Combating terrorist financing as part of a complete strategy to defeat ISIL and prevent terrorist attacks

Address by Je-Yoon Shin
FATF President
To Chatham House conference on Countering Terrorist Financing
Monday 8 February, Chatham House, London.

[as prepared for delivery]

Thank you for the opportunity to address you.

Today I want to highlight the importance of combating terrorist financing as part of a complete strategy to defeat ISIL and prevent terrorist attacks.

And I want to tell you how the FATF is leading a global effort to do this, with unprecedented support from the UN, G20, and the 198 countries that are part of the FATF network.

The Role of Terrorist Financing

Terrorism needs money. Preventing and disrupting terrorist financing creates a hostile environment for terrorism. Lack of money limits the capability of terrorist groups to prepare or carry out attacks. And financial intelligence can reveal the structure of terrorist groups, the activities of individual terrorists, and their logistics and facilitation networks. 

The value of these measures is clear:

The FATF held a meeting in December of operational experts from Financial Intelligence Units, Law Enforcement, and Security and Intelligence Agencies.  They explained how financial intelligence from the private sector has helped track down the terrorists behind recent attacks and therefore prevented further attacks.  We also heard about cases where disruption of terrorist financing has undermined a terrorist group’s ability to prepare attacks. 

Financing is important for all terrorists - from large terrorist organisations which control territory - such as ISIL - to the small terrorist cells which carried out the recent terrible attacks in Paris, Beirut, Istanbul, and other cities. But they have very different financing needs and different ways of meeting them.  Small terrorist cells are a unique challenge because the direct costs of mounting an attack are relatively small. They do not need much money or use sophisticated financing models, so they are difficult or impossible to identify.

Today we are facing a new kind of terrorist threat. Within the parts of Iraq and Syria which it controls, ISIL operates as a state, and it provides all the services a state is expected to provide. Therefore ISIL needs more money, and in constant supply, than other terrorist groups. Money is its biggest vulnerability.  

Preventing and disrupting financial flows must be at the centre of any successful strategy to defeat ISIL.  ISIL needs access to the financial system to move money and pay for supplies. ISIL misuses charities and money remitters and needs to physically move large quantities of cash. Disrupting the finances of ISIL damages its ability to recruit fighters, particularly the local fighters who fight for pay rather than for ideology. And financial stress can damage the cohesion of ISIL’s organisation and leadership.

Global partnership

Measures to combat terrorist financing need to be implemented in all jurisdictions around the world: We should not allow any safe havens for terrorists and those who finance them.

So the leadership of the United Nations is important, to establish a system of obligations on all countries to cut-off terrorist financing. I am pleased to see His Excellency Ambassador Aboulatta - the Chair of the UN Counter-Terrorism Committee - here today.

The FATF works in close partnership with the United Nations.

At the end of last year, I was in New York for a special session of the UN Security Council, attended by Ministers of Finance.  The Security Council adopted a new resolution - 2253 - which set out again the importance of measures to combat terrorist financing. Resolution 2253 also gives the FATF strong, visible support from the UN Security Council, which helps us to put pressure on members to fully implement the FATF’s standards to combat terrorist financing. 

The FATF’s role and the global state of play

So how does the FATF help and what have we achieved?

The FATF has put in place a global framework of standards to combat the financing of terrorism, based on UN Security Council Resolutions. These FATF standards go beyond the UN requirements.

But, the threat from terrorism and its financing is always changing. And this is where, over the years, FATF has shown its strength as a responsive and flexible task-force.

We can act quickly to make sure the tools we use to combat terrorist financing are up-to-date and effective. And we can help countries to take advantage of new opportunities, for example by making better use of financial intelligence, and by identifying obstacles to information sharing between authorities, between countries, and with our partners in the private sector.
Today, almost all jurisdictions have committed to implement the FATF standards and are being assessed by their peers.
We publicly name those that fail to take action. This warns other jurisdictions and banks of the risks and deters foreign investment. Our aim is to protect the integrity of the financial system and the broader economy.
So far FATF has put over 80 jurisdictions through this process, and publicly identified 58 of them. Of these 58, 43 have since made the necessary reforms. This has been a major achievement for the FATF - and it has been led by my colleagues Danny Glaser and Giuseppe Maresca.
In the last 8 months, the FATF has reviewed the implementation of counter-terrorist financing measures in two hundred jurisdictions.
Almost all have criminalised terrorist financing and can apply targeted financial sanctions.
In the last three months alone, half of those where we found serious problems have prepared or adopted urgent laws to address them.
But this is not enough:
Less than one in five jurisdictions have secured convictions for terrorist financing. And most jurisdictions implement UN asset freezes too slowly, with delays of between 2 days and 1 month.
We need to deal with these weaknesses - and we will.
But our highest priority is to improve countries’ operational capability to counter terrorist financing.

The FATF response to attacks, and the new TF strategy

A few weeks after the attacks in Paris, the FATF held a special Plenary meeting to update our knowledge of the terrorist threat, and reinforce measures against terrorist financing.  

Next week, FATF members will meet in Paris for our regular Plenary session, where we will adopt a new strategy on terrorist financing. 

The new strategy sets a clear objective:

To cut-off the financing of terrorism, particularly for serious terrorist threats such as ISIL and Al-Qaeda, to reinforce safeguards that will deny terrorists access to the financial system and prevent them from exploiting vulnerable countries as safe havens, and to ensure that financial intelligence is effectively used.

It also sets out the most important steps we will take to do this:

  • We will improve our understanding of the threat of terrorist financing, in particular the financing of ISIL; 
  • We will ensure countries have up-to-date tools to identify and disrupt terrorist financing activity, and use them effectively, in particular UN Targeted Financial Sanctions
  • We will facilitate better and deeper international cooperation and information sharing between authorities and the private sector to counter the financing of terrorism, 
  • And, we will identify and shut-off any potential safe havens for terrorist financing

This is a transformation in the FATF’s approach:

We will be less focused on building laws and regulations against terrorist financing. Most countries now have the essential measures in place.

Instead, we will help countries make good use of these tools - to properly safeguard the financial system against terrorists, and to aggressively disrupt terrorist financing.

This will mean more work with operational agencies when we set policy, and more emphasis on effectiveness when we review countries.

Closing Remarks

I will end on a positive note: 

Today we face an unprecedented terrorist threat. And an unprecedented challenge to prevent and disrupt the financing of ISIL.

But we also have an unprecedented level of commitment by countries to cut off the financing of terrorism. And effective tools to do so.

We have an opportunity to apply stronger and sharper measures against terrorist financing, and to make more effective use of them.

That will make a major contribution to defeating the terrorist threats.

Thank you.

 

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