ARTICLE:
The US Money Laundering Strategy

NEWS HIGHLIGHTS OF THE WEEK

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1. World

The US, South Korea, Japan and the EU have agreed to suspend construction of nuclear power plants in North Korea unless it abandons its nuclear weapons program. Press reports based on congressional testimony indicate that the CIA believes that North Korea has developed weapons but not tested them.

Iraqis experienced another bloody week that has contributed to the decisions by the UN to withdraw its staff and the International Committee of the Red Cross to close its offices in Baghdad and Basra. Many other humanitarian organizations have already withdrawn and will not return until security is established. US authorities have suggested they will speed up the hand-over of security to Iraqi authorities, a move that raises concerns of the lack of training and resources. A leaked US army memorandum, the "Third Infantry (Mechanized) After Action Report" generated more controversy with its revelation that the army had no occupation plan for Baghdad. http://www.globalsecurity.org

58 states have failed to meet the deadline for their latest reports to the UN Counter-Terrorism Committee. http://www.un.org/Docs/journal/asp/ws.asp?

In an effort to improve UN peacekeeping operations, a review panel (http://www.un.org/apps/news/infocusRel.asp?) has been named to study global security threats. One item for consideration is the suggestion to hire private non-profit resources that could mobilize for peacekeeping missions more quickly. The Global Security Partnership proposed this approach. http://www.gspproject.com

The International Day for Preventing the Exploitation of the Environment in War and Armed Conflict was observed on November 6. Expanded laws to addresses issues such as land mines, mass refugee movements, and weapons of mass destruction were called for.

The UN protocol against smuggling of migrants, a supplement to the Convention against Transnational Organized Crime, has reached the required number of member ratifications and will come into force next January.

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2. Africa

Burundi's largest rebel group, the Forces for the Defense of Democracy (FDD) has reached agreement to join the transitional government.

In Democratic Republic of Congo, sporadic fighting among rival militias continued. UN peacekeeping forces were attacked at headquarters and a camp in Bunia.

Elections in Guinea are scheduled for December, but allegations of vote rigging have already surfaced. The opposition coalition will boycott the elections and some international observer groups have already announced they do not plan to attend the poll, finding they fail in meeting basic organizational conditions.

Guinea has been accused of arming Liberian rebels in a new Human Rights Watch report, "Weapons Sanctions, Military Supplies and Human Suffering: Illegal Arms flow to Liberia and the June-July shelling of Monrovia". http://www.hrw.org/press/2003/11/liberia110503.htm

Independently, the UN has decided to leave Liberian sanctions in place, pending events over the next year. The International Crisis Group has published a report on "Liberia: Security Challenges" that reviews this critical stage in the peace process. http://www.intl-crisis-group.org/home/index.cfm?l=1&id=2344

In Ivory Coast, arson attacks, looting, executions and other acts of violence in interior villages contribute to more refugees and threaten the peace agreement. Main opposition parties are threatening to withdraw from the government of national reconciliation, but talks are under way to salvage the process.

Mauritanian President Maaouiya Ould Taya has been elected to a third term, pending validation by the constitutional council. The opposition alleges massive electoral fraud, but there were no outside monitors and no confirmation of the reports. The main opposition leader, Mohamed Khouna Ould Haidalla, has been arrested.

The Namibian Farm Workers' Union called off its plans to invade 15 white-owned farms following an agreement with the government to improve working conditions. The government made it clear that it was committed to the willing buyer - willing seller policy and that security forces would be deployed in the case of any invasions.

In Nigeria, pirates operating in the southern Niger Delta shot dead five policemen.

Somalia was the subject of an important new report by a UN panel of experts, regarding the arms embargo. They found "a disturbing picture of a continuous influx of small quantities of weapons and ammunition that feed the local open arms markets and faction leaders' warehouses in Somalia". The shipments come from around the Middle East, mainly by boat, and also by air cargo that is usually not inspected. Arms are paid for "for example, with cash received from foreign sponsors; with khat; or with counterfeit Somali shillings printed abroad". In addition, "transnational terrorists have been able to obtain not only small arms but also man-portable air defence systems, light anti-tank weapons and explosives. The terrorists responsible for the bombing of the Paradise Hotel in 2002 in Mombasa, Kenya, and the attempted attack on flight 582 from Mombasa to Tel Aviv brought missiles from Yemen via Somalia to Kenya".
http://www.un.org/Docs/journal/asp/ws.asp?m=S/2003/1035

Ugandan rebels of the Lord's Resistance Army (LRA) have massacred at least 60 civilians in revenge attacks against villagers following the killing last month of LRA's second in command, Charles Tabuley.

