Securitization, Accountability and Risk Management

Transforming the Public Security Domain

Karin Svedberg Helgesson, Ulrika Mörth

• Publisher: Taylor & Francis
• Year: 2012
• Print ISBN: 9780415717694
• eBook ISBN: 9781136467967
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Military & Maritime History
• Index: Politics & International Relations

This edited volume examines the reconstitution of the public security domain since the 9/11 attacks, focusing on the banking sector and anti-money laundering (AML) activity in particular.

Since the inception of the 'Financial Action Taskforce' (FATF) in 1989, AML has been viewed as a global problem. This text argues that the securitization of the financial sector as a result of AML has entailed the emergence of a new public security domain, which transcends the classic public-private divide.

The analysis in the volume is multidisciplinary and combines concepts and theories from the literature on securitization, the public-private divide, and business/management. The authors argue that the state is under transformation and that the developments in the security field are part of an ongoing renegotiation of the relationship between the state and the business sector. Securitization, Accountability and Risk Management therefore contributes to a deeper understanding of how the power relationships have changed between the public and the private sectors after 9/11.

This interdisciplinary book will be of much interest to students of critical security, risk management, business studies, critical legal studies and IR in general.

7 Trace my money if you can

European security management of financial flows

Anthony Amicelle

Introduction

Massive flows of dirty money can damage the stability and reputation of the financial sector and threaten the single market, and terrorism shakes the very foundations of our society… . The soundness, integrity and stability of credit and financial institutions and confidence in the financial system as a whole could be seriously jeopardised by the efforts of criminals and their associates either to disguise the origin of criminal proceeds or to channel lawful or unlawful money for terrorist purposes.

(EU 2005a)

Mobilization against ‘dirty money’ has initiated an ongoing process of securitization with regards to the financial system. A set of acts and proclamations has given a certain consistency to the blurred notion of ‘dirty money’ over the past 25 years. Now, it explicitly appears in regulatory interventions such as the European Union (EU) third anti-money laundering (AML) directive. Its preamble (above) illustrates this mobilization around one expression which is weakly defined and which refers to the ‘simultaneous political, institutional and moral dimensions’ of money (de Blic and Lazarus 2007: 108). The current European measures against ‘dirty money’ are mostly justified with reference to the protection of the financial system and the internal market. Indeed, the two other EU significant regulations on this issue share this justification. Regulation on wire transfers (EU 2006) precisely includes the same statements as the third directive, while regulation on cash controls (EU 2005b) underlines that ‘the introduction of the proceeds of illegal activities into the financial system’ is detrimental to its proper functioning. This assertion – which some authors describe as a ‘metaphysical dogma’ (Van Duyne 2003: 207) – has been presented as such since the first directive in 1991 and has become something ‘obvious’. Thus, the European fight against the proceeds of crime has not simply been formed to undermine different criminal and political forms of violence. It officially aims to preserve financial institutions, internal market and financial system as a whole against ‘threats’ which could destabilize them. With regards to EU legislation, the focus on dirty money is hence presented as an issue of financial protection. Reference to the society exists via the question of terrorism but it remains secondary in these documents.

We have already underlined elsewhere how the recurrence of this financial qualification (since 1991) ultimately leads to represent it as a natural choice which hides the context and dynamics that have contributed to limit the range of possibilities (Amicelle 2010). Although the sociological analysis of this securitization process is beyond the scope of this chapter,¹ the definition and ‘problematization’ of dirty money has been shaped by international transfer of expertise, bureaucratic games and power relations between various actors and institutions (ibid.). Furthermore, the very orientation of the first European directive has partly depended on the positions of the actors who have dealt with it (i.e. ‘professionals of finance’²), but it has also (and maybe primarily) depended on the legal framework in force during the negotiations in 1990. Negotiations took place before the 1992 Treaty of Maastricht, which introduced the ‘third pillar’, ‘granting express powers to the Union (but not the Community) to adopt legislation in criminal matters’ (Gilmore and Mitsilegas 2007: 136). Before Maastricht, any regulatory action against money laundering had to be founded on a legal basis under the European Community Treaty. With reference to this situation, it was extremely difficult if not impossible to refer to criminal law and criminal offenses. In 1990–1991, the solution was to agree on the fact that preventing money laundering was crucial to preserving the integrity of the financial system and the internal market, ‘[t]hus a dual free movement/internal market legal basis was eventually used’ (ibid.).

