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Last Updated: Thursday, 2 October, 2003, 13:45 GMT 14:45 UK
Dirty money spotlight widens
Charities and underground money networks are in the spotlight as experts meet to talk about ways of strengthening the fight against money laundering and terrorist finance.

Also high on the agenda at the meeting in Stockholm of the 31-nation Financial Action Task Force (FATF) is the need for countries to be quicker about freezing funds identified as being linked with crime or terrorism.

The FATF, an international task force set up in 1990 to tighten the rules worldwide on money laundering, expanded its responsibilities into terror finance with a new set of regulations issued shortly after 9/11.

The meeting will continue its practice of "naming and shaming" jurisdictions thought to be lax in regulating their financial systems - a list reduced in recent years from a few dozen to just nine.

The meeting, which for the first time will include Russia as a full member, is also likely to tell Israel it is no longer at risk of returning to the blacklist.

Faster freeze

With better oversight in place over many of the traditional conduits in the financial system, attendees at the meeting say the job now is to tighten up controls on other avenues.

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This is to be achieved in part by extending the rules on reporting suspicions to a range of businesses including lawyers, auction houses, casinos, estate agents and jewellery dealers.

The FATF is revising the advice that accompanies its anti-terror finance regulations - known as its "Eight Special Recommendations" - to ensure this field is properly covered, and that asset freezes happen quickly and without notice to the owner of the assets in question.

The conference is likely to support a call for countries to put in place laws to make sure that banks and financial institutions which do not comply with freezing orders face sanctions.

Different channels

But there is also a need to tackle two areas of great concern to those tasked with disrupting the flow of money to fund political violence: non-governmental groups and so-called "informal money transfer networks".

A number of charities have been named by the US and other authorities as being tied into either funding groups connected with al-Qaeda or, more controversially, with the Hamas extremist group in the Palestinian Occupied Territories.

The latter initiative has run into difficulties because many countries in Europe are reluctant to close down Hamas's welfare activities, even though they want to disrupt the group's backing of suicide attacks against Israelis.

One UK group recently named by the US as complicit in funding Hamas attacks has nevertheless been cleared by the UK authorities, who said the US had failed to provide any evidence.

More seriously, US officials accuse Saudi Arabia of failing to monitor the more than 1bn riyals ($270m; 160m) given in charitable donations within the kingdom each year, and allege that some of the money is going to fund terrorist activities.

Unofficial flows

As well as the worries about charities, informal money systems such as the South Asian "hawala" system are also of concern, the FATF believes.

Such systems allow funds to be transferred from, say, the UK to Pakistan through trust-based relationships without having to go through normal banking channels.

This makes them much cheaper and more reliable for expatriates wanting to send money home.

But experts fear they also offer convenient pathways for money destined to be used for terrorist attacks - not least because such attacks do not require huge amounts of funding.


SEE ALSO:
UK pledges dirty money shake-up
01 Jul 03  |  Business
New rules widen dirty money fight
20 Jun 03  |  Business
Experts tackle terrorist funds
11 Feb 03  |  Business
Backlog in hunt for criminal money
06 Sep 02  |  Business


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