On the trail of terrorists

Last week as the British government moved to freeze the assets of Jemaah Islamiah, the Indonesian group thought to behind the murderous Bali bomb, it also put out the first report detailing its work cracking down on terrorist finances.

Interesting reading it makes too, given that Gordon Brown made it clear that a high-flying accountant was to be placed at the head of the Terrorist Finance Unit, set up in November last year as part of the National Criminal Intelligence Service following the September 11 attacks.

This in itself has proved enthralling. Despite whispers about the selection process for this job – stories of shortlists and experienced people being overlooked – NCIS has refused to reveal who got this top financial crime fighting post. But this is probably for good reason. Last week’s report tells in some detail of the success already met by the Terrorist Finance Unit which means there are obvious secuirity concerns for those who work there.

Accountants are rarely in this kind of firing line. While many may take financial risks in producing audits, few are in the frontline against crime and terror. But that is where the accountants, who are undoubtedly serving in the unit, are working.

Gordon Brown says around $10m (#6.5m) of terrorist money has been frozen – part of around $112m seized worldwide since September 11 – and makes it clear the role played by financial investigators in tracking terrorist funds is crucial. ‘It is not always the size of the money that matters, it is being able to track its source. That is why the sophisticated intelligence we are talking about is necessary, and why even small sums of money must be tracked back,’ he said recently.

This view is echoed by one of the country’s most senior policemen David Veness, head of specialist operations at Scotland Yard. ‘What is critical is financial investigation, pursued on a multi-agency basis across countries, gives us an intelligence harvest we would not as counter-terrorists have access to,’ he says. ‘It is highly desirable that that leads to recovery, it is eminently beneficial if criminal prosecutions result, but it is intelligence that allows us to save lives and to stop mass murder.’

The TFU at NCIS has been created as a financial intelligence gathering group and in less than a year has received 3,500 suspicious financial disclosure reports. These will mainly come from firms regulated by the Financial Services Authority whose money laundering rules dictate disclosures be made to NCIS.

The TFU then refers cases on the National Terrorist Financial Investigation Unit which has seen a threefold increase in staff as a result of a huge ratcheting up of pressure on terrorists. So far 600 cases have been referred.

In one instance the unit found #500,000 worth of assets linked to someone on a United Nations sanctions list.

Since the beginning of this year the TFU has produced three reports into high-profile individuals suspected of fundraising activities but has also identified that businesses have unwittingly funded terrorists or are being abused by those raising cash for terrorists. The unit also helped distinguish between common criminal activity and terrorist fundraising.

This was highlighted when a financial disclosure recently made by a bank turned out to be connected to terrorism.

Financial institutions have received praise, even though some commentators are sceptical about the level of enthusiasm in the City for money laundering rules. At one institution the money laundering reporting officer – a mandatory appointment – is widely known by colleagues as the ‘business prevention officer’.

But Scotland Yard seems happy with efforts made in the City. David Veness says counter-terrorism experts are impressed by the ‘vision demonstrated by Her Majesty’s Treasury, by the Home Office, and if I might say so, by the support the international financial institutions have given us’.

Last week’s report said the FSA and financial institutions have cooperated fully and as a result ‘individuals have been identified who fit a recognised pattern of terrorist fundraising’.

The question now is whether the momentum can be maintained and what effect a possible war with Iraq would have on these efforts.

Regardless of the answers to these questions there is more work to be done for the financial experts on the trail of terrorists.

FACTS & FIGURES

• 3,500 suspicious transaction reports from financial institutions to the National Criminal Intelligence Service
• 600 cases referred from the Terrorist Finance Unit to the National Terrorist Financial Investigation Unit
• £6.5m of terrorist assets frozen by UK government since September 11
• £72.5m frozen worldwide since September 11
• 293 individuals or organisations had their assets frozen
• 175 countries or jurisdictions across the world have taken ‘concrete’ anti-terrorist finance measures
• £500,000 worth of assets linked by NTFIU to individual on UN sanctions list
• £100,000 terrorist bank fraud uncovered
• 16,000 visitors a month to the Bank of England website listing individuals and organisations suspected of committing or facilitating terrorist acts.

• Source: Treasury Combating the Financing of Terrorism report.