Crime, Criminal Law and Criminal Justice 228, p. 228.
75. Ethan. A Nadelmann, “Unlaundering Dirty Money Abroad: US Foreign Policy and Financial Secrecy Jurisdictions” 1986 18(1) Inter-American Law Review 33, p. 34.
76. Levi, above n 74, p. 228.
77. Frank Verbruggen, “Proceeds-Oriented Criminal Justice in Belgium: Backbone or Wishbone of a Modern Approach to Organised Crime?” 1997 5(3) European Journal of Crime, Criminal Law and Criminal Justice 314, p. 318
78. Koh, above n 37, p. 39.
79. Stessens, above n 73, p. 86.
80. Koh, above n 37, p. 43.
81. Stessens, above n 73, p. 86.
82. R. T. Naylor, “Follow-the-Money Methods in Crime Control Policy” in Margaret E. Beare (ed) Critical Reflections on Transnational Organized Crime, Money Laundering, and Corruption (University of Toronto Press, Toronto, 2003). See also Peter Alldridge, “The Moral Limits of the Crime of Money Laundering” 2002 5(1) Buffalo Criminal Law Review 279.
83. Robin Morgan, The Demon Lover: The Roots of Terrorism (Piatkus, London, 2001), p. 40.
84. Michael Levi, “Lessons for Countering Terrorist Financing from the War on Serious and Organized Crime” in Thomas J. Biersteker and Sue E. Eckert (eds) Countering the Financing of Terrorism (Routledge, London, 2008), p. 267.
85. Raphael Perl, “Anti-Terror Strategy, The 9/11 Commission Report, and Terrorism Financing: Implicating for U.S. Policy Makers” in Jeanne K. Giraldo and Harold A. Trinkunas (eds) Terrorism Financing and State Responses: A Comparative Perspective (Stanford University Press, Stanford, CA, 2007), p. 255.
86. Levi, above n 1, p. 662.
87. Ibid. See also UNSC, Letter Dated 23 August 2004 from the Chairman of the Security Council Committee Established Pursuant to Resolution 1267 (1999) Concerning Al-Qaida and the Taliban and Associated Individuals and Entities Addressed to the President of the Security Council (S/2004/679, August 25, 2004), p. 6.
88. Nikos Passas, “Terrorism Financing Mechanisms and Dilemmas” in Jeanne K. Giraldo and Harold A. Trinkunas (eds) Terrorism Financing and State Responses: A Comparative Perspective (Stanford University Press, Stanford, CA, 2007), pp. 32–33.
89. National Commission on Terrorist Attacks upon the United States, Thomas H. Kean and Lee Hamilton, The 9/11 Commission Report: Final Report of the National Commission on Terrorist Attacks upon the United States (National Commission on Terrorist Attacks upon the United States, Washington, DC, 2004), p. 382. See also John Roth, Douglas Greenburg, and Serena Wille, Monograph on Terrorist Financing Staff Report to the Commission (National Commission on Terrorist Attacks upon the United States, Washington, DC, 2004), p. 29.
90. Passas, above n 88, p. 36.
91. Neil Boister, An Introduction to Transnational Criminal Law (Oxford University Press, Oxford, 2012), p. 106.
92. Ben Saul, “The Legal Relationship between Terrorism and Transnational Crime” 2017 17(3) International Criminal Law Review 417, p. 451.
93. Perl, above n 85, p. 251. See also Levi, above n 1, p. 662.
Is Terrorist Financing a Predicate Offense of Money Laundering?
Following the adoption of the Terrorist Financing Convention, the FATF now emphasizes the criminalization of terrorist financing as an independent offense; but referring to “the close connection between international terrorism and, inter alia, money laundering,”1 it additionally pushes countries to criminalize terrorist financing as a predicate crime to money laundering.2 Examination of this recommendation provides a convenient way to analyze some of the assumptions built into terrorist financing, and how certain ideas appear to have been borrowed from the theory of anti-money laundering.
The recommendation suggests (although it is difficult to prove) that the underlying approach of the FATF’s policy makers may have been to resolve the problem of terrorist financing by analogy with their existing solutions to money laundering. Whether or not this is the case, there are, nonetheless, some uncertainties about the scope of this FATF’s recommendation. Practically, it is not clear what the reference to the link between terrorism and money laundering implies. Does it mean that terrorism is a crime which generates proceeds which need to be laundered? There is no doubt that some terrorist acts such as hijacking or hostage taking, criminalized by UN conventions annexed to the Terrorist Financing Convention, may generate money which needs to be laundered. But terrorism in its generic sense refers to the use of violence against civilians which results in bodily injuries for the purpose of intimidating or coercing.3
Does the recommendation imply that financing of terrorism is another form of money laundering, which can be included by the anti-money laundering regime? It is the submission of this chapter, that terrorist financing logically does not fit into the money laundering scheme. This chapter will examine whether it is reasonable to legislate to criminalize terrorist financing on the basis of analogies with money laundering. It is argued that while terrorist funds can be processed by the same tools used by launderers, none of those elements involved in money laundering by organized crime are necessarily engaged in the process of terrorist financing. Even if terrorist financing is involved in money laundering, labeling them as terrorist financing without linking it to terrorism or terrorist activities is problematic.
The Role of Money Laundering in Terrorist Financing
Money laundering is internationally defined as the process of conversion or transfer, concealment or disguise, and possession or use of any income or property derived from illegal activities (hereinafter “predicate crimes”).4 The origin of the term money laundering arose in the United States in the 1920s when mafia groups owned and used launderettes to gain a legitimate appearance for “proceeds” generated from their criminal activities.5 Later, with the explosion of drug trafficking in the 1980s, money laundering became an important part of any serious criminal enterprise, especially “organized crime” activities, from which huge profits are generated.6 The main purpose of money laundering operations is twofold: to hide the predicate (often organized) crimes from which the proceeds are obtained, and to guarantee that criminals can enjoy their proceeds by using or investing in the legal economy.7
To fulfill these goals, launderers use various and complex techniques to launder their proceeds. These techniques very briefly may include using financial institutions as deposit-taking institutions, “nonbank financial institutions,” nonfinancial institutions, or other informal methods such as the purchase of art treasures and jewelry, techniques of illegal money importation, techniques of smurfing or nominal partnerships, gambling, techniques of overpayment on tax accounts, techniques related to real estate, the buying of gift vouchers, assuring real estate credit, establishing fictitious business organizations, fictitious transactions, creating a cover company, techniques of over- or under-charging, methods of acquisition and selling of companies, acquisition of sports clubs, gold purchase, barter trade systems, and so on.8
The involvement of these techniques in laundering is too complex to explain in detail here. However, it has become common to illustrate the process of laundering, especially those involved with drug money, by utilizing a three-stage framework:9
1. Placement stage: proceeds at the first
