AUTHOR:
TerrorismCentral Editorial Staff
TITLE:
TerrorismCentral Newsletter - March 7, 2004
SOURCE:
TerrorismCentral, March 7, 2004
TEXT:
March came in like a lion with attacks in Iraq and Pakistan on the Shia Muslim holy day Ashura that killed more than 300 people. Many other cases of ethnic and religious violence, expanding questions about intelligence, and global work on weapons of mass destruction are also among the stories covered in the News Highlights. This week's Feature Article summarizes the key findings in the recently released Financial Action Task Force and Narcotics Control Strategy reports in "Money Laundering and Terrorist Financing: Lessons from the Past Year".
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:
Money Laundering and Terrorist Financing: Lessons from the Past Year
NEWS HIGHLIGHTS OF THE WEEK
The Muslim world was shocked by the coordinated slaughter of March 2, Ashura, one of the holiest days for Shia Muslims. In Iraq there were suicide and mortar attacks at the shrine of Imam Musa al-Khadam in Baghdad and two mosques in Karbala, killing more than 270 people. In Quetta, Pakistan, at least 40 were killed in a procession. These attacks were the lead story in the international press with the exception of the US, which led with primary election victories by John Kerry.
Australia has joined the UK and US in launching inquiries into intelligence leading up to the war in Iraq.
The 50th anniversary of the US hydrogen bomb test on Bikini atoll in the Marshall Islands was commemorated by peace activists in Japan and island survivors. See WMD, below.
The UN's annual review of peacekeeping missions shows the number of troops increasing while the number of missions is relatively stable. The peak of troop numbers was 1993 with up to 80,000, primarily in Bosnia, Cambodia and Somalia, and the rising trend may reach that level again. http://www.un.org/Docs/journal/asp/ws.asp?m=A/58/705 Another report shows that it is taking three times as long as targeted to recruit peacekeeping staff but that administrative changes could help streamline the process of dealing with the large numbers of applicants. http://www.un.org/Depts/oios
The UN's Counter-Terrorism Committee briefed the Security Council on revitalizing their work to adapt to the changing nature of the mission. http://www.un.org/News/Press/docs/2004/sc8020.p2.doc.htm
The role of the UN in counterterrorism will be covered in a forthcoming Feature Article.
Angola denied claims by Front for the Liberation of the Cabinda Enclave (FLEC) separatists they had killed 47 government soldiers. FLEC admitted two of its soldiers had been killed and four wounded during recent fighting.
Central African Republic has granted former Haitian President Jean Bertrand Aristide asylum.
Democratic Republic of Congo continues to experience factional fighting including a wave of massacres and mutilation in the Katanga Province that have resulted in estimates of up to 20,000 internally displaced people.
Eritrea and Ethiopia hale their first local military border talks in an occasion supported by the UN to help defuse border flashpoints and allow the border demarcation to proceed.
In Ivory Coast, at least 11 villagers were shot dead and 14 injured during an armed raid against a cocoa plantation village that is suspected to be part of ethnic violence surrounding immigrant farm workers. The country's peace process has been threatened with the former ruling party pulling out of the power-sharing government.
In Liberia, human rights monitors have begun a countrywide study of sexual violence during the civil war. During the 3-month project 22 monitors will interview a random sample of 4,000 people and give the results to the Truth and Reconciliation Commission that is being formed. The information will help identify the extent of the violence and the assistance needed to support victims, in addition to the disarmament and reintegration measures already being afforded the ex-combatants.
Libya has provided 12 binders of documents that declare the extent of its chemical weapons program. This is the declaration required by the Organization for the Prohibition of Chemical Weapons. The last of nuclear-related materials has been shipped to the US as part of the disarmament plan.
Nigeria governor George Akume of Benue State survived an attempted assassination but his friend, traveling with him in convoy, was killed. Gunmen targeted his car and robbery did not appear to be a motive, raising fears of increased political violence. In the Plateau State, two weeks of fighting between Muslims and Christians has left 62 dead, more injured, and at least 2,500 internally displaced.
