Ecorys to study restriction of financing of terrorism
The European Commission have enlisted consultancy Ecorys to collaborate with the CEPS, to undertake a study on restricting cash payment linked to the funding of terrorist activities. Cash-based economies and businesses are vulnerable to money laundering and financing of terrorism, as terrorist organisations such as the so-called Islamic State, Colombian FARC, ETA, Hamas, Boko Haram, and Al-Qaeda and its affiliates are largely dependent on the use, transfer and storage of cash.
By 2022, it is predicted that more cashless payment methods will be used than traditional methods in the EU, cash will still remain integral to transactions across numerous member states developing at different paces. Ecorys has been hired by the European Commission to work with the Centre for European Policy Studies (CEPS) to consider how the situation may evolve without EU intervention, and what options there are to address this change, with a specific focus on the prevention of money laundering and the funding of terrorism. The consulting firm will be involved in the study between July 2017 and February 2018, and is being overseen by the Department of Economic and Financial Affairs of the European Commission.
The chief objectives of the study are to ensure a high level of security to the EU and its citizens by cutting off a source of financial oxygen for global terrorist groups, with numerous high profile attacks occurring across member states over recent years, including France, Belgium, Germany, and the UK attacks in Manchester and London. Global money laundering transactions are estimated to be as high as 5% of global GDP, or roughly U.S. $1-2 trillion annually. According to the United Nations Office on Drugs and Crime meanwhile, less than 1% of global illicit financial flows are currently being seized by authorities.
Due to the criminal nature of terrorism, naturally there is little to no quantitative data to analyse the true extent to which money laundering is aiding terror cells, however, such groups are known to rely heavily on alternative financing – with the noted exception of ISIS, who in 2015 were reported to make as much as $600 million a year through the sale of oil. Since air-strikes to multiple ISIS controlled oil-fields however, they too have been forced to rely on more traditional means of funding.
The EU at present has developed a range of measures that aim at cutting off terrorists' access to funding. The Third Anti-Money Laundering Directive expressly extends the scope of the anti-money laundering regime to terrorist financing, while the Cash Control Regulation requires the disclosure of cash or equivalent of over €10,000 when entering or leaving the EU.
However, while money laundering remains an integral part of terror funding, its prevention does little to prevent governmental support. The United States has extensively been criticised for its haphazard support of various groups in the early stages of the Syrian Civil War, without adequately vetting groups it aligned with, while UK Conservative Party were last year criticised, after it emerged they had sold billions of pounds worth of weaponry to Saudis Arabia – a state continuously under investigation for financial links to the so-called Islamic State. The Prime Minister at the time, David Cameron, subsequently ordered an investigation into extremism, as part of a deal with the Liberal Democrats in exchange for the party supporting the extension of British airstrikes in Syria.
The Home Office investigation of overseas funding of extremist groups in the UK, was to be presented to the then Home Secretary Theresa May and Cameron, however 20 months later, the report’s release has been delayed beyond two national elections, given the “sensitive nature” of the content, with a decision about the future of the investigation still to be taken following July’s snap general election. Critics have suggested current Prime Minister Theresa May’s embattled government is stalling information which could damage its reputation further.
