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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:
FATF Annual Report

NEWS HIGHLIGHTS OF THE WEEK

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1. World

North Korean Foreign Minister Paek Nam-Sun and US Secretary of State Colin Powell met on the sidelines of the Association of Southeast Asian Nations (ASEAN) security forum. This was the first face-to-face cabinet-level contact since 2002 and both indicated that some progress had been made.

The World Customs Organization has adopted The Johannesburg Convention to facilitate mutual administrative assistance among members to assist in combating terrorism and other transnational crimes, revenue fraud and border security. http://www.wcoomd.org/ie/En/en.html

The annual meeting of the UN Economic and Social Council called for supporting and strengthening local markets by investing in infrastructure and economic development rather than subsidies and short-term social needs. They suggested that least developed countries use regional integration to help minimize their disadvantages. http://www.un.org/esa/coordination/ecosoc/document.htm

The US has informed the UN that, following its decision not to proceed with a Security Council resolution to extend its immunity from prosecution by the International Criminal Court, it will withdraw some US personnel from UN peacekeeping operations. http://www.un.org/apps/news/story.asp?NewsID=11229&Cr=peacekeeping&Cr1=

The UN has designated the following new World Heritage sites: Koguryo complex, North Korea; Koguryo complex, China; Ilulissat Icefjord, Greenland; Tropical Rainforest of Sumatra, Indonesia; Cape Floral Region, South Africa; Wrangel Island Reserve, Russia; Pitons Area, St Lucia; Tomb of Askia, Mali ; Mazagan/ El Jadida, Morocco; and Koutammakou, Togo. http://whc.unesco.org/

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2. Africa

The African Development Bank held its first Water Week with the theme "Building Partnerships for Water in Africa". They reviewed Millennium Development Goals challenges and responses, water supply and sanitation, financing water infrastructure, and water resources management. A $14.7 billion funding campaign has been launched.
http://www.afdb.org/water/adb_water_week_summary_report_03jul2004e.doc

The African Union held its third summit. http://www.africa-union.org/

Algeria's Salafist Group for Preaching and Combat (GSPC) took responsibility for a car bomb explosion last week at a power station near Algiers that injured 11 people.

In Democratic Republic of Congo, it has been one year since the power-sharing government meant to end 5-years of war came into being. The rebels have not yet been integrated into the army and recent rebel operations, including briefly taking control of Bukavu, combined with tens of thousands of refugees and border insecurity, lead to fears the country could be further destabilized and the peace deal unravel. Rwanda has reopened the border, which should help ease tensions.

Ivory Coast's government and the UN signed an agreement for a one-year UN peacekeeping operation of nearly 7,000 personnel to monitor the ceasefire agreement. Rebels continue to boycott talks with the government and opposition parties.

Kenya's new constitution has been delayed again, leading to large public protests in favor of reform that were met with tear gas.

Liberians United for Reconciliation and Democracy (LURD) held a ceremony to turn the town of Tubmanburg and other territories under rebel control to the transitional government.

Nigeria and Sao Tome and Principe have signed a declaration of transparency and governance in which they agreed to full public disclosure of all oil company activities in the Gulf of Guinea.

The Sudanese government and the UN issued a joint communique in which:
"The Government committed to:
- Immediately disarm the Janjawid militias and other 'armed outlaw groups'.
- Ensure that no militias are present in areas surrounding camps for displaced.
- Deploy a "strong, credible and respected" police force in all IDP areas and others 'susceptible to attacks'.
- Ensure that all movement of IDPs to their homes is done in a 'truly voluntary manner'.
- Implement a "moratorium on restrictions" for all humanitarian work and remove 'any other obstacles to humanitarian work' including a suspension of visa restrictions for all humanitarian workers, free movement of aid workers, immediate temporary NGO registration and suspension of all restrictions on the importation of equipment and vehicles.
- Undertake "concrete measures" to end impunity and investigate all cases of ceasefire violations and all the deployment of human rights monitors.
- Establish "a fair system" to allow abused women to bring charges against alleged perpetrators.
- Resume political talks on Darfur in "the shortest time possible".
The UN committed to:
- Help alleviate the humanitarian needs of the affected populations through its 90-day Humanitarian Action Plan.
- To assist in the quick deployment of African Union ceasefire monitors.
- To continue to help to mediate talks on southern Sudan and Darfur and to assist in the implementation of agreements reached on both areas.
Both parties committed to:
- Form a Joint Implementation Mechanism for the agreement which will meet regularly to discuss progress made." http://www.irinnews.org/report.asp?ReportID=41990
The agreement followed visits by UN Secretary General Annan and US Secretary of State Powell, accompanied by the threat of additional political measures including sanctions. However, the Sudanese government has a poor record of fulfilling such agreements.