In Somalia, the factional leaders that abandoned the ongoing peace talks have met among themselves. The parallel talks may lead to a parallel peace process or to some proposal of how to rejoin the peace talks in progress.
Sudan's government and the main rebel group Sudan People's Liberation Army/Movement (SPLA/M) have extended their ceasefire for another month while continuing negotiations towards a final peace deal. Rebels in the western Darfur region are not part of the agreement and the Sudanese government continues to fight with them, affecting large numbers of civilians. The conflict in Darfur and its exclusion from the current peace process threatens the entire process.
In southern Sudan, the government-backed Equatoria Defense Forces (EDF) has joined the SPLA/M to jointly fight Ugandan rebels of the Lord's Resistance Army (LRA). LRA maintains camps in southern Sudan from which they commit atrocities in both countries. For background refer to last week's Feature Article on LRA online at https://terrorismcentral.com/Newsletters/2004/022904.html#FeatureArticle
Colombia has reestablished the Search Bloc, an elite police force targeting drug cartels.
Haitian President Jean Bertrand Aristide has been granted asylum by the Central African Republic. Details surrounding his departure remain murky, and several countries, including South Africa, have asked for an investigation into claims that he was forced out. Aristide's departure did not end the violence, initiated by rival militias, street gangs and drug dealers. US troops have protected some key areas but are not undertaking policing duties. An international peacekeeping force is being put together.
Mexico and the US have agreed to ease immigration controls for short visits. This would exempt them from the US-VISIT fingerprinting and photographing requirements, as is already provided Canadians.
It has been a year since the US Department of Homeland Security was founded from the combination of 22 different agencies.
The US Pentagon has published plans for new military review panels that will examine the continued detention or release of detainees at Guantanamo Bay each year. http://www.dod.mil/news/mar2004/d20040303ar.pdf Seven Russian citizens held at Guantanamo have been returned to Russia where they are being detained for trial. Two Australians will be charged and tried by a US military commission.
The US Justice Department reports that chronic delays in availability of FBI fingerprints to border patrols present a serious vulnerability that cannot be resolved for at least four more years; the time it will take to develop automated fingerprint checks. http://www.usdoj.gov/oig/igwhnew1.htm
Venezuela's electoral council ruled that the opposition did not collect enough signatures to force a referendum on recalling President Chavez. They said they could only verify 1.8 million of the 3.4 million collected. Violent protests broke out in response, with at least eight deaths and dozens of injuries. Chavez has accused the US of supporting and funding his opponents and insists the US keep out of the conflict. Neighboring countries are concerned at the increased instability and its regional implications.
Australia's Parliamentary Joint committee released its report on "The Accuracy of Intelligence on Iraq's Weapons of Mass destruction". The report found that Australia's approach was more moderate and measured than other countries, but nonetheless there were no WMD. The Committee recommended that: "there should be an independent assessment of the performance of the intelligence agencies, conducted by an experienced former intelligence expert with full access to all the material, which will report to the National Security Committee of Cabinet and which, in the light of the matters raised by the consideration of the pre-war intelligence on Iraq, will recommend any changes that need to take place for the better functioning of the agencies". http://www.aph.gov.au/house/committee/pjcaad/WMD/report.htm
Philip Flood has been appointed to head the inquiry.
Australia's federal Attorney General will now be able to proscribe terrorist organizations. Previously this could only be done after the UN listed the groups.
Malaysia has detained six Indonesians as they entered the country on suspicion of their membership in Jemaah Islamiah.
In the Philippines confusion remains over the ferry fire in which more than a hundred passengers (of 700 on board) are still missing and likely dead. Abu Sayyaf claimed responsibility for an alleged suicide bombing. Authorities denied their claim as a propaganda ploy but later confirmed that Abu Sayyaf member Arnulfo Alvardo was on the ship manifest and among the missing. An investigation into the source of the fire indicated it was caused by an explosion in the boiler room or a defective gas tank with no indication of a bomb.
