15 October 2001
Speech by the Chancellor of the Exchequer, Gordon Brown MP on action against financing of terrorism
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With permission Mr Speaker I wish to announce measures to cut off the supply of funds to terrorism.Those who finance terror are as guilty as those who commit it. So our response to the funding of terrorist acts must be every bit as clear, as unequivocal and as united as our response to the terrorist acts themselves.
The action plan I am placing in the House of Commons library and available in the Vote Office today arises from concerted work across governments, in particular from decisions of the G7 group of Finance Ministers and Central Bank Governors on October 6th, and will tighten the law, further empower the police, and strengthen coordination across the world.
I can report to the House that, having already fully implemented un Security Council Resolution 1267 (Taliban) and UN Resolution 1333 (Usama bin Laden), the UK has now frozen 35 suspect bank accounts immobilising more than £63 million pounds of suspect terrorist funds.
And I can also report that by order in council following the latest UN Resolution 1373 we have frozen all UK bank accounts associated with the individuals and organisations named in the US Treasury suspect lists, including action this weekend where bank accounts have been frozen, with 180,000 pounds already seized belonging to those identified in Friday's updated lists.
Our UK domestic controls are already among the best in the world but as part of the emergency anti-terrorism bill announced this afternoon by the Home Secretary the Government proposes a new power to freeze funds when suspicious transactions are under investigation.
This will be backed up by new reporting requirements on financial institutions so that they must disclose not only known transactions destined for terrorism, but also transactions where there are grounds for suspicion.
Clearly a balance has to be struck between individuals' right to privacy and their security at a time of increased risk. But we believe there is a case for new powers for the police to monitor accounts that may be used to facilitate terrorism; for customs to be allowed, where there are suspicions, to seize cash not only at our borders but within the UK as well; and for Inland Revenue and Customs to share information and cooperate more effectively with the police.
We do this because of the weight of evidence concerning the finances of Usama bin Laden and the Al Qaeda organisation, which is complex but becoming clearer daily.
It is not primarily his personal wealth that supports the Taliban and active terrorist operations - but the profits from the drugs trade and other businesses, and from individual and company donors. This money is channelled through a range of financial centres across the globe - with evidence already pointing to centres in the Gulf, Pakistan and Central Asia and to money laundering through an established underground banking system.
The cells which form part of the wider Al Qaeda network are often self-financing - possibly using business fronts and crime to sustain themselves.
Unravelling this relies on first-rate coordination.
Since September 11th security services, police, special branch, and Customs and Excise, coordinated by the National Criminal Intelligence Service, as well as our armed forces, have worked together to track down terrorist finance and I believe the whole house will wish to express its gratitude to them.
To enhance their efforts we now propose to establish and fund within the NCIS a new multi-agency terrorist finance unit, fully supported by additional Special Branch investigative resources.
To further improve financial intelligence a new task force will also bring into the anti-terrorism effort the best of academic, financial and commercial expertise using the best skills of forensic accountancy in tracking assets. It will also investigate underground banking - often used for legitimate purposes, such as remitting earnings to families and communities far away but also known to provide very easy means for criminals and terrorists to conceal the laundering of money and its movement around the world.
Bureaux de Change are another network by which money can be laundered and transferred. In the past 18 months, Customs and Excise have charged 89 people in connection with laundering 590 million pounds. I believe that is just a start. In the consultation document we are publishing today we therefore propose the implementation from November 12th of a new regime of supervision to ensure their compliance with money laundering regulations and will consult on a registration charge.
And to make easier the tracing and tracking of criminal and terrorist assets, we are also consulting on a new requirement for proper disclosure of beneficial ownership of companies.
Large financial centres all over the world have an important part to play in cutting off the supply of terrorist funding. And I am able to tell the house that many of the measures we are bringing forward are to be replicated throughout UK crown dependencies and overseas territories. They are announcing their own plans to introduce appropriate equivalent measures.
The G7 Finance Ministers and central bank governors met in Washington on October 6th and concluded that a special plenary of the international financial action task force would meet later this month to agree the imposition, enforcement and monitoring of a new international standard to combat terrorist finance. The UK is also pressing:
For the UN to establish a permanent monitoring unit;
For the IMF to provide expert help to countries setting up economic crime units; and
For the early ratification of the EU second money laundering directive and the UN convention for the suppression of financing of terrorism.
At the international meetings G7 ministers also had a chance to review the current state of the world economy. We expressed solidarity with the US government and the whole of the USA after the tragic events of September 11th and agreed that the global economic challenge demanded a global response.
Not only have interest rates been brought down worldwide but the central banks of America, the euro area, Japan and Britain have made clear their determination to take any necessary further action.
Oil prices - which have previously risen in times of trouble - have fallen in the past month. We will continue to work with the oil producing countries to ensure steadiness of supply and prices.