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3. Americas

Brazilian police stations have come under orchestrated attacks by the First Command of the Capital (PCC) drug ring in response to their jailed leader complaining about his treatment in prison. More than 25 police stations in Sao Paulo and the area have been attacked.

Canadian Prime Minister Chretien has condemned the treatment of Maher Arar. US authorities detained him when he was changing planes then deported him to Syria, where he was detained for a year and tortured. Canadian authorities are investigating why the US did not consult with them and whether Canadian intelligence was involved in some way.

Guatemalans are voting in presidential and congressional elections that have been preceded by high levels of violence, requiring tens of thousands of security officials mobilized to keep the peace. Prominent figures from the civil war dominate the list of candidates, including a former dictator (Efrain Rios Montt) and former rebel Makrina Gudiel.

The US 9-11 Commission will subpoena the Pentagon to obtain records regarding air defenses that have been repeatedly delayed.

Five years ago, on November 6, Osama bin Laden was indicted in New York federal court for his role in the East African embassy bombings.

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4. Asia Pacific

Burmese opposition leader Aung San Suu Kyi has met with a UN envoy who reports the ruling junta has told her she was no longer under house arrest but she refuses to leave until her 35 colleagues are also released.

Cambodia has celebrated its 50th anniversary of independence from France.

China and Pakistan have agreed to cooperate against terrorism, including working against separatist Uighar Muslims in northwest China. They did not reach agreement for China to help build a nuclear plant in Pakistan.

In Indonesia's Aceh province, martial law has been extended for another six months. The army says it has not yet achieved its aim to eliminate separatist rebels of the Free Aceh Movement. Police claim to have killed more than 900 rebels and captured a thousand. There have been at least 300 civilian fatalities.

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5. Europe

France arrested five people suspected of links with the Real IRA. Three have since been released.

France and Spain have reached agreement to create joint police operations to combat terrorism and drug-trafficking, including cross-border arrests, investigations, and intelligence.

Georgia held a general election in which the exit polls predicted an opposition victory but the count gave a clear win to President Shevardnadze. Mass demonstrations have been maintained in front of parliament, asking for the resignation of the president.

Germany marked 65th anniversary of the Kristallnacht attacks against Jews.

In Northern Ireland people are gearing up for the election.

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6. Middle East

Iran has agreed to provide written acceptance of the enhanced nuclear protocol and confirmation that it has suspended its uranium enrichment program.

The capture of Islamic Jihad leader Amjad Abeidi led to rioting and firefights in the West Bank and Gaza. At least twelve Palestinians, including a 10-year old boy watching birds, were killed by Israeli Defense Forces over the weekend. Hamas has ruled out a fresh truce.

The Israeli cabinet has approved a prisoner exchange deal with Lebanese Hezbollah that calls for the release of 400 Palestinian and 20 Lebanese prisoners in return for businessman Elhanan Tannebaum and the bodies of three Israeli soldiers.

The Israeli High Court has ordered the government to explain the rationale for the law that bans residency for Palestinians.

In Riyadh, Saudi Arabia, bombings in a residential compound have killed at least 19 and injured more than a hundred. Details are still emerging. The attack indicated increasing threats from Islamic militants opposed to the ruling family. It has been attributed to Al Qaeda. Prior to the bombing, the US closed its mission based on information that attacks were imminent. Earlier in the week, two militants blew themselves up during a Saudi security operation in Mecca.

Palestinian Prime Minister Qureia has new cabinet, including Arafat's choice for minister of interior, leaving security in Arafat's hands. There will be a vote of confidence on Wednesday.

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7. South Asia

In Afghanistan, Taliban militia leader Abdul Waris Muslim has demanded the release of 250 Taliban fighters in exchange for the Turkish engineer, Hasan Onal, they are holding hostage. Elsewhere in the country, fierce fighting continued during the week. On the plus side, the draft constitution has been published and is open for discussion. To further support the government, a UN delegation visited warlords throughout the country to encourage them to stop fighting and enter the political process.

In the Indian state of Gujarat, Hindu-Muslim violence sparked by a cricket match left 3 Muslims dead and 37 injured. In West Bengal, clashes between factions of a Marxist trade union burned to death 21 people, mostly female clerical workers on the targeted tea estate.

In Nepal, violence continues to increase following the breakdown of peace efforts with Maoist rebels. Last weekend, 22 Maoist rebels and ten soldiers were killed

Pakistani President Musharraf says that Pakistan got missiles from North Korea in the past but there are no longer any defense contracts and that there has never been cooperation for nuclear development.

