Remarks by Santiago Otamendi, FATF President
Briefing to the UN Counter-Terrorism Committee (CTC)
Conference Room 7, UN Headquarters Building, New York
Thursday 14 December 2017; 15:00
Mr. Chairman, distinguished Ambassadors and representatives, and dear colleagues; it is a pleasure to be briefing you today on one of the FATF’s main responsibilities.
Purpose of Countering the Financing of Terrorism (CFT)
Terrorism is not only challenging our security but mostly our democracies, freedom, liberties and willingness to live with tolerance, mutual understanding, and peace.
Financing is essential for all terrorists - from large terrorist organisations which control territory down to small terrorist cells, foreign terrorist fighters, and individual “lone actors”. Different terrorist groups have very different financing needs and different ways of meeting them.
Regardless of their size and complexity, the financial activities and channels of terrorists are an essential source of intelligence. Financial investigation can identify terrorist cells, their associates and facilitators, and reveal the structure of terrorist groups, and their logistics and facilitation networks.
Terrorists financing requirements are also an opportunity to disrupt their activities. This means depriving them of the funds and resources they need to plan attacks or to sustain recruitment and spread radicalization. It also has wider effects: putting terrorist organisations under financial stress can damage the level of trust and cohesion within their organisation and leadership.
Therefore, under my tenure as FATF President, combating terrorist financing remains its top priority.
Preventing and disrupting financial flows should be an essential part of the strategy to defeat terrorists in all cases - from large groups to individuals. But this is a dynamic threat which has further transformed in recent months. We need to respond to the changing terrorist threat quickly and flexibly, guided by a risk-based approach.
Today I want to brief you on what the FATF is doing to make that happen.
The FATF works in close partnership with the United Nations - using our status as a task force to bring together technical and operational expertise at a global level, to find the most effective ways to implement the obligations set out by the UN, and to reinforce those obligations, through a rigorous system of peer-reviews.
The FATF standards and resolutions adopted by the UN Security Council have always been complementary in nature, with the FATF seeking to operationalise the financial provisions of UN Security Council Resolutions by setting specific requirements for countries to implement. These efforts give greater effect to the Resolutions.
These and other FATF standards are enforced through rigorous peer-review and follow-up procedures, in which each jurisdiction submits to an in-depth review of its technical compliance and effectiveness by a team of experts from other member jurisdictions. As this process has evolved, whether a country has the right laws, regulations, and mechanisms on paper has become a necessary, but not sufficient, condition of demonstrating a robust system and the focus has largely been on how effective that framework is in actually combating money laundering, and terrorist and proliferation financing.
This peer review process, and the follow-up procedures put in place to ensure deficiencies are being addressed, has had the effect of greatly increasing the number of jurisdictions which comply with the requirements.
Since the adoption of key counterterrorism Resolutions in the late 1990s and early 2000s—including Resolutions 1267 and 1373, which target terrorists and those who support them—the FATF has worked to ensure that its own standards support these efforts. Since 2010, FATF’s public identification process has resulted in over 50 countries establishing the necessary legal framework to implement their UN counter-terrorism sanctions obligations. This is a great example of how the FATF can improve the impact of Security Council Resolutions by pushing for global implementation of Member States’ UN obligations.
In this work we benefit greatly from our co-operation with the UN. The Security Council is the origin of the legal obligations which are elaborated through the FATF Recommendations. But we also benefit from our work with this committee, and with the Counter-Terrorism Executive Directorate, who work to maintain a close connection between the UN’s global view of the terrorist threat, and the FATF’s work on terrorist financing, and play a valuable role in helping vulnerable countries to implement the global standards. Moreover, the FATF has over the last two years prepared reports on ISIL and its financing, based on member contributions. This was recently expanded to cover Al Qaeda and affiliates, and FATF is working closely with the Counter-Terrorism Executive Directorate and UN Monitoring Teams in developing these reports.
FATF’s Terrorist Financing (TF) Strategy
Combating terrorist financing remains the FATF’s top priority and this was very much welcomed by the Leaders of G20 on their Hamburg Statement on Countering Terrorism
In 2016 the FATF set out a consolidated terrorist financing strategy. Its aim is (and I quote):
“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”.
We have made rapid progress in implementing our strategy and operational plan on terrorist financing.
For example, last year:
- We completed work to revise Recommendation 5 on the criminalisation of terrorist financing, and produced guidance to assist legislators, judges, and prosecutors in using criminal justice tools effectively to bring those who finance terrorism to justice.