And where markets have failed, as in airline insurance, governments across Europe and America have acted together, with a new short term insurance guarantee.
Mr Speaker, these remain uncertain and testing times. And, as governments and finance ministers work together, everyone of us is conscious of the human consequences of economic uncertainty, particularly concerns about employment. But since September 11th the world has acted together and decisively to maintain the conditions for stability and growth.
The Government's assessment of the current state of the economy and our forecasts for next year will be published next month in the pre budget report for full discussion in this house.
Mr Speaker, if fanaticism is the heart of modern terrorism, then finance is its lifeblood and I believe the whole house will agree on the need to move expeditiously to cut off the supply of terrorist finance once again this house is demonstrating its unity and determination - standing firm, as one, to cut off all means of support to terrorism.
UK action plan on terrorist financing
The evidence so far accumulated shows that Usama Bin Laden's main income from which he finances support for the Taleban, and for active terrorist operations, comes not primarily from his own personal wealth but from donations from individuals and companies; profits from the drugs trade; profits from businesses; and the diversion of moneys from NGOs.
His money transits through a range of centres and there is evidence which already includes the Gulf, Pakistan, and Central Asia - including laundering money through money-changers operating the underground banking system.
Usama Bin Laden himself is only one source of terrorist financing. Cells that are part of the wider Al Qaeda network are often self-financing, and may be reliant on crime to meet their subsistence expenses. Bin Laden works through a range of organisations and individuals, some of whom are named in the UN list and the two US lists published in the last few days.
Action in the United Nations
1. UK has fully implemented UNSCR 1267 (Taliban) and UNSCR 1333 (Usama Bin Laden). Over £63 million frozen so far, held in 35 accounts.
2. UK took effective action to freeze funds soon as UNSCRs 1267 and 1333 were adopted. The UK has also frozen funds of those listed in subsequent US Executive Orders.
3. Following UNSCR 1373 the UK strengthened its legislation allowing Treasury to freeze terrorist accounts. Under this legislation on 12 October Treasury instructed UK financial institutions to freeze the accounts of 38 individuals and institutions listed by the US of suspected involvement in terrorism.
4. At UK behest, UNSCR 1373 (which requires states to freeze terrorist assets) includes proper provisions for reporting and monitoring compliance, and promoting enforcement by states, involving the use of relevant expertise.
5. UK is pressing for UN to establish a permanent monitoring unit to monitor states compliance with sanctions, drawing upon a wide range of expertise.
6. UK actively supporting extension of UNSCR 1333 to include those listed by subsequent US executive Order, and on any future public lists. UK actively supporting the adoption of EC Regulation to freeze funds throughout the EU of those listed by the US. Both measures would reinforce action already taken by UK to freeze accounts of those listed by the US.
Action in the European Union
7. UK is urging the rapid agreement of the European Parliament to the Second EU Money Laundering Directive. This extends the reporting obligation for transactions suspected to be the proceeds of crime to a wider group of offences and institutions.
Action in the UK
8. UK proposes to amend existing emergency powers legislation shortly to provide Treasury with enhanced powers to freeze funds where there is a risk of damage to national economic interests or the life and property of UK citizens, whether or not there is a UNSCR.
9. UK ratified the UN Convention for Suppression of Financing of Terrorism adopted in December 1999.
10. UK proposes to further enhance anti-terrorism powers via package of emergency legislation to be introduced shortly. Measures include:
- Police powers to seize cash at borders and in-country;
- Police powers to freeze funds at outset of investigation;
- Tougher obligations on people to report suspicions that funds are destined for terrorism;
- Police powers to monitor accounts which may be used to facilitate terrorism;
- Police powers to seek court order for financial institutions to produce records where a breach of money laundering or sanctions regulations is suspected.
11. Legislation will be introduced to allow wider information sharing between government departments.
12. UK is establishing a new multi-agency taskforce within NCIS to trace terrorist funds and is increasing investigative resources to follow through new intelligence leads.
13. UK is investigating how underground banking and informal money remittance systems may facilitate terrorist financing. And findings will be shared with international partners, and new international standards built upon such findings.
14. UK will introduce new domestic regulatory regime to ensure that money laundering regulations are implemented effectively by Bureaux de Change and money transmitters. Consultation Document will be issued on 15 October with Regulations taking effect one month later.
15. UK is actively considering proposals for requiring beneficial ownership information of corporate vehicles to be disclosed publicly upfront and will publish a Consultation Document shortly. This information should assist tracing and tracking of criminal and terrorist assets.
16. UK will circulate details of how existing UK laws address terrorist financing. UK domestic controls are already at the forefront internationally, and we will be strengthening them further in forthcoming legislation. We are willing and ready to share our experience with other countries as a model to build upon in setting new international standards.