Sri Lanka was thrust into turmoil after President Kumaratunga suspended parliament, fired three ministers, and declared a state of emergency. She has since lifted the state of emergency and called for a government of national reconciliation. This move removed control of the security apparatus from Prime Minister Wickramasinghe back to the President, who said that too much was being given away to the Tamil Tiger rebels during the peace process, over which she said she had not been consulted, and that the ceasefire was illegal. Wickramasinghe has suggested that since he no longer holds the defense portfolio, he may ask Kumaratunga to also assume responsibility for the peace talks.

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8. Cyberterrorism and Information Warfare

WorldPay was subjected to a sustained Distributed Denial of Service (DDoS) attack that virtually shut down the service for two days.

Microsoft has partnered with the US Federal Bureau of Investigation, US Secret Service and Interpol to offer a reward for information leading to the creators of viruses. They have established a $5 million reward fund and are offering $250,000 for information on MSBlaster or Sobig.

An Israeli man has been arrested and charged with hacking into a Mossad (intelligence service) recruitment web site.

Brazilian police have arrested a 17-year-old man suspected of membership in the Cyber Lords international hacking group.

The Richmond Journal of Law and Technology has published an article by Timothy H. Skinner on "California's Database Breach Notification Security Act: The First State Breach Notification Law is Not Yet a Suitable Template for National Identity Theft Legislation"
http://law.richmond.edu/jolt/v10i1/article1.html

The US National Institute of Standards and Technology (NIST) has released a public draft of "Recommended Security Controls for Federal Information Systems". Public comments will be solicited for three months. http://csrc.nist.gov/publications/drafts.html

Secret missile tests in Israel were mistakenly shown on television when a communications satellite accidentally beamed a live, unencrypted feed.

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9. Finance

The Financial Action Task Force (FATF) has called for members to apply countermeasures to Burma, which has been identified as a non-cooperative country and continues to fail to establish anti-money laundering regulations. Suggested countermeasures include stringent identification clients, enhanced reporting, consideration of whether new branches should be established, and warning of potential money laundering transaction risks.

UN Sanctions will remain in place against Liberia pending further investigations, taking into account the fragility of the peace agreement and allegations of continued interference by former President Charles Taylor.

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10. Human Rights

British American Tobacco (BAT), the world's second largest cigarette manufacturer, has withdrawn from Burma in response to pressure from human rights activists.

Mexico's high court has ruled that no statue of limitations applies to political disappearances, thereby opening the way for prosecutions during the "dirty war" of the late 1960s.

The Organization for Security and Cooperation in Europe (OSCE) is concerned over continued use of torture in parts of Europe. Uzbekistan is of particular concern.
http://www.osce.org/odihr/meetings/2003/shdm/november/

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11. Law and Legal Issues

Abdelhaleem Ashqar, a professor and Palestinian activist charged in the US with terrorist financing, has been released on $1 million bail.
Osama Awadallah, a Jordanian student detained as a material witness in the US following the September 11 attacks, has lost his appeal.

The NY court upheld the ability of the government to detain individuals without criminal charges as long as they are potential terrorism witnesses.

Mohammad Hussain Batterywalla and Mohammad Rizwan Ladduwala were arrested in Bombay in connection with the August bombings that killed 52 and injured 150.

Abbas Boutrab has been arrested in Northern Ireland on suspicion of connections with Al Qaeda.

Ahmad al-Halabi, a translator at the US detention camp at Guantanamo Bay, faces a court martial on 20 charges connected with attempting to pass classified information to Syria.

Yong Ki Kwon, Khwaja Mahmood Hasan, and Donald Surratt pleaded guilty to conspiracy and illegal firearms in connection with an alleged "jihad network" to support Pakistani terrorist groups. They have now been sentenced to prison for terms of 11 years 6 months, 11 years 3 months, and 3 years 10 months, respectively.

Martin McGuinness, a Sinn Fein Member of Parliament from Northern Ireland, has testified in the Saville inquiry into the events of Bloody Sunday in 1972. In two days of testimony he insisted that the IRA did not fire on troops but refused to give details of IRA safe houses or locations where weapons had been stored. Read his testimony transcript at
http://www.bloody-sunday-inquiry.org.uk/index2.asp?p=3

Dennis O'Hare "Border Fox", a senior member of the Irish National Liberation Army (INLA), has been temporarily released from prison, where he was serving a 40-year sentence for kidnapping and assaulting John O'Grady.