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3. Americas

In Argentina unemployed protestors have been demonstrating, including riots and many confrontations with police. After demonstrators began targeting multinational corporations, the police cracked down against the escalating violence. At least one labor leader has been killed.

Colombia has begun talks with the paramilitary United Self-Defense Forces of Colombia (AUC). The talks were almost derailed after AUC leader Tovar Pupo ("Jorge 40") was been stripped of immunity from arrest in the safe zone established for the peace talks, effectively banning him from the process, in response to the abduction of a senator and eight family and household members. At the last minute, the paramilitaries released the senator and the talks began. Since the AUC is so closely allied with the drugs trade and do not feel they should face any time in prison, no one is optimistic that there will be a positive outcome.

The Mexican Supreme Court has ruled that disappearances during the "dirty war" can be tried even if they are decades old and before the new penal code was in effect.

The US Supreme Court has ruled that detainees and "enemy combatants" held by the US are entitled to challenge their detention in court. They reviewed three cases that included foreign detainees at Guantanamo Bay and US detainees captured both abroad and in the US. Already further legal processes are underway, including providing access to attorneys, beginning military tribunal hearings, and filing cases challenging continued detention. For links to the cases, see Human Rights below.

US homeland security officials warned law enforcement officials to be aware of several unusual new weapons including booby-trapped beer coolers, inner tubes, and other floating objects that could serve as improvised explosive devices or mines. The Federal Emergency Management Agency launched an online course to help first responders understand how to use the new National Incident Management System. http://www.dhs.gov/dhspublic/display?content=3799

In New York City, rebuilding has begun at the site of the destroyed twin towers. The National Institute of Standards and Technology (NIST) released a Progress Report on the federal building and fire safety investigations of the World Trade Center disaster. http://www.nist.gov/public_affairs/releases/wtc_interimfindings.htm

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4. Asia Pacific

South East Asia has a new anti-terrorism training center for police forces across the region. It has been opened in Indonesia, part of the Jakarta Center for Law Enforcement Cooperation (JCLEC) that was set up in the aftermath of the Bali bombing. http://www.thejakartapost.com/detailnational.asp?fileid=20040704.A02&irec=1

The Association of South East Asian Nations (ASEAN) meeting last week dropped plans to put pressure on Burma to release opposition leader Aung San Suu Kyi and lift restrictions on the National League for Democracy (NLD), the pro-democracy party she leads. International campaigns and the International Labor Organization consideration of sanctions last month have had no impact on foreign companies doing business in Burma. A study by the International Confederation of Free Trade Unions (ICFTU) finds the number has risen by nearly ten percent, to 400. ICFTU expressed particular concern over plans for Daewoo International and Korea Gas to exploit new gas fields. Such operations in the past have been accompanied by serious human rights abuses. The Burmese government has accused the banned Burmese trade union (Federation of Trade Unions - Burma [FTUB]) of terrorism and blamed them for explosives detonated last week. Australian Foreign Minister Downer warned that without breakthrough political reforms, the situation in Burma could lead to a regional diplomatic crisis.
http://www.icftu.org/displaydocument.asp?Index=991220263&Language=EN
http://www.icftu.org/displaydocument.asp?Index=991220274&Language=EN
http://www.aseansec.org/

In Hong Kong, a year after massive demonstrations protested against proposed security laws that were later withdrawn, a crowd of a quarter million took to the streets again in a peaceful rally to ask for the right to direct elections for the chief executive and legislature. Although half the size of last year, it is still large enough to get attention. China had intervened in Hong Kong to stop calls to elect the next chief executive in 2007 and said democracy in Hong Kong must proceed slowly.

Indonesia and East Timor have signed an interim agreement to delineate their border and will start talks on the marine border.

Indonesian police have detained six suspected militants found in a raid on the house. They are suspected of involvement in the Bali and against the Marriott Hotel bombings. Several key suspects are still being sought. The Indonesian Environment Minister has proposed imposing heavier punishments against people guilty of illegal logging or starting forest fires, ranging from 12 years prison to the penalty of death. This follows the problem of haze blanketing the entire region after wild fires were set on Sumatra. In the Indonesian presidential election, the former military leaders are up front in the polls, led by Susiol Bambang Yudhoyono.

The results of Mongolia's elections are not yet announced pending a likely recount or revote in at least two areas with significant irregularities. Preliminary results show a large increase in seats for the opposition Motherland Democratic Coalition that could be in a position to form a coalition government replacing the ruling former communist Mongolian People's Revolutionary Party (MPRP).

