Global Threat Assessment
by John Cusack
Despite the limitations presented in estimating criminal activity designed to be hidden, the results in the Global Threat Assessment present a bleak picture.
Criminal markets are generating more illicit funds than at any other time in our history, with ever more harmful effects inflicted against every Country, against billions of people and against our increasingly fragile environment.
We are witnessing the transformation of organised crime into very big business, leveraging networks to connect criminal actors, adopting poly criminality, embracing new cyber tools and opportunities afforded by the transformation to digital.
How big, which Countries, by what Methods and by which Gangs, is summarised in this Global Threat Assessment, using over 100 publicly available studies or reports from credible sources, together with personal observations and recommendations from the author.
The following is a short summary of the finances of the Islamic State (IS), as taken from a detailed Intelligence Briefing available to FCN Premium Professionals. The 30 Page Intelligence Briefing, details how IS is thought to have raised, moved and stores its reserves to support its terrorist activities and its future plans, a full Threat Assessment, what Financial Crime Fighters can do to help and potential Red Flags and or Key Risk Indicators. See Here For the full Intelligence Briefing.
The threat from the Islamic State (“IS”) remains high, and will continue into the near future, despite the losses on the battlefield both in terms of men and territory. In particular Western Europe, North America, South East Asia, and large parts of Africa are on the highest form of alert with attacks not only expected, but considered highly likely.
Whilst the term “organised crime” appears to have emerged in Chicago in 1919, the phenomenon of organised criminal activity far pre-dates this and its manifestations have developed considerably since that time. Examples include “thugs” or gangs of criminals, who terrorised 13th century India moving from town to town, looting and pillaging and “piracy” on the high seas, and highwaymen and banditry to the pre-industrial world what organised crime is to modern society. Many of today’s leading organised criminal gangs also have long histories, many tracing their origins back to feudal times, retaining links and codes from a bygone era whilst at the same time modernising and expanding their operations far beyond their traditional roots from their homelands across the world.
Whilst prohibition on alcohol in the US was presented as a victory for public morals and health, it was to prove a temporary measure being repealed in 1933.
Complying with economic sanctions requires a comprehensive program of controls and oversight capable of addressing the unprecedented pace of change, geopolitical tensions, conflicting governmental policies, and intense interest by a range of stakeholders, all of which means the monitoring, interpreting and controlling of sanctions risks have never been greater. Sanctions changes that have made headlines or yet might are therefore of interest as should be the potential implications for compliance programs.
In November 2018, the US re-imposed sanctions on exports of oil from Iran after President Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers. The US, however, granted waivers to Iran’s eight main buyers – China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece.
|global 2012 GDP or the size of the World Ec0nomy ||US$70 trillion|
|total assets under management managed by top 500 FIs ||US$62 trillion|
|Wolfsberg Group member banks total assets combined amounting to around a quarter of the total assets held by the World’s top 1,000 Banks ||US$20.8 trillion|
|GDP or the size of the world’s biggest economy, US||US$14.9 trillion|
|total value of assets held on deposit in Banks||US$11 trillion|
|tax fraud and tax evasion losses||US$4.75 trillion|
|total value of banknotes and coin in circulation ||US$4.2 trillion|
|average daily turnover of FX transactions ||US$3.9 trillion|
|total assets under management managed by Blackrock, the largest financial asset management firm||US$3.3 trillion|
|total amount of fraud proceeds ||US$2.75 trillion
|total amount invested in Hedge Funds globally||US$2.3|
I like to think of “Red Alert” as an 800 page plus private travel guide through the teeming jungle of crimes, risks, regions, countries, criminals, terrorists, cases, banking products and services, laws, standards and regulations, & programme design relating to the complex work of financial crime.
Financial crime fighters face an increasingly difficult task, and an environment that is complex and dynamic. as such learning holds the key to success and will provide its own rewards. as Benjamin Franklin once said, “For the best return on your money, pour your purse into your head.”
As you read “Red Alert” either from the start to the finish, or by focussing on particular areas of interest consider the words of Confucius, who said, “Learning without thought is labour lost; thought without learning is perilous.”
The U.N. Security Council unanimously adopted a resolution (2462/2019) on 28th March 2019 which requires all countries to do more to act against those responsible for directly or indirectly financing “terrorist organisations or individual terrorists for any purpose,” accepting that 18 years since the 11 September 2001 attacks against the United States, steps taken, by many Countries are still not sufficient. The French tabled resolution noted “that terrorists and terrorist groups raise funds [through] the abuse of legitimate commercial enterprise, exploitation of natural resources, abuse of non-profit organisations, donations, crowdfunding and proceeds of criminal activity, including but not limited to: kidnapping for ransom, extortion, the illicit trade and trafficking in cultural property, trafficking in persons, including for the purpose of sexual exploitation, drug trafficking and the illicit trade in small arms and light weapons,” and that terrorists, including foreign terrorist fighters, may move and transfer funds, including through [FI’s], abuse of legitimate businesses and NPO’s, including as front businesses and organisations and cash-couriers, as well as through the use of emerging payment methods, such as prepaid cards and mobile-payments or virtual-assets.”
Countries where FATF has called for counter measures remains unchanged with both North Korea and Iran still listed. That said counter measures on Iran had been suspended and that suspension was continued but only for a short period.. FATF made clear that, “if by June 2019, Iran does not enact the remaining legislation in line with FATF Standards, then the FATF will require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran. The FATF also expects Iran to continue to progress with enabling regulations and other amendments.”
Notwithstanding the continued suspension of “counter measures” FATF remains “concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system” and FATF calls on its members “and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence with respect to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19, including: (1) obtaining information on the reasons for intended transactions; and (2) conducting enhanced monitoring of business relationships, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.” Continue reading
During a meeting held on 31 January 2019 at the UN Security Council, titled “Preventing and Countering the financing of terrorism,” chaired by the French delegation, it announced it was committed to mobilising the CTF effort and was expecting to bring forward a new CTF resolution in the coming weeks to the UNSC. Delegations attending the meeting were joined by international groups and a few experts, providing an update on the stats of IS and AQ and the CTF response. Following are some of the highlights:
The 1267 Monitoring Team via the analytical support and sanctions monitoring team re IS and AQ reported that they believe that:
• IS retains US$50-300 million making it an enormously wealthy terrorist Group notwithstanding its loss of territory. Continue reading