The US State Department claims that North Korea is involved in state-sponsored drugs trafficking. The allegation, contained in the "2003 International Narcotics Control Strategy Report" (see Feature Article), could add to tensions over the standoff in addressing North Korea's nuclear program. North Korea has previously denied connections to the drug trade but findings in the investigation last year of an interdicted ship may support the allegation.
Cyprus' Greek and Turkish leaders have been meeting to discuss the UN reunification plans. Turkish Cypriot leader Denktesh says he does not believe agreement will be reached before Cyprus joins the EU on May 1.
French authorities are on alert after receiving bomb threats claiming ten devices had been planted on railway tracks and were programmed to go off unless a ransom of more than $5 million is paid.
Greek elections have ended in an apparent victory for the conservative New Democracy party, ousting the socialist Pasok party after 11 years in power.
A previously unknown Chechen rebel group called Gazoton Murdash claimed responsibility for the Moscow subway bombing last month that killed 41 people. Russia's Federal Security Service claims that Chechen rebel warlord Ruslan Gelayev has been killed but forensic evidence has not yet confirmed this report, which has been made previously.
Seven Russian citizens held at the US Guantanamo Bay detention center have been returned to Moscow where they are being held in a pretrial detention center to face charges of participating in mercenary activities and a criminal group and illegal border crossings.
Serbia's parliament approved the new government, led by Prime Minister Vojislav Kostunica, two months after general elections. Kostunica has expressed the desire to partition Kosovo into ethnic cantons and opposes transfer of war crimes suspects to the international tribunal.
Turkey has agreed to export water from the Manbaget River to Israel.
British Prime Minister Blair's decision to go to war in Iraq came under renewed attack last week with the revelation, by Cabinet Secretary Sir Andrew Turnbull, that the government was advised by the Attorney General that a UN mandate was required to go to war. Without this mandate, the government believed the action was illegal. Mr. Blair has since given a major speech on the global terror threat, saying that: " This is not a time to err on the side of caution; not a time to weigh the risks to an infinite balance; not a time for the cynicism of the worldly wise who favour playing it long".
http://www.number-10.gov.uk/output/Page5470.asp
In Northern Ireland, review of the Good Friday Agreement has been overshadowed by discussions over continuing republican violence, reducing the possibility of reaching a settlement.
The week began in the Gaza Strip with an Israeli military helicopter attack that killed three members of Hamas. Hamas promised revenge. On Tuesday, prominent advisor to Arafat, Khalil al Zaben, was shot dead by unidentified gunmen in a suspected assassination reflecting internal divisions and the near collapse of the Palestinian Authority. On Wednesday, three more Hamas activists were killed by another Israeli missile fired by helicopter. On Saturday, two jeeps disguised as Israeli military vehicles drove up to the crossing point to Israel and exploded in an apparent suicide bombing executed prematurely. Six Palestinians were killed and about 20 wounded, including 12 policemen. An exchange of gunfire killed at least one militant. On Sunday an Israeli raid killed 15 people, including 10 militants and three boys under age 16, with nearly a hundred injuries. Gaza has been under complete closure, imposed by Israel in preparation for the Purim holiday weekend.
About 40 Iranians were killed in the Karbala and Baghdad bombings.
In Iraq, the nascent democratic process is at risk following the devastating attacks in Baghdad and Karbala that killed more than 270 people as they commemorated the holy day Ashura. Other attacks during the week targeted the infrastructure, including the main telephone exchange. Following last minute objections by Shias signing of the interim constitution was delayed. The episode revealed deep disagreements in the distribution of power but it is possible that an agreement will be reached in time for signing on Monday.
Israel's Central Bureau of Statistics report that new building in Jewish settlements on occupied land increased last year by 35 percent.