Philippines police have arrested at least four suspected Jemaah Islamiah militants found with ammonium nitrate, explosives and bomb making materials. Police believe they were plotting an attack against President Arroyo's inauguration ceremony.

In southern Thailand, teachers went on strike to demand improved security. Islamic militants have targeted teachers and burned down dozens of schools. This protest was set off when a pair of gunmen shot dead a teacher and student.

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5. Europe

Bosnia-Herzegovina's Serb leadership was purged last week when the High Representative with overall civilian administrative authority, Paddy Ashdown, dismissed 60 officials and subjected them to travel bans and froze bank accounts because they were accused of sheltering most wanted war crimes suspect Radovan Karadzic. Those dismissed included the speaker of parliament, Dragan Kalinic, who is also accused of genocide. http://www.ohr.int/

In Georgia, three special services officers were detained in the breakaway region of South Ossetia last weekend. President Saakashvili refused to participate in talks with South Ossetia until the detainees are released and has said he expects to restore Georgian control there. South Ossetia refused to admit a Georgian official trying to retrieve the officers, whom they accuse of spying.

Greek authorities have begun deployment of security forces ahead of the Olympic games that will begin in mid-August. An initial force of 10,000 is protecting sites associated with the games but the full force of 70,000 will not be in place to close off the area until shortly before the events begin. Construction is still underway at many locations, raising concern whether security can actually be assured. As part of the security efforts, closed-circuit cameras were installed and officials are considering whether to keep the machines in place after the games.

Luxembourg and Montenegro are featured in Financial Times Special Reports. Coverage of Luxembourg includes information on maintaining bank secrecy laws, while the Montenegro report discusses efforts to gain independence. http://news.ft.com/reports/luxembourg2004
http://news.ft.com/servlet/ContentServer?pagename=FT.com/Page/SurveyReport&c=Page&cid=1087373239359&p=1016719495698

Russian authorities investigating the raids on Ingushetia last week that killed more than 80 people claim they killed senior militant leader Magomed Yevloyev ("Magas") but new information suggests it was a different militant, not a senior figure but possibly his relative. A cache of weapons and ammunition stolen last week has been recovered. In Grozny, Chechnya, an explosion at a cafe near a military checkpoint killed the owner and wounded five.

Serbians elected Boris Tadic, the pro-western candidate, as their new President. Three prior ballots were invalid because of a law that required a minimum 50 percent turnout. That law has been abolished; turnout in this election was 49 percent.

Spanish investigators looking into the March 11 train bombings found evidence of plans against more targets, including a hotel, a school, a recreation center, and a suburb associated with Jewish, British, and other foreign interests.

In eastern Turkey, a car bomb attacked governor Hikmet Tan's convoy, killing five and injuring 24. Tan was uninjured. The attack was blamed on Kurdish rebels.

The UK Parliament's Intelligence and Security Committee's annual report finds that counterterrorism efforts are diverting resources from other intelligence efforts, questions the ability to cope with unconventional weapons attacks, and finds the government report on the weapons dossier fiasco unsatisfactory.
http://www.cabinet-office.gov.uk/news/2004/040629_intelligence.asp

In Northern Ireland, the annual Orange Order parade in Drumcree was peaceful, with reduced security measures in place.

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6. Middle East

In Bahrain, more than 500 non-emergency US defense employees and their families were evacuated under a mandatory Pentagon order that followed news of planned attacks.

In Gaza, on Monday, militants launched rocket attacks against Sderot, an Israeli town near Gaza. After firing hundreds of Qassam rockets, Hamas militants claimed their first fatalities, killing a 3-year old boy outside a nursery school and a man, while injuring 11. A gunfight between Israeli troops and Palestinian militants led to the death of a 9-year old boy, shot dead by a tank's machine gun as he played football. On Friday, Israeli troops killed three Palestinians in three separate incidents. One in a refugee camp raid, one who was a farmer, and a scrap dealer shot while picking through rubble.

Iraqi eyes this week were turned to the war crimes trial of Saddam Hussein. After his transfer from US to Iraqi custody he appeared before a judge to be charged. Hussein, who had no legal representation, said he is still president of Iraq and denied the authority of the court. Little is likely to happen with the case while evidence is being gathered and pending establishment of a permanent government. An edited transcript can be found at http://news.independent.co.uk/world/middle_east/story.jsp?story=537293

Meanwhile, violence in Iraq persists, including bombings, gunfights, mortar attacks and kidnapping with decapitation, although the discovery of a large quantity of bomb-making equipment, weapons and ammunition at several locations may provide some interruption to insurgent operations. Note the report on the millions of small arms in Iraq (see Weapons of Mass Destruction below). Also note an article in the New England Journal of Medicine on returning US troops. Serious post-traumatic stress syndrome (PTSD) affected nearly one in five soldiers, compared to about 15 percent in Vietnam. Furthermore, they face serious obstacles to treatment. http://content.nejm.org/cgi/content/full/351/1/13

Israel's High Court has ordered the West Bank barrier around Jerusalem must be changed to reduce hardship for Palestinians even if it is less secure. The ruling affects a 19-mile section in the northwest that as previously designed would have disrupted 45,0000 people in ten villages. Another section of the fence was subjected to a restraining order.

