New Technologies, New Risks? Innovation and Countering the Financing of Terrorism

Andrew Zerzan

• Publisher: World Bank
• Year: 2010
• Topic: Business
• eBook ISBN:
  9780821380864
• Subtopic: Finance
• Index: Business

Recent developments in the way financial services are delivered have provided both opportunities for economic development and prompted fears of their attractiveness for crimes such as terrorist financing. This paper explores four innovations, value cards, mobile financial services, online banking and payments, and digital currencies, outlining how they work, analyzing their risks, and identifying some ways in which governments and providers are attempting to reduce their attractiveness to financiers of terrorism. Determining what the actual risks are is critical to ensuring that laws and regulations balance both the need to protect integrity in the market and to create an environment friendly to business and empowering to the poor. The paper concludes that these new methods of payment do not offer particular usefulness to terrorist financiers. However, some of these channels could be attractive for general criminal abuse because they have an ambiguous place in the legal regime. Providers therefore, may not know about or elect to properly mitigate risks. The industry is encouraged to work within itself to share information to prevent and detect criminal activity. Governments should consult with industry in deciding regulation and industry should notify government prior to rolling out a new service. This will make government oversight more effective. Lastly, since many of these services are international in scope, government coordination and awareness rising is central.

Table of contents

• Contents
• Foreword
• Acknowledgments
• Executive Summary
• Acronyms and Abbreviations
• Author’s Biography
• 1. Introduction
• 2. Value Card Systems
• 3. Mobile Phone Financial Services
• 4. Online Banking and Payment Services
• 5. Digital Currency
• 6. Conclusions
• References
• Table 5.1. Payment Methods and Risks of Abuse
• Figure 2.1. Centrally Recorded and Unit-Recorded Value Card Setup
• Figure 3.1. Surge in Mobile Connections across All Regions
• Figure 3.2. Billions of m-FS users in 2007 (actual) and 2015 (estimated)
• Figure 4.1. Internet Boom across Regions 1990–2005 (users per thousand people)
• Figure 4.2. Percent of Chinese and American Internet Users Accessing Online Payment and Banking Services
• Figure 4.3. Transaction Limits for Moneybookers.com for UK residents
• Figure 4.4. Online Revenue Lost to Fraud, Proportion of Total Revenue 2000–07
• Figure 5.1. Typical Digital Currency Exchange Setup
• Box 3.1. Risk-based Determination of Transaction Limits
• Box 4.1. Indicators of Internet Payment System Crime