{"id":28251,"date":"2016-08-19T12:30:54","date_gmt":"2016-08-19T02:30:54","guid":{"rendered":"http:\/\/www.aspistrategist.ru\/?p=28251"},"modified":"2016-08-19T08:56:52","modified_gmt":"2016-08-18T22:56:52","slug":"risk-assessment-financing-terror-important-first-step","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/risk-assessment-financing-terror-important-first-step\/","title":{"rendered":"A risk assessment for financing terror: an important first step"},"content":{"rendered":"

\"Image<\/a><\/p>\n

Last week the second Southeast Asian regional Counter-Terrorism Financing Summit<\/a>, co-hosted by Australia\u2019s financial intelligence unit AUSTRAC and PPATK, its Indonesian counterpart, convened in Bali. Delivering on the commitments from last November\u2019s Sydney Summit, the release of the world\u2019s first regional risk assessment<\/a> (RRA) on terrorism financing was an important achievement.<\/p>\n

As the RRA notes<\/a> (PDF), our region hasn\u2019t yet been exposed to the full range of terrorism financing risks experienced globally. Rather, risks depend on each country\u2019s domestic situation and geographical location. Understanding those risks is an important first step towards tackling the most pressing threats and vulnerabilities.<\/p>\n

Australia, Indonesia, Malaysia, the Philippines, Singapore and Thailand assessed two methods of terrorism funding as high risk.<\/p>\n

The first is self-funding through legitimate sources\u2014including personal income, welfare and pension payments, credit cards and other loans\u2014and the sale of personal items. Relatively small amounts of money are required to travel to conflict zones or pay for unsophisticated attacks which may simply involve hiring a truck<\/a>. On its own, such activity is indistinguishable from ordinary financial behaviour, making it difficult to detect.<\/p>\n

The second method is the misuse of non-profit organisations (NPOs). Insiders can divert legitimate funds to terrorist groups, or NPOs can be set up as fronts. The recent allegations against Dar al Quran wa Sunnah<\/a>, a Sydney-based charity established to raise money for Syrian refugees, and the Israeli arrest of World Vision\u2019s Gaza manager<\/a> for allegedly diverting funds to Hamas are examples of that method. While not all NPOs are high risk, these cases show how large amounts of money can be raised and moved undetected over time.<\/p>\n

The RRA found that cross-border movement of cash is the predominant method used to move terrorist funds across the region. It highlighted in particular the region\u2019s many porous land borders and close maritime boundaries as factors, with authorities having poor visibility over cash smuggling routes. While regional countries require departing travellers to declare cash over a certain threshold (AU$10,000 for Australia), border authorities can\u2019t check everyone and detecting hidden cash is difficult. Compounding this problem, there are multiple ways to move financial assets across borders that don\u2019t involve cash, and many don\u2019t need to be declared. An increasingly popular method is the use of stored value cards which have been used by foreign terrorist fighters.<\/p>\n

Now that the priority areas for focus have been determined, what should Australia do?<\/p>\n

The Australian government is already considering answers to that question, thanks to the review<\/a> (PDF) of the Anti-Money Laundering and Counter-Terrorism Financing (AML\/CTF) Act released in April. In Bali last week, Justice Minister Michael Keenan announced<\/a> that \u2018reforms arising from the review will be progressed in two stages\u2019: a short-term package and longer-term reforms.<\/p>\n

An important measure to address the cross-border movement of funds is broadening the definition of what constitutes cash (over the existing threshold of AU$10,000) to include gaming chips, letters of credit, and bullion. The government is also investigating the feasibility of including stored value cards. These are much needed reforms to help detect the cross border movement of assets other than cash.<\/p>\n

The regional study of cross-border cash movements announced at Bali<\/a> will usefully improve visibility over smuggling routes. Regional financial intelligence units should build on this work to enhance collaboration and information sharing on threats and suspect targets.<\/p>\n

The Australian government is also investigating a simplified model for sharing information between AUSTRAC and the private sector. This is an area requiring urgent reform to reduce restrictions on the sharing of information about terrorism financing threats generally. It\u2019s particularly crucial in helping detect self-funding through legitimate sources. Private sector companies, such as banks, are in the front line of detecting and reporting such activity. But they need greater information from government<\/a> on who and what to look for.<\/p>\n

Not mentioned in the AML\/CTF Act review, however, were actions to counter the misuse of NPOs. Minister Keenan did note<\/a> at the Summit that work to better understand the sector in Australia is underway. The Bali Summit communiqu\u00e9<\/a> (PDF) declared that a second RRA, focussed on NPOs, will be undertaken to inform targeted oversight and outreach to the sector. That should be of the utmost priority. NPOs need urgent information on how their respective organisations can be misused and what governance practices and mitigation strategies should be put in place. The region needs to build on the Bali momentum and get behind these next steps.<\/p>\n

The release of the RRA is an important development, allowing counterterrorism financing measures to be targeted and prioritised. However, as AUSTRAC CEO Paul Jevtovic stated at Bali, regional countries will be judged on what actions they take in response to the risks and threats outlined in the RRA. The hard work has only just begun.<\/p>\n","protected":false},"excerpt":{"rendered":"

Last week the second Southeast Asian regional Counter-Terrorism Financing Summit, co-hosted by Australia\u2019s financial intelligence unit AUSTRAC and PPATK, its Indonesian counterpart, convened in Bali. 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