Qatar has sentenced two Russian intelligence officers to life in prison for assassinating Chechen rebel leader Zelimkhan Yandarbiyev.

Saudi Arabia's militant amnesty saw an important success with the surrender of Othman al-Amri, 21st of 26 on their most-wanted list. Two al Qaeda suspects and a member of the security forces were killed in a shootout. For a time it was believed that al-Qaeda ideologue and cleric Abdullah al-Rashud, was one of those killed but it is now believed to be a different militant, Fahd bin Ali bin Dakhil el-Qaelan.

A Syrian security court sentenced seven people to jail terms for demanding Kurdish rights.

In the West Bank, Palestinian militants with the al-Aqsa Martyrs' Brigades publicly executed a man accused of collaborating with Israel and abusing his daughters.

Yemen government forces are battling supporters of rebel cleric Hussein al-Houthi have killed more than a hundred of his followers in the last two weeks. The siege continues.

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7. South Asia

Afghanistan's elections will be delayed again. Election law required a date be announced 90 days in advance and discussions around setting this date are underway. Meanwhile, there have been increases in explosions, children abducted for ransom, attacks on election workers and (good news) the number of child soldiers being demobilized. It is also reported that the flood of opium coming out of Afghanistan has depressed prices by some 65 percent, helping remove the financial incentive for growing that crop in preference to others.

India's Andhra Pradesh state names two negotiators to coordinate talks with the Maoist People's War Group. In Bihar state, eight low caste people were shot dead and three wounded in an inter-caste revenge attack.

India and Pakistan have agreed on a series of measures to move towards a final peaceful settlement including Kashmir. These measures include advance notification of missile flight tests, restoration of High Commission staff levels, reopening of consulates, freeing fishermen held prisoner and early release of civilian prisoners.

In Indian-administered Kashmir, police raided a Lashkar-e-Toiba cell, killing two and arresting 20. They are suspected of planning a suicide attack against the Bombay stock exchange. In Srinigar, a bomb hidden in a handcart exploded, killing two and injuring 21.

Pokhara, Nepal's Mayor Gurung was shot dead by three Maoist rebels in apparent revenge for the killing of six rebels. His driver and bodyguard were injured.

Pakistan has been accepted as a member of the ASEAN Regional Forum.

Sri Lankan President Kumaratunga denied that the government helped breakaway Tamil Tiger Colonel Karuna, although a government minister had previously admitted the army had given him assistance. The Tigers say they do not trust the government and Norwegian mediators have been unable to break through the impasse and resume negotiations.

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8. Cyberterrorism and Information Warfare

A US appeals court has ruled that email is not subject to the protection of wiretapping laws since email is stored in a machine and that therefore a company providing email services can copy, read, and analyze any message it handles. The decision will be appealed, but as it stands provides a dramatically different reading of privacy rights than that assumed by email users. The case rose from an online seller of used books that intercepted email to analyze and exploit the content of messages exchanged with Amazon. Large email services, including AOL, Microsoft, Earthlink, Yahoo, Comcast etc affirm they do not read email or disclose personal information except when required by law enforcement.
http://www.ca1.uscourts.gov/cgi-bin/getopn.pl?OPINION=03-1383.01A

The Internet Storm Center issued a warming over a new flaw that is delivered to pop-up windows (img1big.gif) when users enter a financial site. http://isc.sans.org/presentations/banking_malware.pdf

Microsoft has released a Windows update that shuts off controls that allow web sites to put files on a user's hard drive. This helps close the vulnerability identified last week (download.ject worm) in which an affected web server can infect a machine when the user simply visits a web page. This reflects changes recommended by CERT. The software change can affect the functionality. It only affects Microsoft Windows machines and Internet Explorer. It is safer to switch to a different browser.
http://www.microsoft.com/presspass/press/2004/jul04/07-02configchange.asp

Barclays Bank of Zimbabwe reported computer hard drives containing classified information were stolen. Police are investigating.

The first data privacy law in the US, California's Online Privacy Act of 2003, came into effect on July 1. It requires that any online business that collects personally identifiable information from state residents must inform consumers regarding data capture and usage.

