Tom Keatinge is the founding director of the Center for Financial Crime and Security Studies at the Royal United Services Institute.
Seven years ago this month, tragedy struck Paris as terrorists murdered 100 innocent citizens, and hundreds more were scarred with life-changing injuries.
The calamity in Paris heralded a wave of both large- and small-scale terrorist attacks — all with devastating consequences — across a range of European cities, as supporters of the so-called Islamic State (ISIS) “self-activated” in response to the call from jihadist leaders, asking them to mount attacks on the streets of the West.
And in each case, finance played a key role in the subsequent investigations, shining a harsh light on possible missed opportunities for averting disaster. Yet, that is something we already seem to have forgotten.
The European Union initially responded to these events with the publication of an “Action Plan for strengthening the fight against terrorist financing” in 2016, which focused on two main themes: First, on how to detect and prevent terrorist organizations and their backers from moving funds, and ensuring that any financial movements are used to help law enforcement trace terrorists and prevent crimes; and second, on how to disrupt the revenue sources of terrorist organizations by targeting their capacity to raise funds in the first place.
The fact that it took the murder of innocent citizens in EU cities for the bloc to finally bring forward such a plan was shameful — and it was also indicative of the broader apathy toward counterterrorism in Brussels.
However, over a decade after finance had proven to be so central to al Qaeda’s 9/11 attacks on New York City and Washington DC, the EU had finally woken up to the reality of finance as a pillar of Europe’s response to terrorism. And complementing this policy direction, across Europe, no political leader’s speech at the time was complete without vague calls to “cut off” terrorist financing.
Along these lines, in 2018, French President Emmanuel Macron convened his No Money for Terror Conference, the latest iteration of which will be hosted by India this week; in 2019, the country used its U.N. Security Council presidency to bring forward an updated terrorist financing resolution (UNSCR 2462); and the Financial Action Task Force (FATF), the global standard setter on anti-money laundering and counterterrorist financing, conducted a revealing review of what countries were actually doing — or rather not doing — to combat terrorist financing.
Fortunately, in the past two to three years, the frequency of such attacks has reduced considerably, whether because of the decline of ISIS in Syria and Iraq, more effective responses from security authorities, or restrictions due to the COVID-19 pandemic. But the threat from terrorism — jihadi, right wing or otherwise — persists; and the advancement of technology offers an ever-expanding range of financial opportunities for bad actors.
Yet, the focus on combating terrorist financing in Europe has declined, becoming a technical matter pursued to meet the FATF’s requirements rather than a core element of the bloc’s counterterrorism defenses.
This shift in emphasis has been starkly illuminated by my own experience and that of my colleagues from the RRUSI Europe over the past few years.
In January 2020, supported by the European Commission’s International Security Fund (Police), we embarked on a three-year project aimed at assessing and promoting collaboration, research and analysis against the financing of terrorism, called Project CRAAFT. But while member countries willingly engaged in workshops and other activities, as the project progressed, it became clear that their motivation was more a function of the FATF’s requirements, rather than being driven by the more practical and security-focused intentions of the Commission’s Action Plan and the desire to protect their citizens.
Why is this?
Certainly, other distractions have intervened: The EU has been consumed by addressing its members’ anti-money laundering supervision failings, as a wide range of banks have been revealed to have left the doors wide open for criminal and malign finance. More recently, Russia’s war of aggression in Ukraine has also presented a much more immediate security challenge for the bloc than the receding threat posed by terrorism.
But it’s also the case that the possibilities offered by the investigation of financial transactions and that the associated intelligence remains poorly understood by many in policy circles, as they place an unremitting belief in the standards required by the FATF. But these standards represent a minimum requirement, not a basis on which to truly leverage financial intelligence as a tool for combating terrorism.
Thus, the EU’s response to terrorist financing risks returning to the status quo ante — a sleepwalking response driven not by the Action Plan’s mission statement but by a technocratic desire to meet anti-financial crime standards.
This is a dangerous route to follow. Countries that score highly in the FATF’s assessment of terrorist financing responses — such as France and the United Kingdom — have suffered some of the most punishing attacks. And the FATF’s definition of effectiveness offers little assurance of security for Europe’s citizens.
At a time when authorities are consumed by a great many challenges, from cost-of-living crises to energy price shocks and a war on the EU’s borders, it would be naive to imagine the resources that were dedicated to combating terrorist financing five to seven years ago are still available today. But this doesn’t excuse policymakers and political leaders from continuously assessing how the bloc’s defenses can be strengthened against terrorist financing, adapting to the changing nature of the threat landscape and the financial technology available to bad actors.
What is clear from Project CRAAFT is that member countries still struggle to engage with the threat posed by terrorist financing effectively. The challenges and opportunities presented by new technologies and new payment methods need much more study; the intersection between organized crime and terrorism is misunderstood; and policy development has stagnated.
Though the wave of terrorist attacks that afflicted the EU in the wake of the 2015 Paris attacks may have subsided, the importance of the lessons that should have been learned has not diminished. And yet, the policy community has seemingly — and irresponsibly — moved on.