Suppressing the Financing of Terrorism : A Handbook for Legislative Drafting

International Monetary Fund

• Publisher: INTERNATIONAL MONETARY FUND
• eBook ISBN:
  9781589062252
• Year: 2003

NONE

1 INTRODUCTION

IMF member countries and other jurisdictions wishing to bring their legislation up to the norms and standards established by the international community in the area of combating the financing of terrorism face a number of choices. The sources of these norms and standards range from legally binding international norms, such as those contained in resolutions of the United Nations (UN) Security Council, and in international conventions, such as the International Convention for the Suppression of the Financing of Terrorism, to nonbinding standards established by groups of countries acting in concert, such as the Eight Special Recommendations on Terrorism Financing of the Financial Action Task Force (FATF). While there is considerable overlap among these sources, their scope varies. Implementation of some of the norms and standards requires legislation, but on many points, implementation can be effected in a number of different ways. As a result, in responding to their international obligations and meeting the standards, countries must make a number of choices as to the scope of the legislation and its contents.

The objective of this handbook is to assist IMF member countries and other jurisdictions in preparing legislation to implement the international obligations and to meet the international standards related to combating the financing of terrorism in a manner most appropriate to their circumstances.

Context

The international community’s efforts to prevent and punish the financing of terrorism are part of a larger effort to combat all aspects of terrorism. These efforts have been deployed at the global and at the regional levels. At the global level, the United Nations has been involved in the issue since 1970.¹ In 1972, the General Assembly established the first Ad Hoc Committee on International Terrorism,² and in 1994, it adopted a Declaration on Measures to Eliminate International Terrorism.³ In 1996, the General Assembly established a new ad hoc committee to elaborate international conventions on terrorism. It is in this ad hoc committee that the Convention on the Suppression of the Financing of Terrorism was elaborated. Since 2000, the ad hoc committee has begun work on a comprehensive convention on international terrorism.⁴

Since 1985, the Security Council has also been concerned with the issue of terrorism, and in 2001, it established its Counter-Terrorism Committee, which is charged with monitoring the response of member states to the requirements of Security Council Resolution No. 1373 (2001).⁵ Earlier, in its Resolutions 1267 (1999)⁶ and 1333 (2000),⁷ the Security Council had decided that UN member countries would seize the assets of named terrorists and terrorist organizations. A number of conventions have also been adopted at the regional level.⁸ There is thus a complex web of international instruments through which states have committed to combat terrorism. The combating of the financing of terrorism became a prominent part of this effort following the terrorist attacks in the United States in September 2001 and the subsequent adoption of the FATF Special Recommendations on Terrorist Financing and Resolution No. 1373 (2001) and the establishment of the Counter-Terrorism Committee. Thus, in addition to fostering international cooperation in the prevention and repression of terrorist offenses themselves, the international community has now embarked on an ambitious program intended to prevent terrorism by detecting and suppressing its sources of financing, and criminalizing the provision of financing for terrorism.

The handbook provides examples of legislative measures that may be used to draft laws implementing the international obligations related to combating the financing of terrorism set out in Resolutions 1373 (2001), 1267 (1999), and 1333 (2000) and in the International Convention for the Suppression of the Financing of Terrorism, as well as to meet the standards established by the Eight Special Recommendations on Terrorist Financing issued by the FATF. These instruments each address the combating of the financing of terrorism, but their exact scope varies. In particular, the Resolution takes a very broad approach to the measures states are to take to combat the financing of terrorism. It includes, for example, provisions related to the potential abuse of refugee status by terrorists. In this handbook, the contents of Resolution 1373 (2001) will be briefly described, but only those measures bearing directly on combating the financing of terrorism will be discussed. However, each of the substantive requirements of the Convention and the Special Recommendations will be addressed.

Outline

Chapter 2 of this handbook presents the three main sources of international obligations and standards in the area of combating the financing of terrorism and discusses the main issues they raise. Chapter 3 presents the legislation that certain countries have already adopted in this regard and discusses the general issues involved in the preparation of such legislation. Chapter 4 offers detailed discussions of specific topics to be covered in the legislation. Examples of legislation are provided in Appendixes VII (for civil law countries) and VIII (for common law countries).