In the West Bank two members of Fatah's military wing were shot dead by Israel Defense Forces during an intelligence operation in Nablus that continued throughout Monday, ending with the death of another armed Palestinian. On Tuesday, an unarmed Palestinian was killed as he fled his home; Israel Defense Forces were searching for a terror suspect but the man they killed was not associated with any terrorist group. On Saturday a Palestinian policeman was shot dead by an Israeli patrol in Tulkarm as he returned home unarmed. The 11-year-old boy injured during anti-barrier demonstrations last week has died of his wounds. Israel imposed total closure in the West Bank on Thursday night in preparation for the Purim holiday weekend.
Afghan voters have reached the mid-way point in voter registration, with more than half of those eligible to vote enrolled in the first phase of the registration drive. Elections scheduled for this year face possible delays due to continuing attacks blamed on Islamic militants and lack of trained security forces.
In the state of Assam, India, police claim to have killed four separatist rebels and recovered a large arms cache.
In Indian-administered Kashmir, a militant with explosives strapped to his body in an apparent suicide attempt was killed in a gunfight in which at three police, a prisoner and a civilian were killed and at least 12 people were injured.
Nepal's Maoist rebels attacked security forces guarding a telephone tower. They destroyed the tower and killed 29 security forces. Ten rebels were also killed. Armed forces responded with a huge security operation directed against the rebels and have banned further strikes in essential economic sectors. A bus bomb in Katmandu went off after the last passenger had disembarked, injuring three people. Other bombings around the city were reported but there were no further casualties.
In Quetta, Pakistan, the holy day of Ashura was disrupted by a gun and grenade attack against a procession that killed at least 44 pilgrims and injured more than 150. Riots broke out following the attacks and a curfew was put in place, though it has now been eased. A suspect connected with the attacks has been arrested.
In Sri Lanka, nearly 300 monks representing the National Heritage Party are contesting next month's election on a platform of protecting Buddhism and building a righteous state without corruption. A Tamil Tiger commander in the east, Colonel Karuna, broke ranks with the main leadership that comes from the north of the country, but the government has rejected calls for a separate truce with him. The Tigers have dismissed Karuna, who says he had already left the movement. He has not given up control of some 6,000 troops, a situation that could complicate the already troubled peace process.
8. Cyberterrorism and Information Warfare
The number of new variants of Windows viruses is increasing in unprecedented numbers. For example, Netsky originally appeared on February 16. Since then at least seven variants have spread, notably the destructive Netsky.D. Growth is supported by using previously infected machines offering a backdoor to send out attacks and inspired by increased competition among virus writers, who are adding insults to their program code.
Don Van Natta Jr. and Desmond Butler of the New York Times describe how phone cards helped track al Qaeda http://www.iht.com/articles/508783.html
Three US Senators have introduced the SPYBLOCK Act that would make it illegal to install invasive software on a computer secretly, without consent, and required reasonable uninstall procedures for downloadable software.
http://burns.senate.gov/index.cfm?FuseAction=PressReleases.View&PressRelease_id=1077
Following revelations of bugging at the UN, here is a link to an interesting article on keeping conversations private http://news.bbc.co.uk/2/hi/uk_news/magazine/3522137.stm
Black Hat has issued calls for papers for the 2004 briefings:
http://www.blackhat.com/html/bh-link/briefings.html
See this week's Feature Article below for details of two major new reports on money laundering.
Expanded money laundering rules have come into effect in the UK, requiring accountants, lawyers, estate agents and casino operators to report on suspected money laundering activities. Next month the rules will include auctioneers, car dealers and jewelers.
The US Treasury today designated of three commercial farms and four businesses in Zimbabwe as Specially Designated Nationals (SDNs) of Zimbabwe, each controlled by one or more key members of the Mugabe government. The designation imposed economic sanctions on those named: the farms owned by Jonathan Moyo, Minister of Information; M & S Syndicate (Pvt) Ltd. controlled by SDN Emmerson Mnangagwa, Parliamentary Speaker, and four other prohibited officials; and Zimbabwe Defence, Swift Investments and Zvinavashe controlled by the retired General, Vitalis Zvinavashe.
http://www.treas.gov/press/releases/js1207.htm
The US has proposed a UN resolution to freeze the assets of former Liberian President Charles Taylor and his family.
