Transparency International has this device to illustrate the overall level of AML/CFT compliance worldwide. Ratings reflect the extent to which a country’s measures to stop money laundering are considered effective by FATF. The assessment is conducted on the basis of 11 Immediate Outcomes, which represent key goals that an effective AML/CFT system should achieve. The Effective-O-Meter and effectiveness map draw on country effectiveness ratings these “immediate outcomes” available from FATF. To date 43 countries have been assessed, and only 7 have scored above 50% (USA, Spain, Italy, Switzerland, Australia, Portugal and Sweden), but it points out that even these relative high-scorers are below the 70% mark.
Hence it is unsurprising that the global rating is currently set at just 32%.
On 13th December, OFAC added 2 persons linked to the Lord’s Resistance Army to those persons designated for the purposes of its CAR sanctions regime, Okot Lukwang and Musa Hatari. Both facilitated the transfer of ivory, weapons, and money in support of the LRA. All property and interests in property of those designated today subject to US jurisdiction are blocked, and US persons are generally prohibited from engaging in transactions with them. OFAC originally designated the LRA and the group’s leader Joseph Kony in 2016.
The War on the Rocks website recently took a studied look at the number of terrorist attacks before and after 9/11, both inside and outside warzones. The thought-provoking study paired the Global Terrorism Database from the University of Maryland with civil war and insurgency data from the Uppsala Conflict Data Program in 194 countries. Spanning the years 1989 to 2014 allowed it to directly compare terrorist attacks in the early post-Cold War era with those since 2001.
It reports that the graphic indicates that global terrorist attacks rose dramatically after 2004: there were just over 1,000 in 2004, but almost 17,000 in 2014. The numbers from 2015 and 2016 (not shown) have remained remarkably high, but below the 2014 peak. The upward pattern holds even when removing attacks in Iraq and Afghanistan. However, it notes that more than 70% of the attacks in the past 10 years transpired in just 2 regions, both of which have seen extensive insurgency and civil conflict during that time: North Africa/Middle East and South-Central Asia. The article then posed the question, what do the numbers of attacks look like outside of places beset with civil strife?
The article highlights conclusions made from the data, including the apparent oddity that perhaps counterintuitively, the graphic also indicates that for a period in the mid-1990s, terrorist attacks in countries not experiencing civil wars exceeded attacks in war-torn states.
The article draws a number of significant conclusions – firstly, it is possible that post-9/11 counter-terrorism efforts have contributed to reducing incidents of non-insurgency terror (plus providing “easier” and more tempting targets in war zones, namely US and other soldiers in Afghanistan etc). Secondly, the decline in terrorism it describes could be reversed in the next several years (for example, if returning fighters caused mayhem).
Finally, and perhaps more importantly in a Trump era, the evidence raises difficult questions about the efficacy of the US approach to the war on terror in the future. Is it willing to maintain a sustained presence in Afghanistan, the Middle East, and parts of Africa to confront a problem that is increasingly regional and local?
The article makes some further observations (including civil wars are not normally the result of terrorism, but that terrorists exploit the conflict) and recommendations for US policy.
The Wall Street Journal reports on a report from C4DS – see link below – highlighting that researchers in the US and South Korea have identified a number of business transactions that they say show North Korea’s international finance web is more sophisticated than what was widely known previously.
As an example, the report cites a transaction in which a military equipment supplier run by North Korea’s intelligence agency used a front company in Hong Kong to purchase components from an East Asian electronics reseller. The payment was cleared through a correspondent account at the Bank of America, according to the report.
The Report itself says that it has found that the financial structure used by the North Koreans networks, surrounding North Korea’s major foreign exchange banks, which is tasked with the management of hard currency, have found themselves serving as a financial lifeline for the regime, but are reliant on a system that North Korea cannot control and is therefore vulnerable to systemic disruption. The report says it is –
- is Cash Dependent, the report explores how maintaining a positive flow of hard currency has become an imperative for regime survival and how the regime has gone to great lengths, often by illicit means, to ensure ongoing access to it;
- is institutionally bottlenecked, the regime, hoping to maintain oversight and security, with limited methods for storing and transacting in foreign currency internationally. The report analyses how North Korea’s policies led the regime to offshore critical portions of its financial system; and
- Is exposed to disruption, the report looks at how North Korean assets, nested within businesses overseas, are inherently vulnerable. It further explores the potential for international law enforcement action to dismantle critical nodes of the system.
On 12th December the EU published Council Decision 2017/2282/CFSP that extended current EU sanctions on the Democratic Republic of Congo to 12th December 2008.
DUTCH BUSINESSMAN ARRESTED ON LIBERIAN SANCTIONS CHARGES
As often is the case, Defence Web has a story not commonly seen elsewhere. It reports that a Dutch businessman convicted in April of selling weapons to ex-Liberian president and warlord Charles Taylor has been arrested in South Africa on a Dutch warrant, officials said. “Blood timber” trader Guus Kouwenhoven, 75, (known in Liberia as “Mister Gus”) was sentenced as an accessory to war crimes for providing arms to Taylor’s government in violation of a UN embargo. He had been living in Cape Town and refused to return to the Netherlands for trial, citing health problems, and so was not present at the trial. He is said to have run 2 timber companies in Liberia 2000-03 and used them to smuggle arms, according to the Dutch court that sentenced him to 19 years in prison.
On 11th December FATF published its report on Portugal’s AML/CFT regimes and concludes that Portugal has a sound and effective regime for fighting money laundering and terrorist financing, but should improve implementation of measures aimed at non-financial business and professions. Non-financial businesses and professions and their supervisors lack the understanding of the risks involved. It says that Portugal should allocate appropriate means and resources to the FIU so that it can adequately manage and investigate the increasing volume of suspicious transaction reports, and conduct strategic analysis to identify ML/TF trends and patterns, and should also maintain adequate and comprehensive ML/TF-related statistics in order to better support and document its understanding and analysis of risks, and demonstrate the actions taken and results achieved.
HMRC on 11th December published the 2016/17 accounts. These accounts calculate the total share of common duties due to the Isle of Man government and the balance owing to either the Isle of Man or the UK. VAT and other indirect taxes and duties arising in the Isle of Man are collected on behalf of the Manx Government by the Isle of Man Customs & Excise Service.
On 11th December the Home Secretary announced the creation of the National Economic Crime Centre (NECC) within the NCA. The multi-agency centre will plan, task and co-ordinate operational responses across agencies bringing together the UK’s capabilities to tackle economic crime more effectively. Supported by enhanced intelligence and analytical capabilities it will draw together expertise from across law enforcement agencies, Government and the private sector.