- We produced a Best Practices Paper on preventing terrorist abuse of the not-for-profit sector, and revised Recommendation 8 to properly embed a risk-based approach in the international standards.
- We completed studies on the financing of ISIL, and produced updated terrorist financing risk indicators.
- And we continued to follow-up on the terrorist financing fact-finding initiative, which reviewed the legal framework to combat terrorist financing in 198 jurisdictions, to identify gaps and weaknesses, and ensure jurisdictions take urgent action to address them.
Earlier this year, the FATF completed its work on inter-agency information sharing for Counter-terrorism and Counter terrorist financing purposes, to promote better information flows between different national authorities, in order to realise the maximum benefit from financial intelligence in counter-terrorism investigations.
We also completed work on information sharing in the private sector, which aims to break down the barriers (such as data protection) which can prevent private sector firms from being able to share information about suspicious activities and customers in order to identify TF activity and report it to the authorities. It is important to recognise that we are working in partnership with the private sector in fighting the financing of terrorism
At our Plenary meeting in Buenos Aires last month, the FATF finalised a project on financing recruitment for terrorist purposes. The aim of this report was to identify how financial tools can help to disrupt terrorist threats at the earliest possible stage. The report identified that there are different ways to recruit people to a terrorist organisation in different parts of the world. In some cases, all a person needs is a computer or a cell phone to be recruited. In other cases, there is a broader facilitation network involved. We produced this report to help countries to understand how terrorists might be recruited, what this recruitment costs, and how AML/CFT tools have been used to disrupt the recruitment for terrorism.
Our work continued this week: I would like to thank the UN CTED for hosting the FATF’s Practitioners’ Meeting on the Implementation of UNSCR 1373 which was held here in New York at the United Nations headquarters on Tuesday and Wednesday. This meeting brought together practitioners with practical experience in implementing requests through UNSCR 1373 to discuss current practices, potential challenges, and examples of best practice in the sending and/or receiving of requests to take freezing action pursuant to UNSCR 1373.
Effective implementation of this resolution is important to the goals of both the FATF and the UN CTC and events like this are important vehicles for raising awareness and improving implementation on the ground.
Currently the FATF is considering a new set of actions that will help ensure we continue to understand the evolving threats as well as the most effective methods for tackling them. It is critically important that countries analyse and understand the TF risks they face, and that these risk assessments are regularly updated as threats evolve. We also expect the new CFT Operational Plan to have more emphasis on supporting the improvement of all countries’ efforts to combat terrorist financing.
The FATF is also looking more closely at new technologies for providing financial services, and new technologies for meeting regulatory requirements - FinTech and RegTech. Terrorists could use new technologies to raise and move funds. There are risks of misuse of crowdfunding platforms, or of virtual currency payment products and services.
The FATF is working closely with the FinTech and RegTech sectors to improve their awareness of money laundering and terrorist financing risks and of the FATF requirements, and to help them to integrate risk management into their services. It is much more effective for measures to manage these risks to be built-in to new products from the beginning, than it is to add them afterwards.
But it is not only terrorists who can exploit the potential of new technologies. Counter-terrorism authorities can use them also. Technologies being developed and implemented today have the potential to greatly enhance our ability to identify and disrupt terrorist financing.
The temptation is always to look at the newest and most interesting issues. But we should not forget that most terrorist financing is done using simple, low-technology methods, and that many countries still do not have effective preventive measures or investigative capacity to deter or disrupt terrorist financing by those methods. We need to get the basics right.
To help countries make the most effective use of criminal justice tools to fight terrorist financing, the FATF is holding a series of workshops for judges and prosecutors. We have already held the first workshop in Ecuador for judges and prosecutors from GAFILAT region, and in January we will hold a second workshop in China for the EAG and APG region. We will follow with workshops in Europe, the Caribbean and North Africa to reach the whole FATF Global Network, and finish with a wrap-up workshop in South Korea, to produce a technical paper in which FATF will identify global and regional challenges, obstacles, goals and best practices for successfully prosecuting terrorists and their financiers -particularly for trans-national cases-, and also help to envisage training programs, other workshops and technical assistance.
This is another FATF priority under Argentina´s presidency that was highlighted by G20 Leaders, which they also understand will contribute to enhanced international co-operation and increased effectiveness in the application of FATF's standards.
To conclude, I want to share with you what the Secretary-General said in his speech in London recently: “Terrorism is fundamentally the denial and destruction of human rights. The fight against terrorism will never succeed by perpetuating the same denial and destruction”.
Thank you for your attention.