The British Awaaz South Asia Watch foundation issued the report "In Bad Faith?" that claims UK-registered charities duped contributors into providing aid for disaster victims that was actually used to fund Hindu extremists associated with the Rashtriya Swayamsevak Sangh (RSS, Organization of National Volunteers). http://www.awaazsaw.org http://www.rss.org
In response to the US Human Rights report issued last week, China has issued its own evaluation of the US record in "Human Rights Record of the United States in 2003). http://news.xinhuanet.com/english./2004-03/01/content_1338758.htm
Human rights organization Rights and Democracy and the UN issued "Where are the Girls?" that evaluates the role of girls as child soldiers, both as victims and as perpetrators. http://www.ichrdd.ca/english/commdoc/prelease/girlslaunch.html
The Organization for Security and Cooperation in Europe (OSCE) issued a report on the outcomes of war crimes in 2002 that showed ethnic Serb defendants were disadvantaged during the judicial proceedings compared to Croats and that further reform is needed to make sure that justice is evenly administered. http://www.osce.org/
Muhamed Abid Afridi and Ilyas Ali pled guilty today in US federal court to the felony conspiracy to provide material support to terrorists and conspiracy to distribute heroin and hashish. Sentencing is scheduled for June 29.
Masoud Khan was Found guilty in US federal court of conspiracy to levy war against the US and conspiracy to contribute services to the Taliban. Two of his associates, Seifullah Chapman and Hammad Abdur Raheem were also convicted on conspiracy charges. Sentencing is scheduled for June. The three were part of an alleged "jihad network" in Virginia.
Mounir el Motassadeq, the only person convicted in connection with the September 11 attacks, will face a new trial. A German appeals court threw out the conviction and sent the case back to a lower court after finding that critical evidence had been withheld by US and German authorities.
Abdul Rauf Nassib and Sayyed Imam Sherif, suspected al Qaeda members, were arrested with about a dozen other militants by Yemeni security forces in the southern province Abyan.
Gael Roblin, Christian Georgeault and four others are on trial in France for allegedly carrying out a series of attacks from 1993-2000, one of which killed a waitress, for the separatist Breton Revolutionary Army.
Ahmad Roichan has been found guilty in Indonesian court for protecting fellow Islamic militants who carried out the 2002 Bali bombing and for possessing ammunition.
General Bogdan Subotic is being detained and questioned by NATO peacekeepers in Bosnia in connection with providing assistance to indicted war criminal Radovan Karadzic.
Muhammad al Zawahiri, brother of al Qaeda lieutenant Ayman al Zawahiri is in prison in Egypt awaiting a new trial. He had been sentenced in absentia to death for leading Islamic Jihad and the new trial is to ensure the public views it as fair.
The European Parliament amended civil aviation rules to exempt small airports and light- and mid-range jets from regulations originally drawn up after September 11.
The US Department of Homeland Security has begun discussions with other countries to see if US inspectors could be posted at international airports. This action would be similar to some rules in place for maritime shipments.
13. Weapons of Mass Destruction
March 1 was the 50th anniversary of the first hydrogen bomb test. It was detonated in Bikini, part of the Marshall Islands, and was up to 1,000 times more powerful than the atomic bombs of Hiroshima and Nagasaki. Peace activists in Japan and island survivors marked the anniversary of the event that killed one, injured dozens, and left a devastating legacy of radioactive contamination.
The National Security Archive has added new files related to "China, Pakistan, and the Bomb: The Declassified File on U.S. Policy, 1977-1997". http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB114/index.htm
Libya has the declaration of its weapons program as required by the Organization for the Prohibition of Chemical Weapons. The report includes declaration of a 20-ton stockpile of mustard gas.
