Mr. Moderator, Distinguished Delegates,
We congratulate the Counter Terrorism Committee for holding this special meeting on ‘preventing and suppressing terrorist financing’. We also commend Mike Smith, Executive Director CTED and his team for their hard work and leadership.
The legal framework for the global networking for countering the financing of terrorism (CFT) is based on the International Convention for the Suppression of the Financing of Terrorism of 1999 and the Security Council resolution 1373. Article 18 of the Convention had not only set forth various forms of the CFT but also the importance of global cooperation in this area. It encouraged better communication and the exchange of information between different jurisdictions.
In spite of the above legal and normative framework, the following issues still need to be resolved for an effective and efficient global cooperation in this field.
First, the urgency of the international cooperation in this field has to be balanced with provisions of financial institutions regarding the confidentiality of data and protection of their clients’ privacy. Security agencies need to share more information with corporate sector before forwarding queries to the latter. Bankers need to be more forthcoming in response to such questions.
Second, law enforcement problems in counter financing of terrorism in developing countries are mainly because of lack of skills, training, or resources to investigate, prosecute, and adjudicate financial crimes. A global network of trainers would be required for capacity building across different legal systems of the world. We commend the CTED’s initiative of drawing attention to this challenge by holding workshops on this issue.
Third, recommendation 8 of FATF regarding the abuse of non-profit entities for the financing of terrorism might have some unintended consequences for charities around the world. In some cultures, it is a religious duty to pay a fixed amount of income to poor and it is usually done through charities. For example, in Islam zakat is obligatory for every Muslim who can afford to pay it. Developing States’ capacity needs to be enhanced so that they could introduce regulatory framework for it without undermining the legitimate role and the right to freedom of association of non-profit organizations (NPOs).
Fourth, in spite of the February 2012 updating of the FATF recommendations, the international framework as a whole still assumes the frequent use of formal sector institutions by terrorists for cross-border transfers of value. It is hard to trace suspicious activity of terrorism financing in the formal financial system and even harder in an informal economy. The current legal and normative framework needs to be adapted to the reality of informal value transfer systems (IVTS) in many parts of the world.
Fifth, national authorities and international bodies should not introduce laws or regulations in the name of countering the financing of terrorism without sufficient and reasonable evidence. The burden of prevention of the financing should be commensurate with the risk of terrorism. Otherwise national and regional courts are likely to ignore the rationale for freezing accounts and give decisions to protect human rights and due process.
Pakistan is fully committed to countering financing of terrorism. Pakistan is a party to the UN Convention for the Suppression of the Financing of Terrorism; and has enacted a landmark Anti-Money Laundering Law. The Financial Intelligence Unit of the State Bank of Pakistan is active in monitoring suspicious financial transactions. Hundreds of bank accounts totaling Rs. 751 million have been frozen. We are implementing comprehensive international standards embodied in the recently modified recommendations of the Financial Action Task Force.
Pakistan is an active member of the Asia-Pacific Group on Money Laundering. We recently hosted in Islamabad a Ministerial meeting to devise strategies to deal with the increasing threat of financing of terrorism through the proceeds of illicit narcotics, their production and trafficking.
I have outlined a few challenges which need to be overcome by adopting a global approach towards the financing of terrorism. In conclusion, I must also appreciate that it is due to international legal system’s CFT regulations today that the flow of terrorists’ funds gets noticed. It is hard for terrorists to raise money today and harder for them to transfer it anywhere. Today, banks are more conscious of customer due diligence. Security agencies are more efficient in monitoring terrorists’ financial transactions. There is no room for complacency but these few successes are a matter of satisfaction for the international community and lay a sound foundation for more work to suppress financing of terrorism.