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Combating Terrorist Financing

The term hawala is used for a system that is most often times trust based, and results in no written records of transactions.  It involves a third party lender, and is just one of the ways those intending to commit fraud, money laundering or the act of terrorist financing.  Other methods used for laundering money for funding terrorism include charities and commodities.  Since the September 11 attacks on the United States, financial institutions have been discovering the ways in which this takes place and they discovered as well, just how prevalent these activities have been.  And investigations have not taken place in the United States alone.  The international financial systems are finding out just how many terrorist cells, as well as crimes relating to money laundering committed by other organizations, have been operating and just how many different ways they go about doing what they do.

The wide array of methods include the trafficking of drugs, the smuggling of large sums of cash, the misuse of charity funds, as well as thehawala and the standard transfers of money laundering techniques.  Previous to September and in the months following, the vast array had investigators just shooting, figuratively, in the air hoping to hit a target, hoping to uncover some of the terrorist and laundering rings, as the conventional methods of enforcement were just not equipped to handle so many covert operations.

The Executive Order 13224 was enacted just two weeks following September 11.  This act served to give the United States more power in targeting the structure of the terrorist and criminal organizations.  Investigators were granted the power to freeze assets and block transactions of the terrorists and the support structure of the terrorists.  The U.S. was also now able to block assets to foreign financial institutions as well.  Additionally, if foreign banks did not cooperate with the U.S. authorities in the the freezing of assets and identification of resources used abroad by terrorist cells, they would no longer have access to American markets.  This was the beginning of a worldwide network to globally freeze and block the assets of terrorist organizations.

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