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9. Finance

For details on the FATF Annual meeting and report see this week's Feature Article, below.

The European Commission has proposed measures to further strengthen measures against money laundering and terrorist financing. It expands the definition of money laundering to include terrorist financing and other serious crimes, extends anti-money laundering requirements to additional groups, requires customer verification procedures, standardizes it across all member states, and ensures common application of FATF rules. http://europa.eu.int/comm/internal_market/en/company/financialcrime/index.htm

The US Federal Deposit Insurance Corporation (FDIC) has begun a new journal, "Supervisory Insights" that " provides a forum for discussing how bank regulation and policy are put into practice in the field, sharing best practices, and communicating about the emerging issues that bank supervisors are facing". The first issue includes an article on the Patriot Act and changes in the Bank Secrecy Act, and a range of other topics. http://www.fdic.gov/regulations/examinations/supervisory/insights/index.html

Hezbollah has denied claims by US diplomats that it is extorting money from Lebanese merchants working in the West African diamond trade. There are other reports of links between al Qaeda and smuggling Sierra Leone diamonds through Liberia. http://www.haaretz.com/hasen/spages/445455.html
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373362718 (subscription)
http://wwwc.house.gov/international_relations/108/far040104.htm
http://www.fbi.gov/terrorinfo/siddiqui.htm

Standard Chartered is the first foreign bank offering Islamic banking products in Pakistan.

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10. Human Rights

A report from the British Home Office reveals serious racial and ethnic inequalities in the criminal justice system since the Terrorism Act 2000 came into force. For example, in 2002-3, stops and searches under section 44 of TACT for Asians rose by 302 per cent from 744 to 2,989. Stops and Searches under PACE of black people went up by 38 per cent, Asians by 36 per cent, "other" ethnic backgrounds by 47 per cent and white by 17 per cent. Overall, black people are six times more likely to be searched by police than white, and there are almost twice as many searches of Asian people than white. http://www.homeoffice.gov.uk/n_story.asp?item_id=991

The British Office of Surveillance Commissioners released their first report, documenting 6,398 cases of directed surveillance by public authorities and 26,986 by law enforcement agencies as well as 2483 cases of property interference by all agencies and 447 cases of intrusive surveillance by all agencies. They found that several public bodies were not meeting required standards. This is the first such report not provided by law enforcement agencies. http://www.surveillancecommissioners.gov.uk/

The US Supreme Court ruled that foreign victims of human rights violations anywhere in the world can file suit in US court. The case did not cover the use of the Alien Tort Statute to cover cases brought against corporations, but several such cases are in lower courts at this time. http://www.supremecourtus.gov/opinions/03pdf/03-339.pdf

The Supreme Court detainee decisions (described in Americas above) are:
Rumsfield v. Padilla http://www.supremecourtus.gov/opinions/03pdf/03-1027.pdf
Rasul v. Bush http://www.supremecourtus.gov/opinions/03pdf/03-334.pdf
Hamdi v Rumsfeld http://www.supremecourtus.gov/opinions/03pdf/03-6696.pdf

Azerbaijan police raided Juma mosque in the capital, Baku, expelling some thirty worshipers. Its imam, leading human rights campaigner and former political prisoner, Ilgar Ibrahimoglu, was replaced by a state-sanctioned cleric, who held afternoon services.

Louise Arbour, a former Canadian judge, is the new UN High Commissioner for Human Rights.

July 20 marks the 40th anniversary of US President Johnson signing the Civil Rights Act into law. http://usinfo.state.gov/usa/infousa/facts/democrac/39.htm

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11. Law and Legal Issues

Milan Babic, a former wartime Croatian Serb leader, pleaded guilty to being a co-perpetrator in a joint criminal enterprise to forcibly and permanently remove Croats and other non-Serbs while he was president of the self-declared Republic of Serbian Krajina (RSK) 1991-1992. He has been sentenced to 13 years in prison by the UN war crimes tribunal for the former Yugoslavia. http://www.un.org/icty/latest/index.htm

Cesare Battisti, a former member of an Italian radical leftist group Armed Proletarians for Communism who was later convicted in absentia of four murders had been granted asylum in France but an appeals court has now ruled he should be extradited back to Italy. During his asylum he became a successful crime writer and he is likely to appeal the extradition.

The Court of Appeal in Belfast has ruled that the Real IRA is an illegal terrorist organization, overturning a judgment that since it was not listed under section 3 of the Terrorism Act 2000 it was not a prescribed organization. This judgment does not affect the acquittal of four men cleared under the prior decision.

