The sophistication and diversity that characterize the raising of funds for terrorist organizations present practical and legal hurdles for those nations seeking to combat terrorism. Many factors make it difficult to identify the channels used for financing terrorism, including the ease with which monies are transferred internationally and the difficulty in distinguishing between funds for financing terrorism and legitimate funds. This situation has led the U.N. and other international organizations to assume a more dominant role in developing an international legal infrastructure in the battle against financing terrorism.
It is recognized that a certain degree of tension exists between the war on terror and the commitment to democratic values and human rights. At first glance, the war on the financing of terrorism would appear to utilize relatively “clean” methods. Nonetheless, it is specifically the seemingly dispassionate nature of this struggle that prompts concern over the insidious infringement of basic rights, such as the right to property, the right of privacy, freedom of occupation, and even the right to freedom from incarceration or arrest.
Currently, most of the financing for terrorism is initiated by private parties that often enjoy the indirect support of states. The money itself is derived from both illegal and legal sources. When the source is illegal (such as from the drug trade, fraud and extortion), the legal battle against it can be based on an existing legal structure.
However, when the sources of the money are themselves legal, such as non-profit charities, which form a link in the chain to terrorist organizations, or legitimate businesses, which adopt tactics of false reporting of their income in order to designate a portion thereof to terrorist organizations, it is more difficult to identify the flow of funds. In this case, it is necessary to create a special legal infrastructure for combating the financing of terrorism. However, the implementation of effective means of supervising entities which, for the most part, are conducting legal activities, raises the questions of whether the measures taken are proportional to the benefit gained and whether fundamental rights, such as the freedom of association and the freedom of religion, have been unduly compromised.
In 2002, the United Nations’ International Convention for the Suppression of the Financing of Terrorism (hereinafter, the “Convention”) became effective – and is currently the primary legal tool employed in the fight against the financing of terrorism. The Convention lays obligations upon states to prohibit financial institutions from accepting and transferring monies intended for terrorism and imposes a duty to report any suspicious transactions. Moreover, the signatory states undertake to cooperate on an international level in the war against the financing of terrorism. On the criminal level, the Convention determines that financing terrorism is in itself an offense, and that the use of monies to commit acts of terrorism is not a requirement for determining that a pecuniary offense has been committed. Similar to other treaties concerning terrorism, the United Nations’ Convention applies solely in instances where the commission of the offense has an international dimension.
The international legal infrastructure also relies on additional sources, including the resolutions of the U.N. Security Council, as well as activities conducted by other international organizations to prevent money laundering, such as the Financial Actio