The US Department of Health and Human Services announced a new initiative to improve biological security measures for dual-use research. The National Sciences Advisory Board for Biosecurity (NSBB) has been created to provide guidance on these issues. http://www.nih.gov/news/pr/mar2004/hhs-04.htm
Canadian Broadcasting Corporation, "Al Qaeda Family" http://www.cbc.ca/news/background/khadr/index.html
Dale L. June, Editor, "Protection, Security and Safeguards: Practical Approaches and Perspectives" CRC Press
James Mann, "Rise of the Vulcans: The History of Bush's War Cabinet" Viking
Beatriz Manz, "Paradise in Ashes: A Guatemalan Journey of Courage, Terror and Hope", University of California Press
William Shawcross, "Allies: The U.S., Britain, Europe and the War in Iraq" Public Affairs
Mostafa Hashem Sherif, "Protocols for Secure Electronic Commerce", 2nd edition, CRC Press
G Edward White, "Alger Hiss's Looking-Glass Wars: The Covert Life of a Soviet Spy" Oxford University Press
FEATURE ARTICLE: Money Laundering and Terrorist Financing: Lessons from the Past Year
In November last year Financial Action Task Force (FATF) experts in typologies met to share information on existing and new methods of terrorist financing and money laundering. Their report was recently published, as was the US Department of State's annual report on narcotics control (INCSR). This report describes anti-drug efforts in selected countries. Part II of this report includes more than 400 pages on money laundering and financial crimes.
INCSR summarizes the most frequent and long-running methods to launder money:
" Financial activity inconsistent with the stated purpose of the business;
* Financial activity not commensurate with stated occupation;
* Use of multiple accounts at a single bank for no apparent legitimate purpose;
* Importation of high dollar currency and traveler’s checks not commensurate with stated occupation;
* Significant and even dollar deposits to personal accounts over a short period;
* Structuring of deposits at multiple bank branches to avoid Bank Secrecy Act requirements;
* Refusal by any party conducting transactions to provide identification;
* Apparent use of personal account for business purposes;
* Abrupt change in account activity;
* Use of multiple personal and business accounts to collect and then funnel funds to a small number of foreign beneficiaries;
* Deposits followed within a short period of time by wire transfers of funds;
* Deposits of a combination of monetary instruments atypical of legitimate business activity.
* Movement of funds through countries that are on the FATF list of NCCTs."
In addition to these old favorites, FATF and INCSR identified a number of new trends. INCSR used Suspicious Activity Reports (SARs) to identify common trends and typologies, highlighting Alternative Remittance Systems, Illegal Money Transmitter Businesses, Securities and Futures Industries, Online or Internet Banking, Internet Gambling, and Trade-Based Money Laundering. FATF's experts focused on Wire Transfers, Non-Profit Organizations, Insurance, Politically Exposed Persons and Gatekeepers. Each are described briefly below, in alphabetical order.
Alternative Remittance Systems (ARS) include unlicensed or unregistered money transmitters (see below), hawala, the Black Market Peso Exchange (BMPE) and evasion of the International Emergency Economic Powers Act. BMPE is used by Colombian drug cartels to launder US drug dollars by converting them into Colombian pesos and then using the derived funds to purchase trade goods. INCSR describes several successful investigations in this area.
Gatekeepers are legal and financial experts that help facilitate financial operations. FATF reports this trend has increased, in part offering "the veneer or legitimacy". They cite suspicious actions such related to trust accounts and the ability of gatekeepers to use multiple layers to further separate the layers of money laundering. Real estate transactions and development of complex audit trails are favorites.
Insurance provides a number of money laundering vulnerabilities, as FATF reports, "because of the size of the industry, the easy availability and diversity of its products and the structure of its business". This includes the use of cross-border business, brokers and other intermediaries, and the problems that can arise because the policyholder is often different from the beneficiary. Money laundering indicators include a policyholder with more interest in cancellation terms than benefits, obtaining premiums from offshore and unregulated financial intermediaries, overpaying and asking refunds be sent to a third party, and frequent changes of beneficiary.