Sayed Mohammed Hanif, Fahimida Hanif, Arshat Ansari, Mohammed Hussain ("Batterywalla") and Mohammed Rizwan ("Ladduwala") have been charged in special court in Bombay with causing the Bombay explosions last August and with conspiring to blow up a bus. Farheen Hanif was discharged through insufficient evidence.

Steven Kurtz, a University at Buffalo art professor, and Robert Ferrell, chair of the human genetics department at the University of Pittsburgh, have been indicted on mail fraud and wire fraud charges connected with the use of biological materials in works of art. They had originally been investigated for bioterrorism. http://www.buffalonews.com/editorial/20040630/1041908.asp

Vladimiro Montesinos, former head of intelligence under Peru's ex-president Fujimori, has been sentenced to 15 years in jail for embezzlement, conspiracy and corruption. This is the fifth guilty verdict since trials began in 2002 and he will still be tried on dozens more charges.

Donald Mullan, Sean Dillion, Kevin Murphy, and Brendan O'Connor were acquitted in Northern Ireland Court of conspiracy to murder and having a rocket launcher in February 2002. The judge had previously acquitted them of membership in the Real IRA by ruling that under current legislation it was not an illegal organization; this ruling is being disputed.

Mohammed Oumer of the Oromo Liberation Front (OLF) was sentenced by Ethiopia's High Court to 12 years prison on weapons and terrorist charges.

Lino Oviedo, former head of the Paraguayan army, has been taken into custody in connection with the assassination of Vice-President Luis Maria Argana and leading a failed coup in 1996.

David Tomkins told US federal court in Miami that he was a mercenary paid by a rival drug cartel to assassinate Pablo Escobar, to which end he attempted to pub a plane, bombs and a helicopter to bomb Escobar's prison. He will be sentenced in September.

Issa Hassan Sesay, Morris Kallon, and Augustine Gbao, all alleged senior members of the Revolutionary United Front (RUF) will be on trial beginning July 5 in the Special Court for Sierra Leone (SCSL). They face an 18-count indictment that includes terrorizing the civilian population; unlawful killings; sexual and physical violence; use of child soldiers; abduction and forced labor; looting; burning; attacks on UN peacekeepers and, forced marriage.

Heru Setianto, Muhammad Solihin and Suprapto were convicted in Indonesian court of helping carry out the Marriott Hotel bombings and sentenced to seven years in prison.

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12. Transportation

The Australian Department of Foreign Affairs issued a study, "Combating Terrorism in the Transport Sector: Economic Costs and Benefits", on the enormous potential costs posed by terrorist threats against the transportation system, stressing security measures to mitigate the risks. http://www.dfat.gov.au/publications/combating_terrorism/

Threats against air travel continue to disrupt the industry. East Africa finds the combination of reduced traffic because of travel advisories with the added cost of security investments is causing serious financial problems. Air India increased security after receiving intelligence of threats against flights between India and the Gulf. Flights between Israel and Turkey were halted for several days until the two countries agreed on new security arrangements. In Istanbul, a device on a Turkish Airlines plan exploded on the ground after passengers had left and injured three cleaners.

US customs officials issued an inspectors' bulletin suggesting that Pakistanis arriving at the US should be inspected for injuries such as rope burns, unusual bruises, or scars, that they could have gotten from a terrorist training camp.

AFP reports that Adnan Guishar el Shukrijumah, wanted by the US Federal Bureau of Investigation for alleged al Qaeda connections, was seen in Honduras, where the Security Minister suggested he was planning an attack against the Panama Canal.
http://dailytelegraph.news.com.au/story.jsp?sectionid=1274&storyid=1560144
http://www.hardbeatnews.com/details1442.htm

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13. Weapons of Mass Destruction

The 2004 Carnegie International Non-Proliferation Conference included sessions covering control of deadly pathogens; the situations in Iran, North Korea and Russia; preventing nuclear terrorism and the US nuclear posture. For information on the conference and the new report, "Universal Compliance: A Strategy for Nuclear Security" visit http://www.ceip.org/conference

The "Small Arms Survey 2004: Rights at Risk" explores the impact of arms exports to areas of conflict, the role of weapons in global violence and crime, and the implementation of human rights standards by police forces worldwide". Key findings include:
* Colombia has the greatest incidence of gun violence in the world, followed closely by South Africa.
* Each year at least 200,000 killed around the world by small arms in non-conflict situation.
* States with poor human rights records do not encounter significant obstacles in obtaining small arms and light weapons, that are routinely used to facilitate or commit abuses
* Lack of transparency in the gun trade is the greatest obstacle in controlling the threat.
The report features a wealth of specific details. In the case of Iraq, "Millions of firearms suddenly flooded a chaotic social landscape" when Saddam Hussein's army fled, leaving behind their arms. Now at least seven million are in the hands of the Iraqi people, and there no one knows what proportion of them are military-style, but the presence of such large numbers of weapons could contribute to regional instability for many years. The report also features details on Man Portable Air Defense Systems (MANPADS). There are some 100,000 in circulation, and "At least 13 non-state groups, some of which have been identified as terrorist organizations, are known to possess MANPADS, with a further 14 groups reported to possess them". http://www.smallarmssurvey.org/publications/yb_2004.htm