This legal pragmatism clearly indicates that the intention to fight against crime was as important as the intention to protect the financial system during the negotiations, but this first goal could not legally support the directive. The introduction of the third pillar has certainly provided new opportunities, but the situation has not fundamentally changed. The fight against dirty money still looks like an internal dimension of two sectoral policies: the management of the financial system on the one hand, and the fight against crime on the other. While we have to reject the naïve idea that the protection of the financial system is the only goal of AML because it is the official legal justification, we do not have to fall into the other trap which consists of stating that the protection of the financial system is no more than a ‘paper justification’. This observation reflects once again that there is no univocal intentionality as the basis of the interventionist consensus against dirty money (Favarel-Garrigues et al. 2011) in which the aim of protection of the financial system (and the internal market) and the fight against crime need to be permanently adjusted.

Actually, this general state of affairs does not represent so much a specificity of the EU level. Indeed, the non-univocal intentionality was perfectly summed up by one of the former presidents of the Financial Action Task Force (FATF ), who famously stated that ‘Combating money laundering is not just a matter of fighting crime but of preserving the integrity of financial institutions and ultimately the financial system as a whole’ (Sherman 1993: 12). Hence, this integrity of the international financial system has been constituted as one central referent object of security while the discursive continuum of threats has been simultaneously extended for the last 20 years (see Anja Jacobi, this volume). The initial 1989 mandate of the FATF has regularly evolved towards new targets depending on the political agenda of its member states. The agenda has been focused on money laundering of proceeds from drug trafficking and then other ‘serious offences’ associated with ‘(transnational) organized crime’, followed by terrorism financing and nuclear proliferation finance (FATF 2008³), and probably soon to include piracy (House of Lords 2009).

European and international promoters and standard-setters of the fight against ‘dirty money’ have not intended to change or to hinder the existing economic order and the free movement of capital. They have ‘just’ introduced new preoccupations for the actors who have been in charge of mitigating financial flows which have been consensually rejected. These preoccupations and their related obligations have been strongly expanded, strengthened and even reconfigured since the prioritization of the issue of terrorist financing, but they still mainly refer to the aim of protecting the financial system and monitoring the flows. Hence, the key issue is to creep into the relationship between (financial) mobility and the provision of security. In 1999, Friman and Andreas already coined the idea that states ‘face the increasingly difficult dilemma of how to facilitate legal cross-border economic flows while enforcing their laws against illegal cross-border economic flows’ (Friman and Andreas 1999: 11). This focus on states’ dual purposes of granting international mobility while detecting and banning certain illegalities from circulation has been even reinforced since the attacks of 11 September 2001. Although the valorization of financial mobility has remained a fundamental dimension, professionals of security have increasingly insisted on the ‘risks’ associated with such mobility (Amicelle 2011a).

Of course, this so-called ‘dynamic tension between freedom of mobility and the provision of security’ (Amoore et al. 2008: 100) goes far beyond the specific issue of financial flows. However, while a vast academic literature exists in relation to the question of transnational flows of persons and the transformations of bordering processes (see, for instance: Amoore et al. 2008; Andreas and Snyder 2000; Bigo and Guild 2005; Bonditti 2005; Broeders 2007; Brouwer 2008; Groenendijk et al. 2003; Jeandesboz 2010), few studies directly interrogate the same interplay between mobility and security regarding financial movements. In this chapter, we precisely would like to contribute to the numerous debates on ‘mobility controls’ and ‘mobility surveillance’ in security studies with a focus on the European fight against terrorist financing and its correlated financial surveillance at a distance via traceability. Thus, the main aim of the chapter is to underline how the current practices against terrorist financing show that the relationship between mobility and security is not a zero-sum game to the extent that security practices have been designed to never sacrifice the principle of free movement of capitals. Moreover, we even argue that contemporary politics of control and surveillance at a distance suppose mobility without which they would lose their critical enabler. Ultimately, we put the issue of liberty into the context of this strained relationship between mobility and security.