The International Court of Justice (ICJ) has ruled that the 1980s US bombing of oil platforms was in breach of a 1955 treaty and could not be justified by self defense. However the court ruled against compensation since the platforms were not in use at the time of the attack. ICJ also ruled against the US counter-claim, finding that Iran had not breached the same treaty since none of the damaged ships were used in commerce between the two countries.
http://www.icj-cij.org/icjwww/ipresscom/ipress2003/ipresscom2003-38bis_op_20031106.htm

Adolfo Olaechea was extradited from Spain to Peru on charges of membership in the Maoist rebel Shining Path. A Peruvian tribunal reviewed the evidence and decided it was not sufficient to hold him, so he has been granted bail.

Howard Prosser, Jeffrey Chandler and Alfred Henderson were ordered freed in British court after their trial associated with Colombian money laundering collapsed due to deficiencies in the way Customs handled the investigation.

Mohammed Sagheer, one of the detainees held in Guantanamo Bay, is suing the governments of Pakistan and the US for damages of more than $10 million for the physical and mental torture he endured.

Franz Strambach, a pilot who hijacked a light plane in Germany and planned to kill himself was found mentally incompetent to stand trial.

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12. Transportation

The US has issued a warning of possible terrorist attacks using cargo planes.

German authorities have agreed that hijacked planes can be shot down as a last resort.

The US General Accounting Office (GAO) has published "Aviation Security: Efforts to Measure Effectiveness and Address Challenges" that addresses the effectiveness Transportation Security Agency initiatives. It points to the need for a risk management approach to establish priorities and looks at the challenges of implementing computer-assisted passenger prescreening, airport perimeter and access controls, and other measures. http://www.gao.gov/cgi-bin/getrpt?-GAO=04-232T

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13. Weapons of Mass Destruction

Twelve US post offices were temporarily closed following detection of possible anthrax contamination.

The US Bush Administration request for developing next generation nuclear weapons has been reduced in Congress to $7.5 million.

British Members of parliament have produced "The Scientific Response to Terrorism" report that cites concerns over investment into chemical, biological, radiological and nuclear threats, and calls for scientists to exercise caution when doing work or publishing information that could be of use to terrorists. The Wellcome Trust responded to the report by emphasizing the need for further research, self-regulated
http://www.publications.parliament.uk/pa/cm200203/cmselect/cmsctech/415/41502.htm
http://www/wellcome.ac.uk/en/1/awtprerel1103n308.html

In related coverage, New Scientist looks at the impact of the US Bioterrorism Preparedness and Response Act on biotech research. The US Department of Agriculture amended their regulations this week.
http://www.newscientist.com/news/news.jsp?id=ns99994345
http://www.aphis.usda.gov/lpa/news/2003/11/biselect_aphis.html

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14. Recently Published

Theodore Friend "Indonesian Destinies" Belknap/Harvard

Frank Lentricchia and Jody McAuliffe "Crimes of Art and Terror" University of Chicago

David Maraniss "They Marched Into Sunlight" War and Peace: Vietnam and America, October 1967" Simon and Schuster

Williamson Murray and Robert H Scales Jr, "The Iraq War: A Military History" Harvard University Press

Olga Oliker and Thomas Zayna, editors, "Faultlines of Conflict in Central Asia and the South Caucasus: Implications for the US Army" Rand

Anna Politkovskaya "A Small Corner of Hell: Dispatches from Chechnya" University of Chicago

Jean-Francois Revel "Anti-Americanism" Encounter

Li Zhensheng "Red-Color News Soldier: A Chinese Photographer's Odyssey Through the Cultural Revolution" Phaidon

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FEATURE ARTICLE: The US Money Laundering Strategy

The "Money Laundering and Financial Crimes Strategy Act" became US law in 1998. The legislation provided for two measures to combat money laundering. First to develop a national strategy and second to increase local, state and federal law enforcement efforts to combat it. This legislation was not driven by fear of terrorism, but rather by "the most serious drug consumption problem and drug-related social problems of any industrialised country in the world" * with between 60 and 80 percent of federal money laundering cases involving narcotics proceeds. **

The first report published under this law was issued in 1999. It was presented as complementing the National Drug Control Strategy, by offering the plan to stop the flow of drugs money. The strategy included a new initiative to designate what are now called High Risk Money Laundering and Related Financial Crimes Areas (HIFCAs)*** to concentrate law enforcement by geography or industry sector. It also required increased scrutiny of suspicious activities at financial institutions and casinos and called for greater pressure on countries to adopt AML controls where they were lacking.