2. THE SOURCES OF INTERNATIONAL NORMS AND STANDARDS ON THE SUPPRESSION OF THE FINANCING OF TERRORISM

The main sources of international obligations in the combating of the financing of terrorism are the Resolutions of the United Nations Security Council, and in particular, Resolution No. 1373 (2001) (hereinafter “the Resolution”) and the earlier resolutions requiring the freezing of assets of listed terrorists, and the International Convention for the Suppression of the Financing of Terrorism (hereinafter “the Convention”). In addition to these formal sources of international obligations, the Financial Action Task Force (FATF) issued a set of eight Special Recommendations on Terrorist Financing (hereinafter “the Special Recommendations”) on October 30, 2001 and invited all countries to implement them and to report to the FATF on their implementation.

There is considerable overlap among these various obligations and standards. For example, both the Resolution and the Special Recommendations call for countries to become parties to the Convention and to implement its provisions internally. Similarly, the Resolution, the Convention, and the Special Recommendations each deal with aspects of the freezing, seizure, and confiscation of terrorist assets. The Convention requires states parties to consider adopting some of the standards contained in the FATF 40 Recommendations on Money Laundering. Apart from these and other areas of overlap, each instrument contains provisions not found in the others. For example, the Special Recommendations contain references to alternative remittance systems, wire transfers and non-profit organizations—three topics that are not covered by the Resolution and the Convention.

The three main sources of international obligations and standards, namely the Convention, the Resolution and the FATF Special Recommendations, will be examined in turn.

The International Convention for the Suppression of the Financing of Terrorism

The International Convention for the Suppression of the Financing of Terrorism is the result of a French initiative strongly supported by the Group of Eight (G-8).⁹ In May 1998, the Foreign Ministers of the G-8 identified the prevention of terrorism fund-raising as a “priority [area] for further action.”¹⁰ In the fall of 1998, France initiated the negotiations of the Convention, and proposed a text to the United Nations. In December 1998, the General Assembly decided that the Convention would be elaborated by the ad hoc committee established by Resolution 51/210.¹¹ The text of the Convention was adopted by the General Assembly on December 9, 1999.¹² The Convention has been signed by 132 states, and, as of April 30, 2003, it was in force among 80 states.

The Convention contains three main obligations for states parties. First, states parties must establish the offense of financing of terrorist acts in their criminal legislation. Second, they must engage in wide-ranging cooperation with other states parties and provide them with legal assistance in the matters covered by the Convention. Third, they must enact certain requirements concerning the role of financial institutions in the detection and reporting of evidence of financing of terrorist acts. Table 1, below, sets out a list of the substantive provisions of the Convention.

Table 1. Summary Contents of the Convention

Criminalization of Financing of Terrorist Acts

The Convention requires each party to adopt measures (a) to establish under its domestic law the offenses of the financing of terrorist acts set out in the Convention, and (b) “to make [these] offences punishable by appropriate penalties which take into account the grave nature of the offences.”¹³ Financing of terrorism is defined as an offense established when a person “by any means, directly or indirectly, unlawfully and wilfully, provides or collects funds with the intention that they should be used or in the knowledge that they will be used in full or in part, in order to carry out [a terrorist act as defined in the Convention].” The mental element and material elements of the offense will be discussed in turn.

The mental element

There are two aspects to the mental element of the financing of terrorism as defined in the Convention. First, the act must be done willfully. Second, the perpetrator must have had either the intention that the funds be used to finance terrorist acts, or the knowledge that the funds would be used for such purposes. In this second aspect, intent and knowledge are alternative elements. The Convention does not provide further information on these two aspects of the mental element, and therefore they are to be applied in accordance with the general criminal law of each state party.

The material elements

The definition of the offense of terrorism financing in the Convention contains two main material elements. The first is that of “financing.” Financing is defined very broadly as providing or collecting funds. This element is established if a person “by any m...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Foreword
• 1. Introduction
• 2. The Sources of International Norms and Standards on the Suppression of the Financing of Terrorism
• 3. Legislating to Meet the International Norms and Standards
• 4. Drafting Notes on Specific Matters
• 5. Conclusion
• Footnotes