The Merging of the Counter-Terrorism and Anti-Money Laundering Regimes

Abstract

TABLE OF CONTENTS I. INTRODUCTION II. U.S. INITIATIVES A. U.S. Initiates Sanctions Against bin Laden and Associates 1. Executive Order 2. Second U.S. Counter-terrorism List 3. Third U.S. Counter-terrorism List B. Infrastructure: U.S. Forms New Investigative Team to Target Terrorist Financial Networks C. USA PATRIOT Act and Implementation 1. Selected Provisions of the USA PATRIOT Act 2. Initial Treasury Regulations Implementing the PATRIOT Act a. Correspondent Accounts for Foreign Shell Banks b. Advisory on SARs by Money Transmitters c. Requirement that Nonfinancial Trades or Businesses Report Certain Currency Transactions D. Enforcement Actions 1. U.S. and Allies Act Against Two Money Transmitters 2. Counter-terrorism Financial Enforcement Produces Litigation and Controversy III. INTERNATIONAL ORGANIZATIONS A. Organizations of a Universal Nature 1. The United Nations Acts to Combat Terrorism a. 1999 Convention for the Suppression of the Financing of Terrorism b. Security Council Resolutions on Combating Financing c. Implementation by the Counter-Terrorism Committee of Resolution 1373 d. Sweden and France Request Review of Freezing of Terrorist Assets Process 2. G7 Promises to Enhance Counter-terrorism Anti-Money Laundering Efforts 3. FATF Adopts New Standards to Combat Terrorist Financing 4. Twenty Nations Agree to Freeze Terrorist Assets and IMF Will Provide Technical Aid B. Regional Organizations 1. Extraordinary September 21, 2001 European Council Meeting 2. EU Regulation to Combat Terrorist Financing IV. RESPONSES BY SELECTED FOREIGN GOVERNMENTS A. European Countries 1. Sweden 2. Switzerland B. Middle Eastern Countries 1. Bahrain 2. Egypt 3. Kuwait 4. Lebanon C. Selected Government Actions Affecting Offshore Financial Centers 1. Bahamas Freezes Bank Account Linked to Terrorist 2. Grenada Suspends Economic Nationality Law 3. Antigua and Barbuda Enacts Law to Prevent Terrorism V. FUTURE DIRECTIONS AND PRIVATE SECTOR DUE DILIGENCE VI. SUMMARY AND CONCLUSION I. INTRODUCTION The form of the emerging counter-terrorism financial enforcement regime is derived substantially from the process of establishing an anti-money laundering enforcement initiative. Due to space limitations, this Article omits a discussion of the development of anti-money laundering enforcement laws, but outlines the substantive component. The Article reviews some of the major U.S. government initiatives to combat the financing of transnational terrorism in the aftermath of the incidents of September 11, 2001. In particular, it reviews the Executive Orders, the infrastructural changes, the enactment of the USA PATRIOT Act, (1) and some of the enforcement actions undertaken to hinder terrorist financing. The second part of this Article identifies the major intergovernmental organizations (IGOs) that have undertaken counter-terrorism financial enforcement. As a result of the actions of the IGOs, legal uniformity is developing in counter-terrorism financial enforcement. The rapid transformation of the law and culture surrounding international financial transactions requires that governments and the private sector pay attention and follow the developments or risk adverse consequences. This Article reviews the responses by selected foreign governments in Europe and the Middle East as well as actions by Caribbean governments that affect offshore financial centers. …