Drawing upon primary sources and interviews at the European and UK level, the chapter begins with an overview of European measures against terrorist financing. Then, we insist on the specificity of contemporary financial surveillance since the beginning of AML, before mentioning the role of banks as ‘traffic wardens’ in state mechanisms of security. Finally, we examine the impact of the fight against terrorist financing on the area of combating dirty money and its basic principle of traceability regarding the so-called transatlantic ‘SWIFT affair’.

Blacklisting and financial intelligence

While there was the UN convention for the suppression of the financing of terrorism in 1999 (UN 1999), this topic did not paradoxically constitute either an international top priority or a significant operational issue before the events of 11 September 2001 (Thony 2009). The idea of undermining terrorism with financial tools needs to be understood with reference to a socio-historical context which has been in favour of this approach. It has not appeared ex-nihilo to the extent that the financial dimension has emerged with international economic sanctions on the one hand (i.e. economic embargos, freezing assets of targeted governments and political leaders, etc.), and with AML policies on the other. In accordance with this statement, the formation of counterterrorism finance activities has been similar to other public actions. Indeed, it has mainly consisted of a process of conversion-adaptation of the ‘already there’ (Lascoumes 1994: 23). Nevertheless, such postulate does not contradict at all the assumption that this recycling process has generated a reconfiguration of previous instrumentations, which is not without consequences.

In December 2001, the EU established its own blacklist – of individuals and groups who were suspected of association with ‘terrorist activities’ – under the banner of the United Nations Security Council Resolution (UNSCR) 1373 (UN 2001; EU 2001a).⁴ Then, there was Council Regulation 881/2002, which has consisted of implementing UNSCR 1390 – related to Resolutions 1267 and 1333 – on ‘the freezing of funds of persons and entities associated with Usama bin Laden, the Al-Qaida network and the Taliban’ (UN 2002; EU 2002). Thus, Resolution 1390 has justified the second European blacklisting programme which simply replaces the UN programme. It has also led to prominent evolution to the extent that it is the first resolution in which targeted suspects do not necessarily need to be linked to a particular state territory (Afghanistan being earlier linked with the Taliban) (Cameron 2005). Ultimately, the ‘terrorist issue’ has been included within the AML framework, which has been presented as relevant in the broader attempt to counter political violence. With reference to US terminology, one can assume that previous techniques and practices of the ‘war on drugs’ (1970–1990s) have been extended in the name of the ‘war on terror’ (Simon 2008). Association between money laundering and terrorist financing has been implicitly legitimized at the European and international level since the end of 2001 (Zagaris 2003; Fitzgerald 2004). At this time, revision of the 1991 money laundering directive (EU 1991) was a matter of intense disagreement between members of the European Parliament and representatives of the two other European institutions. The Council and the Commission supported an expansion of the directive duties to legal professions, but members of the Parliament expressed their opposition. They insisted on potential negative consequences for civil liberties (Mitsilegas 2003). The controversy slightly diminished when legislation proposal was considered as one response among others with regards to a situation perceived as an emergency after the 9/11 attacks (Amicelle 2008). Therefore, legal professions such as lawyers and notaries have been included in the scope of the directive under a number of conditions (EU 2001b). Subsequently, the EU Counci...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of illustrations
• Notes on contributors
• Preface
• Acknowledgements
• List of abbreviations
• Introduction: transforming the public security domain
• The FATF as the central promoter of the anti-money laundering regime
• The EU anti-money laundering legal regime
• Anti-money laundering in the United States
• The managerialization of security
• Tools and securitization: the instrumentation of AML/CFT policies in French banks
• Trace my money if you can: European security management of financial flows
• The multiple positions of private actors in securitization
• Conclusions: the manifestations of securitization
• Index