Despite the central rôle of countering terrorism financing in international efforts against terrorism, there has been very little analysis of the nature, scale and threat of terrorism
319 R v Fattal & Ors [2011] VSC 681 (16 December 2011) per King J at [12]
320 R v Fattal & Ors [2011] VSC 681 (16 December 2011) per King J at [9]
321 A separate trial for this charge has been ordered but not yet listed for trial.
322 sec 7 of the Charter of the United Nations (Sanctions - Somalia) Regulations 2008 (Cth) which came into effect on
16th May 2009. At the time of the conduct, Al Shabaab was not listed by the Minister for Foreign Affairs under Part
4 of the UN Charter Act (this occurred on 21st August 2009) and therefore no offence could have been committed
against the UN Charter Act terrorist asset freezing régime. Al Shabaab was also not listed at the time by the UNSC 751 Committee (which applies sanctions related to Somalia), therefore Al Shabaab was not a designated entity for the purposes of sec 6A of the Somalia Regulations (prohibiting the direct or indirect provision to a designated person or entity of financial or other assistance related to military activities etc). The UNSC 751 Committee listed Al Shabaab
on 2nd April 2010.
323 Al Shabaab was not proscribed by regulation under the Criminal Code until 22nd August 2009. This lack of
proscription through regulation would have required the prosecution to prove Al Shabaab was a terrorist organisation within the meaning of the Criminal Code. The difficulties of proof associated with proving an organisation based overseas is a “terrorist organisation” for the purposes of the Criminal Code are discussed in Chapter IV.
financing globally and the effectiveness of measures to counter terrorism financing adopted by States in purported compliance with international obligations.324
In determining the threat of terrorism financing,325 including the scale and nature of the
threat, the INSLM has been hindered by the lack of data on the flow of funds for terrorism financing domestically (that is, to or from Australia) or globally. While the overall amount of terrorism funding flows cannot be identified, an assessment of the nature and threat of terrorism financing can be informed from other available information.
Data on global illicit capital flows and money laundering are available. The UN Office of Drugs and Crime (“UNODC”) has stated “the issue of illicit capital flows has emerged as one that is central to the mandate of UNODC: garnered through the proceeds of illicit trafficking and other forms of organized profit-motivated crime, dirty money promotes bribery and corruption, finances insurgency and, in some cases, terrorist activities”.326
The UNODC estimated money laundering to have amounted to US$0.9 trillion over the 2002- 2005 period, that is, between 2% and 2.6% of global GDP for these years. Money laundering related to criminal activities was estimated at US$0.2 trillion, suggesting that between a fifth and a quarter of all money laundering was linked to proceeds of crime. Drug trafficking was identified as the single largest crime category (about a third), followed by smuggling (about a fifth). The amounts of money laundered related to terrorism were comparatively small (less than 0.3%). The US$193 billion of crime-related money laundering in 2002 was estimated to have been as follows: drugs ($66 billion), smuggling ($37 billion), other crime ($90 billion) and terrorism ($0.5 billion).327
There are estimates on the annual budgets of certain terrorist organisations and of the costs of terrorist attacks.328 There is evidence from Australian329 and foreign330 criminal trials as to the
amount of funds raised by terrorists and for terrorist organisations, as well as the purchases
324 See Arabinda Acharya, Targeting Terrorist Financing: International cooperation and new régimes (2009), pp119-134
325 It is a function of the INSLM to consider whether the laws remain proportionate to the threat of terrorism or
threat to national security, or both (subpara 6(1)(b)(ii) of the INSLM Act).
326 UN Office of Drugs and Crime Report, Estimating illicit financial flows resulting from drug trafficking and other
transnational organized crimes Research report (October 2011) p9
327 UN Office of Drugs and Crime Report, Estimating illicit financial flows resulting from drug trafficking and other
transnational organized crimes Research report (October 2011) pp32-34. UNODC report estimates the amounts of
illicit flows affecting developing countries and countries in transition to have between USD$0.5 and USD$0.8 trillion over the 2000-2005 period (half of the global total).
328 Discussed at VI.8
329 Discussed at VI.4-5
made in preparation for terrorist attacks.331 These trials also provide evidence of the means
by which such funding occurred. There is also evidence on the amount of terrorist assets frozen globally332 and by individual countries such as the United States333 and the United
Kingdom.334
While there are no statistics on the amount of illicit money flows from Australia to finance terrorism abroad, Australians are transferring large sums of money to countries which have high levels of terrorism activity (eg Al-Shabaab in Somalia, Al-Nusrah in Syria, Al-Qa’ida in Pakistan and Afghanistan). A large proportion of those funds are transferred through the alternative remittance sector, recognised internationally as a sector that involves higher risk. While the alternative remittance sector is recognized as high risk, the formal banking sector may also be vulnerable to terrorism financing activities.