The US Department of Defense announced expansion of the anthrax and smallpox immunization program for defense personnel based on the continuing threat and prior program success. http://www.defenselink.mil/transcripts/2004/tr20040630-0948.html

Ahead of the International AIDS Conference (http://www.aids2004.org/) next week, several important research findings were released. The Lancet Infectious Diseases (http://infecthelancet.com) July issue is devoted to HIV/AIDS, including reviews of current treatment and vaccine developments, including the finding that generic drugs are as safe and effective as the more expensive branded versions. The New England Journal of Medicine (http://www.nejm.org) features an important finding that multivitamin supplements delay HIV progression and provide "an effective, low-cost means of delaying the initiation of antiretroviral therapy in HIV-infected women". NEJM also has an article on "Health Care Reform and the Crisis of HIV and AIDS in South Africa". The Board of the Global Fund to Fight AIDS, Tuberculosis and Malaria met and approved additional grants that continue to present a small fraction of the amount promised and an even smaller percentage of that necessary to combat the pandemic. The World Bank (http://www1.worldbank.org/hiv_aids/) has warned India and Russia that without urgent action, their epidemic could rival that of Africa. For instance, in Russia the GDP could decrease by as much as four percent by 2010 as the result of HIV/AIDS.

The US Centers for Disease Control and Prevention report on a case in which three people died from rabies after receiving organ transplants from an infected donor. http://www.cdc.gov/mmwr/preview/mmwrhtml/mm53d701a1.htm

Philippine researchers have found that rice yields drop by ten percent for each degree of increased temperature, raising serious concerns over the effect of global warming. Shaobing Peng, et al "Rice yields decline with higher night temperature from global warming", PNAS published June 28, 2004 http://www.pnas.org/cgi/content/abstract/0403720101v1

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14. Recently Published

Anonymous (CIA Officer), "Inside Hubris: Why the West is Losing the War on Terror" Brassey's

Charles Brandt, "'I Hear You Paint Houses': Frank 'the Irishman' Sheeran and the Inside Story of the Mafia, the Teamsters, and the Last Ride of Jimmy Hoffa" Steerforth Press

Dan Briody, "The Halliburton Agenda" The Politics of Oil and Money" Wiley

Elizabeth C. Economy, "The River Runs Black: The Environmental Challenge to China's Future" Cornell University Press

Lewis H Lapham, "Gag Rule: On the Suppression of Dissent and the Stifling of Democracy" Penguin Press

Robert Saliba, "Beirut City Center Recovery: The Foch-Allenby and Etoile Conservation Area" Steidl

Nigel West, "Mortal Crimes: The Greatest Theft in History: Soviet Penetration of the Manhattan Project" Enigma

Joseph Wilson, "The Politics of Truth: Inside the Lies that Led to War and Betrayed My Wife's CIA Identity: A Diplomat's Memoir" Carroll and Graf

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FEATURE ARTICLE: FATF Annual Report

The Financial Action Task Force (FATF) met last week to discuss past progress and measures necessary in the future to address the fight against terrorist financing and money laundering.

FATF began by reviewing the current list of Non-Cooperative Countries and Territories (NCCT), those with critical deficiencies in their anti-money laundering (AML) systems or who are unwilling to cooperate in AML efforts. The list now includes Cook Islands, Indonesia, Myanmar (Burma), Nauru, Nigeria, and the Philippines. Guatemala has been delisted since it passed laws requiring licensing and supervision of offshore banks and implemented customer identification and suspicious activity reporting measures.

Several of the NCCT countries had made progress, but it was not considered sufficient for delisting. For example, Burma passed AML rules and regulations but not enough international cooperation on legal issues. Nigeria also enacted legal reforms but needs to submit a detailed implementation plan.

Other countries were also evaluated, and measures to counter terrorist financing in Argentina, Brazil, Mexico, and Saudi Arabia received particular attention.

Argentina had adopted AML legislation but it did not include several possible offenses, including terrorist financing. Confidentiality and secrecy provisions of the legislation can delay or inhibit investigations. Suspicious transaction reporting is limited to certain types of transactions and thresholds and compliance verification is ineffective or not in place for several financial sectors. Argentina was also unable to provide statistics sufficient to evaluate implementation.

