How has the landscape of terrorism finance (and its disruption) changed over the past year? What have been the most significant incidents?
Over the past 12 months we have had the opportunity to study a constant flow of ISIS-related prosecutions in the UK courts. Combined with the reporting from the attacks in Paris (Nov 2015) and Brussels (March 2016), it is clear the terrorist finance threat we face is much more than the ‘oil and tax’ story in Syria and Iraq. Lone actors and small cells have tapped a range of sources to fund their plans, from student loans, to state social security benefits, to short-term ‘pay day’ loans. Whilst it is impossible to police every form of financial transaction, a widening of terrorist finance awareness is clearly needed as the traditional approaches used to raise terrorist financing are no longer as dominant as they once were.
Where have successes and failures indicated a need to reassess approaches towards illicit financial flows? Is a shift in focus required?
In reality, those that enable illicit financial flows are clearly winning. The Panama Paper revelations; the admission of the UK authorities of ‘intelligence gaps’ in the understanding of illicit finance; the continued ability of autocratic leaders to syphon state funds into offshore bank accounts and property all clearly indicate that successfully reversing the tide of illicit finance remains elusive. The good news is that high-level policymakers and leaders are finally realising that addressing this challenge requires action, not just words in summit communiques. But the jury is out as to whether this realisation is translating into genuine implementation. For the UK, the opportunities presented by new legislation (such as Unexplained Wealth Orders in the Criminal Finances Bill) are promising but there is a very long way to go.
Who are the key players and organizations when it comes to disrupting flows? Should the drive come from policy or industry?
The drive has to come from the policy and lawmakers. Practically speaking whilst industry should be implementing appropriate anti-bribery policies and the financial sector should be monitoring and investigating suspicious transactions, without a degree of guidance from the public sector there is only so much the private sector can do. I am sure the private sector can do more on its own, but the most effective solutions will require collaboration. For example, the banking sector is spending billions of pounds each year on financial crime compliance yet one must question how productively that money is being spent and how much is being spent simply to ‘comply’. If the public sector can effectively harness this investment then surely considerably more impressive results could be achieved.
What key issues are you most looking forward to seeing discussed at the Chatham House Illicit Financial Flows conference?
The past 12 months have demonstrated that despite all the talk, progress on tackling illicit financial flows is patchy, at best. It is now time for policymakers and the private sector to practice what they preach. Implementation of regulations, laws and policies is critical. But it is going to require governments to take tough decisions and private sector companies to forgo business opportunities. Too often geopolitics and geoeconomics get in the way of genuinely confronting illicit financial flows, including terrorist financing. If global leaders and captains of industry genuinely want to tackle illicit financial flows they are going to have to make tough, difficult, politically unpopular and perhaps financially unappealing decisions. That would be real leadership.
*Please note that the views expressed above are of the speaker and not of Chatham House.