Money Laundering and the Financing of Terrorism

Money-laundering is the method by which criminals disguise the illegal origins of their wealth and protect their asset bases, so as to avoid the suspicion of law enforcement agencies and prevent leaving a trail of incriminating evidence.

Terrorists and terrorist organizations also rely on money to sustain themselves and to carry out terrorist acts. Money for terrorists is derived from a wide variety of sources. While terrorists are not greatly concerned with disguising the origin of money, they are concerned with concealing its destination and the purpose for which it has been collected. Terrorists and terrorist organizations therefore employ techniques similar to those used by money launderers to hide their money.

The ability to prevent and detect money-laundering is a highly effective means of identifying criminals and terrorists and the underlying activity from which money is derived. The application of intelligence and investigative techniques can be one way of detecting and disrupting the activities of terrorists and terrorist organizations.

Important instruments and international standards on Money Laundering and Financing of Terrorism:

  1. 1988 UN Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances is the first international convention which criminalizes money-laundering.
     
  2. Financial Action Task Force (FATF) 40 Recommendations (1990) for improving national legal systems, enhancing the role of the financial sector and intensifying cooperation in the fight against money-laundering. These Recommendations were revised and updated in 1996, in 2003, and in 2012 in order to reflect changes in money-laundering techniques and trends.
     
  3. 1998 United Nations’ Special Assembly Session, Political Declaration and Action Plan against Money Laundering.
     
  4. International Convention for the Suppression of the Financing of Terrorism (2002) requires Member States to take measures to protect their financial systems from being misused by persons planning or engaged in terrorist activities.
     
  5. UN Convention Against Transnational Organized Crime (2003) and UN Convention Against Corruption (2005) Both instruments declare that money-laundering offence should not only apply to the proceeds of illicit drug trafficking, but should also cover the proceeds of all serious crimes. Both Conventions urge States to create a comprehensive domestic supervisory and regulatory regime for banks and non-bank financial institutions, including natural and legal persons, as well as any entities particularly susceptible to being involved in a money-laundering scheme. The Conventions also call for the establishment of Financial Intelligence Units (FIUs).
     
  6. UN Security Council Resolution 1617 (2005) and the Annexed Plan of Action of Resolution 60/288 of the UN General Assembly (20 Sept 2006), stress the importance of the implementation of the FATF 40 Recommendations and the 9 Special Recommendations on terrorist financing. The Resolution reads in part: “…Strongly urges all Member States to implement the comprehensive, international standards embodied in the Financial Action Task Force’s (FATF) Forty Recommendations on Money Laundering and the FATF Nine Special Recommendations on Terrorist Financing;’’
     
  7. UN General Assembly Resolution 60/288 (Sep. 2006) is a unique global instrument that will enhance national, regional and international efforts to counter terrorism. This is the first time that all Member States have agreed to a common strategic approach to fight terrorism, not only sending a clear message that terrorism is unacceptable in all its forms and manifestation but also resolving to take practical steps individually and collectively to prevent and combat it.



( Taken from the UNODC website: http://www.unodc.org/unodc/en/money-laundering/Instruments-Standards.html?ref=menuside#UN-Conventions )