331 Discussed at VI.4-5
332 The US Department of State estimates less than $US170 million of funds used to finance terrorism through the
formal financial sector have been blocked globally. http://www.state.gov/j/inl/c/crime/c44634.htm
333 The Twenty-first Annual Report to the Congress on Assets in the United States Relating to Terrorist Countries and
International Terrorism Program Designees, Office of Foreign Assets Control, U.S. Department of the Treasury (2013)
provides data on terrorist asset freezing in the United States for the year ending December 31, 2012. This information relates to international terrorist organisations and state sponsors of terrorism.
International terrorist organisations: The Report states that the “[i]mplementation of programs targeting international terrorist organisations has resulted in the blocking in the United States of more than $21 million [in funds] in which there exists an interest of an international terrorist organisation or other related designated party.” This figure excludes the value of real or tangible property (assets) of international terrorist organisations and related parties inside the United States that is blocked. The $21 million of funds blocked were in relation to nine terrorist organisations (and their related designated parties) with the five largest amounts blocked belonging to: 1) Al-Qaida $13,161,630 (an increase from $12,991,696 in 2011) 2) Hizballah $6,762,636 (an increase from $4,882,893 in 2011) 3) Hamas $1,203,578 (a 50% decrease from $2,445,535 in 2011 4) LTTE $599,224 (a decrease from $601,724 in 2011) and 5) Palestinian Islamic Jihad $83,818 (an increase from $63,802 in 2011). See pp2-8
State sponsored terrorism: Of the $2.4 billion in assets relating to four designated state sponsors of terrorism (Cuba, Iran, Syria and Sudan) identified as located within the United States, approximately $2.3 billion is blocked pursuant to economic sanctions imposed by the United States. The remaining balance of $125 million in assets represents non- blocked assets of individuals and entities located in Iran and Syria. See pp2-14
334 Mr David Anderson QC, the UK Independent Reviewer of Terrorism Legislation, in his Report on the Terrorism
Acts in 2012 (quoting from the Written Ministerial Statement of 14 February 2013, Operation of the UK’s Counter-
Terrorist Asset-Freezing Regime, 1 October 2012 to 31 December 2012) found that “The available figures, though
incomplete, suggest once again that infrequent and declining use is being made of the power to prosecute for terrorist funding offences. This corresponds to the very modest use now being made of the asset-freezing provisions in TAFA 2010 [the Terrorist Asset-Freezing etc Act 2010 (UK) which implements 1373]: the total quantity of assets frozen in accounts designated by the Treasury under TAFA 2010 – none of them linked to Northern Ireland-related terrorism – fell to a new low of £26,000 at the end of 2012”. Report of the Independent Reviewer on the Operation of the Terrorism
Act 2000 and Part 1 of the Terrorism Act 2006 (July 2013) para 6.9
In the six months since the UK Independent Reviewer’s report, the total quantity of assets frozen in accounts designated by the Treasury under TAFA 2010 increased to £91,000 (Written Ministerial Statement of 16 July 2013,
Operation of the UK’s Counter-Terrorist Asset-Freezing Regime 1 April 2013 to 30 June 2013). While this represents a
significant increase in the 6 months since the end of 2012 it is still a relatively small overall amount. The Ministerial
Statement also covers the UK implementation of the UN Al-Qaida asset freezing régime (1267) and the operation
of the EU asset freezing régime in the UK under EU Regulation (EC) 2580/2001 which implements 1373. As at 30
June 2013, the total quantity of assets frozen in UK accounts pursuant to the UN Al-Qaida asset freezing régime was
In 2012-13, Australians transferred funds through money transmitters and banks, valued at over AUD$490 million to Pakistan, AUD$54 million to Afghanistan, AUD$21 million to Syria and AUD$17 million to Somalia. The Statement of Reasons for listing Al-Qa’ida as a terrorist organisation under the Criminal Code states that the “organisation’s core leadership is located in the border regions in Afghanistan and Pakistan” and “Al-Qa’ida maintains core support networks and operations in the Afghanistan and Pakistan border region.” Operation Neath (discussed at VI.6) demonstrates that Australians are seeking to finance terrorism in Somalia and ASIO investigations show the same is true in relation to Syria (see ASIO’s submission to the INSLM at VI.1).
While it cannot be said how much of the funds being transferred from Australia are for legitimate purposes and how much may be intended for illicit purposes, the fact that Australians are sending funds to countries where terrorism financing is a real risk shows the need for terrorism financing laws (especially given the relatively low cost of a terrorist attack). Even if a small percentage of those funds was going towards terrorism financing it would be sufficient to fund terrorist organisations and terrorist attacks.