Brazil has a comprehensive legal and regulatory framework but their focus on domestic crimes means there are areas in which additional agreements and legal assistance outside of treaties should be undertaken. Bank secrecy currently limits international exchange of information. FATF also found that Brazil needed more comprehensive measures to counter terrorist financing, including criminalizing it and complying with UN Security Council resolutions and the freezing of assets as well by demonstrating efficacy through criminal prosecutions and convictions.

Mexico has acted on many FATF recommendations after its last evaluation but terrorist financing is not yet a separate offense, although legislation is working its way through the congress. FATF also found that there are significant delays in reporting from within financial institutions and that uneven supervision of compliance results in uneven application of AML measures. Bank and trust secrecy rules interfere with sharing information during investigations. There are no clear procedures for how investigators could access financial information and a number of procedural and policy issues make prosecution and punishment difficult. There are also no procedures for international cooperation.

Saudi Arabia has met almost all of the FATF recommendations. The exceptions include the needs to clearly define terrorist financing to streamline processing of law enforcement requests, to strengthen customer identification measures for non-bank financial institutions, particularly for originator information on wire transfers, and to ensure that rules are comprehensive and detailed across all financial sectors.

In addition to country reviews, FATF developed an Interpretative Note regarding the special recommendation to criminalize terrorist financing and associated money laundering, with terrorist financing considered a predicate offence for money laundering. It defines the terms and points to the close relationship between terrorist financing and money laundering that requires they be treated together. It states that:
"Terrorist financing offenses should extend to any person who willfully provides or collects funds by any means, directly or indirectly, with the unlawful intention that they should be used or in the knowledge that they are to be used, in full or in part: (a) to carry out a terrorist act(s); (b) by a terrorist organisation; or (c) by an individual terrorist."

It also applies to those who attempt to carry out these actions or who contribute towards other individuals or groups doing so but does not include criminalization solely based on aiding and abetting, attempt, or conspiracy but does extend funds from both legitimate and illegitimate sources. The offenses are independent of geographic location. Furthermore, it suggests that the intentional element be inferred from objective fact. It concludes with recommendations that criminal liability should extend to legal persons unless prevented by fundamental principles of domestic law, in which case civil or administrative liability should apply, but in neither case should these liabilities preclude other parallel proceedings, including criminal charges. Finally, "Natural and legal persons should be subject to effective, proportionate and dissuasive criminal, civil or administrative sanctions...."

FATF carried out their Typologies Exercise. This year they focused on vulnerabilities in the insurance sector. They found all sectors vulnerable at the integration state but there was a low rate of detection and further research was needed. They also examined risks presented in "gatekeepers" who provide advice or services that can be used to help carry out transactions that are often used in money laundering schemes and therefore are detectable if AML measures are consistently applied. They also investigated Politically Exposed Persons, where existing diligence methods should be effective, and at the misuse of non-profit organizations, and the use of wire transfers. In the latter two cases, additional measures are probably necessary and further research needed to identify potentially suspicious transactions.

The FATF meeting also set out seven main strategic issues.

First, to establish international standards for combating money laundering and terrorist financing integrated into a single, unified standard.

Second, to pursue global advisory and enforcement actions in cooperation with other international organizations. They will renew and strengthen cooperation agreements with the International Monetary Fund and World Bank as well as the UN, donor organizations, and international financial institutions.

Third, they will continue to use the common assessment methodology to ensure that member states implement all recommendations. To that end, they will develop the procedures to follow in the third round of mutual evaluations with particular attention to legislation.

Fourth, the FATF would like to engage China and India as members. (Current members and observers include Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, European Commission, Finland, France, Germany, Greece, Gulf Co-operation Council, Hong Kong/China, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Portugal, Russian Federation, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States.)

Fifth, FATF will investigate ways to increase cooperation among the FATF-Style Regional Bodies (FSRBs), the Offshore Group of Banking Supervisors and non-member countries. FSRBs include: Asia/Pacific Group on Money Laundering (APG), Caribbean Financial Action Task Force (CFATF), Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL), Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), and Financial Action Task Force on Money Laundering in South America (GAFISUD).

Sixth, FATF will devote more resources to understanding techniques and trends in money laundering and, especially, in terrorist financing to become the authoritative source and be able to connect typologies with standards setting.

Seventh, FATF will reach out to the public, governments, financial institutions and other parties affected by FATF standards to develop mutual communications and share FATF's work.

FATF's mandate has been extended to December 2012. This is the third extension, but the prior two were for five years. The 8-year timeframe recognizes the commitment to FATF's work and the time needed to deliver on the mandates described above. TerrorismCentral will, of course, continue to keep you informed as these events unfold.

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