Internet Gambling sites have increased in substantial numbers. INCSR reported of offshore jurisdictions permitting activities that are illegal under US law and cited several cases of companies inside the US that aided US citizens to participate in these offshore gambling sites. A variety of charges, ranging from conspiracy to tax crimes and money laundering, were used to prosecute a number of such cases. FATF had reported on the use of Internet gambling for money laundering in the 2001 report. Under US law and FATF recommendations, casinos are now required to adopt money laundering programs.
Money Transmitter Businesses were identified in SARs most often by their aggregation of monetary instruments or cash from multiple sources. Most ARS are Money Services Businesses (MSBs) because they offer funds or value transfer services. FATF points out "Wire transfers are a fast and efficient way of moving funds thus they can also be used for terrorist purposes. Complex wire transfer schemes can be used to create a deliberately confusing audit trail to disguise the source and destination of funds destined for terrorist use. Currently, there are a limited number of indicators to help identify potential terrorist wire transfers -- primarily the source and destination of the funds and the names of the individuals involved when this information is available."
Non-Profit Organizations (NPOs) are cited by both INCSR and FATF for links to terrorist financing. FATF explains "They enjoy the public trust, have access to considerable sources of funds, and are often cash-intensive. Furthermore, some NPOs have a global presence that provides a framework for national and international operations and financial transactions, often exactly in or next to those areas that are most exposed to terrorist activity. Finally, depending on the country and legal form of the NPO, they are often subject to little or no regulation....." Typologies include the use of informal cash collection, the ability to transfer funds, and a means "to provide direct logistical support to terrorists or serve as a cover for their operations". FATF also provides specific categories of misuse to help further explain and distinguish among activities and uses of funds. This area requires much more work and will be a focus of attention in the future.
Online or Internet Banking showed an increase the reporting volume related to the addition of "computer intrusion" as a specific violation. In addition to this category, the most common violations were check fraud and money laundering/structuring/Bank Secrecy Act.
Politically Exposed Persons (PEPs) were first discussed in relation to private banking issues in 2001. Individuals in positions of public trust have been exposed to yet more. FATF observes "First, the sources for the funds that a PEP may try to launder are not only bribes, illegal kickbacks and other directly corruption-related proceeds but also may be embezzlement or outright theft of State assets or funds from political parties and unions, as well as tax fraud. Indeed in certain cases, a PEP may be directly implicated in other types of illegal activities such as organised crime or narcotics trafficking". They cite the frequent use of intermediaries, shell companies and offshore banking. Detection most often comes with a change of government but can also be detected through suspicious transactions.
Securities and Futures Industries were required to file SARs beginning January 2003. The most common types of activity reported were money laundering/structuring, check fraud, identity theft, embezzlement/theft, and significant transactions without economic purpose. Nearly half of these activities were conducted through cash or cash equivalents.
Trade-Based Money Laundering is cited by INCSR as a new method to use "international commerce to launder, earn, move, and integrate funds and assets". Techniques include false or double invoicing, drawback (customs refunds) and carousel fraud (diversion of goods). They say that "These simple schemes become more complex when the misuse of trade also involves traditional and entrenched ethnic-based trading networks, indigenous business practices, smuggling, corruption, narcotics trafficking, the need for foreign exchange, capital flight, terrorist financing and tax avoidance." The tangled interactions make law enforcement difficult. INCSR reports on a number of examples in which these techniques have been used to support terrorist financing.
Wire Transfers see Money Transmitter Businesses above
In addition to more details on the typologies for each of these methods of money laundering and terrorist financing, both reports offer excellent detail on the methodology and descriptions of actual cases involved. INCSR provided names law enforcement actions. It also provides excellent details of multilateral activities and an extensive set of country reports.
The full reports are available at the following web locations:
Financial Action Task Force on Money Laundering "Report on Money Laundering Typologies 2003-2004"
http://www.fatf-gafi.orgUS Department of State "2003 International Narcotics Control Strategy Report"
http://www.state.gov/g/inl/rls/nrcrpt/2003/
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