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Last Updated: Monday, 13 February 2006, 14:41 GMT
Brown promises terror finance fight
Analysis
By Jeremy Scott-Joynt
BBC News business reporter

The accountants are taking over.

Gordon Brown
Gordon Brown is prioritising the fight against terrorist finance

According to Chancellor Gordon Brown, the new front in the fight against terrorism will be fought with balance sheets and financial instruments, as much as it is with police, spies and soldiers.

In a speech designed to set out his stall as Prime Minister-in-waiting, the Chancellor made clear his determination to put the Treasury at the heart of the fight against terror by pumping more money and resources into rooting out funding sources.

He is promising a push against terrorist finance to rival the efforts of Bletchley Park, where a ragtag team of mathematical geniuses broke Nazi Germany's codes during World War II.

Tightening the net

The main thrust of his proposals is twofold:

First, the conduits through which money flows - from banks and financial institutions to money remittance services and charities - need to be hardened, he says.

The aim is to make sure that the net catches illicit funding, but does not hinder clean money.

Controls are already in place, but the Chancellor says he wants to give better advice to professionals in these areas and strengthen oversight.

Among the new initiatives are "hit squads" within HM Revenue & Customs to tackle money services businesses which flout controls on money laundering and terrorist finance.

Charities, too, are in the firing line - and the Chancellor promises not only to tighten regulation, but to try to rebuild donor confidence.

We have a situation where today money is raised in one country, used for training in the second, for procurement in a third and terrorist acts in a fourth
Gordon Brown

This is particularly important for Muslim charities.

The leaders of two of the biggest in the UK have said donors are worried about the integrity of their donations and the possibility that they could be unjustly linked to terrorism.

Alms-giving plays a central part in the Muslim faith.

The UK is also targeting a leadership role in the Financial Action Task Force (FATF) - the main international body set up to oversee rules on fighting money laundering and terrorist finance.

More hands on deck

The second key promise is to beef up the skills used in the terror finance fight.

This is the core of Mr Brown's "Bletchley Park" reference: more and better-trained people are needed to carry on this side of counter-terrorism.

Better international co-operation is crucial too, he said, to tackle a situation where "money is raised in one country, used for training in the second, for procurement in a third and terrorist acts in a fourth".

He has proposed creating a dedicated body to freeze terrorist assets.

At present the task falls to a small team at the Bank of England, but Mr Brown is suggesting that in a year's time, he might consider a dedicated agency for this purpose - perhaps along the lines of the US Office of Foreign Asset Control (Ofac).

And in an implicit acknowledgement that the really big brains in following money trails can only be found outside government, he promises to build more formal relationships with the financial services industry.

He wants a forum to "discuss how we can achieve more together to identify, root out, and prevent the use of financial networks to advance terrorism".

Cautious welcome

Not all of what the Chancellor is proposing is likely to meet with applause - and while much of it starts to meet economic crime professionals' concerns, the lack of detail will have many responding cautiously.

For one thing, despite a rise in the number of financial experts working on terrorist finance - Special Branch, the arm of the police which works most closely with the security services, has doubled its financial investigators since 9/11 - demand massively outstrips supply.

Sanabel Relief Agency sign
Charities are among the groups whose assets have been frozen

As for the private sector, banks and financial institutions makes no secret of their wish to work more closely with government on fighting terrorist finance.

But past experience leads many in banking and accountancy to doubt that the public sector is sufficiently willing to bring them inside the "magic circle".

They complain that feedback on the information they file in the shape of suspicious activity reports is sketchy at best, and warn of widespread reluctance to listen to their experience of the difficulty of spotting the kind of patterns the Chancellor would like them to find.

The primacy of FATF in the Chancellor's thinking is also open to challenge.

As long ago as 2002, the BBC reported FATF was being steadily sidelined in its task of promoting best practice by the International Monetary Fund and the World Bank.

Many of its recommendations need updating - a task the UK now wants to undertake if it can achieve its aim of securing FATF's leadership in 2007.

People power

While the Chancellor speaks of 80m in terrorist funds frozen since the 11 September attacks, most of that money was seized in the first year after the attacks on the US.

More important than asset freezes, some say, is the use of dogged financial investigation to map terrorist networks. That will also rely on having enough people and strong public-private relationships.

In the end, experts argue it all comes down to people: building trusting relationships between the public and private sector so that as many minds as possible, with as broad an experience as possible, can attack the problem.

There is one potential example of this currently brewing in UK law enforcement.

On 1 April, the Serious Organised Crime Agency (Soca) formally starts work.

Its top officials have been working hard to reach out to the financial sector, promising closer collaboration and better two-way communication to tackle organised economic crime.

If it can practice what it preaches, it could prove a template, filling in the detail which could make or break the Chancellor's proposals.


SEE ALSO:
Brown backs tougher terror laws
13 Feb 06 |  UK Politics
The bombers' money trail
18 Jul 05 |  Business


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