Recommendations of the 1999 Strategy were brought into law by the Money Laundering Act of 1999. This law provided for funds from fraud, bribery, public funds misappropriation, arms trafficking, and violent crimes to be prosecuted under money laundering laws. It made interstate and international movement of funds in excess of $10,000 a crime. It expanded jurisdiction over foreign entities and provided for increased access to foreign business records (particularly focusing on black markets in Colombia).

The 2000 Strategy had over 60 action items. These included addressing risks related to organized crime after the fall of the Soviet Union; strengthening local, state and federal cooperation; and updating examinations to include money laundering. Most important were increasing the focus on international financial institutions and governments, and the identification of four HIFCAs. These new risk areas included private banking, payable through accounts, and wire transfers. Additional work was being done to address issues with electronic banking and foreign correspondence accounts; and guidelines for securities and insurance industries would be forthcoming.

Internationally, the 2000 Strategy paid particular attention to the black market exchange of funds by Colombian drug traffickers that were processing some half a billion dollars each year, and to alleged Russian Mafia funds of some $7 billion. In addition, foreign jurisdictions susceptible to financial crime would be targeted and provided training and technical assistance in exchange for implementing anti-money laundering measures.

The 2001 Strategy "recognizes that money laundering is an integral component of large-scale criminal enterprises. Drug trafficking, firearms smuggling, international bank and securities frauds, bribery, intellectual property theft, and other specified unlawful activity generate illicit proceeds that criminals must conceal.... The goal of the 2001 Strategy is to disrupt and dismantle large-scale money laundering organizations and prosecute money launderers to the fullest extent of the law. The Strategy concentrates law enforcement's resources in high intensity financial crime areas, and provides for the structure, training and supervision of specialized money laundering task forces within these areas that will ensure inter- and intra-agency coordination. The Strategy mandates our continued cooperation and involvement at the international level, and seeks to prevent money laundering through necessary regulatory controls" ****

The ink had scarcely dried when the attacks of September 11 occurred and all at once changed the focus from drugs-related money laundering to terrorist financing techniques. Congressional committee reports drew the connection to correspondent banking and private banking services and their use by crime syndicates, foreign dictators, and drugs traffickers to exploit legal loopholes. ***** Many of these loopholes were addressed in the subsequent USA Patriot Act.

The International Monetary Fund also weighed in with an evaluation of Anti-Money Laundering Practices that found the US was in compliance with 17 of 28 Financial Action Task Force (FATF) Recommendations, failing in its dealings with insurance companies, change bureaus and money transmitters. IMF found there wasn't substantial activity in these areas and that the US was taking steps to address remaining vulnerabilities. (These were addressed in the Patriot Act.)

The 2002 Strategy is the first to incorporate terrorist financing. It focuses on the use of charities and non-governmental organizations to raise money for terrorist groups; creation of an interagency group to target large-scale activities, including bulk cash smuggling and alternative remittances like hawala; addresses ways to implement Patriot Act provisions; and describes metrics to measure progress.

This is the latest Strategy to be published, and it has just been subject to review by the General Accounting Office whose report, "Combating Money Laundering: Opportunities Exist to Improve the National Strategy" finds that initially a coordinating strategy promoted interagency planning and communication. However over time, the combination of competing agency views and changes such as the September 11 attacks and establishment of the Department of Homeland Security has made it ineffective.

GAO identified a number of critical components lacking to develop and implement the Strategy. These include:
* Lack of leadership that can marshal resources and overcome inter-agency issues to build consensus
* Absence of clear priorities, including more priorities than could be accomplished, and not using threat and risk assessments to help establish priorities
* Accountability mechanisms such as performance measures have not been implemented

If Congress renews the requirement for an annual Strategy, GAO recommends these executive actions:
" * strengthen the leadership structure responsible for strategy development and implementation by establishing a mechanism that would have the ability to marshal resources to ensure that the strategy?s vision is achieved, resolve disputes between agencies, and ensure accountability for strategy implementation;
* link the strategy to periodic assessments of threats and risks, which would provide a basis for ensuring that clear priorities are established and focused on the areas of greatest need; and
* establish accountability mechanisms, such as (1) requiring the principal agencies to develop outcome-oriented performance measures that must be linked to the NMLS?s goals and objectives and that also must be reflected in the agencies? annual performance plans and (2) providing Congress with periodic reports on the strategy?s results." (GAO-03-813)

These recommendations, particularly the emphasis on leadership to achieve collaboration and overcome interagency rivalries are very familiar and reflect similar findings for intelligence operations and other aspects of counter-terrorism efforts. Given the lack of uniform communications regarding such critical areas as the war in Iraq, policies towards North Korea, and so forth, it is unclear from where such leadership would emerge.

Footnotes:

Further reading: