Abstract
This article considers the impact of the terrorist attacks of September 11, 2001 (9/11) on the legislative and policy response by the United States towards terrorist financing. This article is divided into three parts. Part 1 considers the alleged association between Islamic banking systems and terrorist finance. The second part of the article critically considers the ability of the US authorities to freeze the assets of organisations who are suspected of financing terrorism by virtue of Presidential Executive Order 13 224. The final part of the article considers the reporting requirements imposed by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act 2001 (USA PATRIOT Act 2001). The third part also highlights some provisions and practices that raise the spectre of racial profiling in the United States, and critiques the fairness and success of such measures imposed on particular group of persons. The objective is not to provide a comprehensive analysis of the laws and policies, but to emphasise areas that have not yet been subject to sufficient scrutiny from the perspective of success and equality of the application of the law.
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References and Notes
Annex to Resolution 49/60, Measures to eliminate international terrorism, 9 December 1994, 49/60.
Article 1. para. 1 of the Convention, The United Nations (1999).
However, it must be noted that this is not a new concept or strategy. See, for example, Rider, B. (2002) The weapons of war: The use of anti-money laundering laws against terrorist and criminal enterprises – Part I (2002). Journal of International Banking Regulation 4 (1): 13–31, at 14. A reaction to these attacks was the issuing of Executive Order 13 129, which prevented access to property and outlawed dealings with the Taliban. See Exec. Order No. 13224, 3 C.F.R. 786 (2001), reprinted in 50 USC.S. 1701 (2001).
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For a detailed discussion of this issue see Chase, A. (2004) Legal mechanisms of the international community and the United States concerning the state sponsorship of terrorism. Virginia Journal of International Law 45 (1): 137–141.
See US Department of State ‘State sponsors of terrorism’, n/d, http://www.state.gov/s/ct/c14151.htm, accessed 13 March 2009.
This may attributable to the depth of shared international commitment to an effective, sustained and multilateral response to the problem of terrorism since 9/11. Within the United Nations, the Security Council was the first to react and unanimously passed resolutions 1368 (2001), 1373 (2001) and 1566 (2004) in order to prevent and suppress terrorism, while the General Assembly adopted resolution 56/1 (2001) by consensus. Arguably, along with some 19 global and regional treaties pertaining to the subject of international terrorism, there is now a more robust political and legal deterrence to counter-terrorism.
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The self sufficiency-of terrorist cells was also recognised by the official report on the terrorist attacks on London on the 7 July 2005. See House of Commons. (2005) Report of the official account of the – Bombings in London on 7th July 2005. London: House of Commons, p. 23.
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Rider, above n 3, at p. 28.
This system has also been referred to as the ‘hundi’ or ‘fei ch’ien banking system. See, for example, Pathak, R. (2004) The obstacles to regulating the hawala: A cultural norm or a terrorist hotbed? Fordham International Law Journal 27 (6): 2007–2061.
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Schramm, M. and Taube, M. (2003) Evolution and institutional foundation of the Hawala financial system. International Review of Financial Analysis 12 (4): 405–420, at 407.
Pathak, above n 19, at p. 2008.
See, for example, Waszak, D. (2004) The obstacles to suppressing radical Islamic terrorist financing case western reserve. Journal of International Law 35 (2–3): 673–710.
For a detailed explanation of the practical workings of the hawala system see Daudi, A. (2005) The invisible bank: Regulating the hawala system in India, Pakistan and the United Arab emirates. Indiana International and Comparative Law Review 15 (3): 619–654.
Razavy, above n 20, at p. 287.
Ryder, above n 13, at p. 829.
See Wheatley, J. (2005) Ancient banking, modern crimes: How Hawala secretly transfers the finances of criminals and thwarts existing laws university of Pennsylvania. Journal of International Economic Law 26 (2): 347–374.
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See, for example, Wheatley, above n 29, at p. 347.
The 9/11 Commission conclude that the funds used for these attacks were directly transferred into the bank accounts of the terrorists through the formal US banking system, not through the hawala system. See 9/11 Commission, above n 10, at pp. 170–171.
Navias, M. (2002) Financial warfare as a response to international terrorism. The Political Quarterly 73 (1): 57–79, at 61.
Rider, above n 3, at p. 25.
For a more detailed discussion of this see Ryder, N. (2008) The financial services authority, the reduction of financial crime and the money launderer – A game of cat and mouse. Cambridge Law Journal 67 (3): 635–653.
Winer and Roule, above n 12, at p. 88.
S.C. Res, 1373, U.N. SCOR, 56th Sess., 4385th Mtg. Article 1(a).
S.C. Res, 1373, U.N. SCOR, 56th Sess., 4385th Mtg. Article 1(b).
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See Myers, above n 49, at p. 17.
For a critical review of these powers see McCulloch, J. and Pickering, S. (2005) Suppressing the financing of terrorism – Proliferating state crime, eroding centure and extending no-colonialism. British Journal of Criminology 45 (4): 470–486, at 470.
Seldon, R. (2003) The executive protection: Freezing the financial assets of alleged terrorists, the constitution, and foreign participation in US financial markets. Fordham Journal of Corporate and Financial Law 8 (3): 491–552.
OFAC enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists and those engaged in proliferation of weapons of mass destruction.
For a more detailed discussion of the US government's ability to classify groups as specially designated terrorist group or a foreign terrorist organisation see Crimm, N.J. (2004) High alert: The Government's war on the financing of terrorism and its implications for donors, domestic charitable organisations and global philanthropy. William and Mary Law Review 45: 1341–1449, at 1369.
US Treasury Department. (2006) Office of Terrorism and Financial Intelligence – US Department of Treasury Fact Sheet. Washington: US Department of Treasury, p. 5.
Waszak, above n 23, at p. 673.
Winer and Roule, above n 12, at p. 88.
See Navias, above n 37, at p. 59.
Seldon, above n 56, at p. 502.
Ibid., at 503.
See, for example, Hardister, A. (2003) Can we buy peace on earth?: The price of freezing terrorist assets in a post-September 11 world North Carolina. Journal of International and Commercial Regulation 28: 605–661.
Baron, B. (2005) The Treasury guidelines have had little impact overall on US international philanthropy, but they have had a chilling impact on US based Muslim charities. Pace Law Review 25: 309–317, at 315.
Ibid., at p. 317.
On 25 November 2008, five of the organisers of the Holy Land Foundation were convicted of providing over $12 million to Hamas. See Trahan, J. and Eiserer, T. (2008) Holy land foundation defendants guilty on all counts. Dallas Morning News, 25 November 2008, www.dallasnews.com.
For an excellent discussion of this case see Nicols, G. (2008) Repercussions and recourse for specially designated terrorist organisations acquitted of materially supporting terrorism. Review of Litigation 28: 263–293.
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Ibid., p. 465.
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Ruff, above n 69, at pp. 464–471.
The 9/11 Commission called the US approach towards Muslim charities as ‘aggressive’ and that it did have concerns about certain civil liberties. See 9/11 Commission, above n 10.
United States Treasury Department. (2002) Contributions by the Department of the Treasury to the Financial War on Terrorism. Washington: US Treasury Department, pp. 10–11.
Title III is also known as the International Money Laundering Abatement and Anti-terrorist Financing Act 2001.
USA PATRIOT Act 2001, Sections 311–330.
For a more detailed assessment and commentary about the SARs regime, see FinCEN. (1998) 1st Review of the Suspicious Activity Reporting Systems. Washington: FinCEN.
See, generally, Adams, T. (2000) Tacking on money laundering charges to white collar crimes: What did congress intend, and what are the courts doing? Georgia State University Law Review 17 (2): 531–573.
Baldwin Jnr, above n 17, at p. 118.
FinCEN. (2008) The SAR Activity Review – By the Numbers. Washington: FinCEN, p. 5.
Roberts, M. (2004) Big brother isn’t just watching you, he's also wasting your tax payer dollars: An analysis of the anti-money laundering provisions of the USA Patriot Act Rutgers. Law Review 56: 573–602, at 584.
The US Treasury Department reported that there in 2001, there were 12.6 million currency transaction reports were filed (these are required for transactions over $10 000) and 182 000 suspicious activity reports were filed with the Treasury Department. See US Treasury Department, above n 74, at 6.
See above n 74, at p. 82.
Bumiller, E. and Myers, S.L. (2001) Senior administration official defend military tribunals for terrorist suspects. New York Times, 15 November, citing Vice President Dick Cheney, 14 November, www.nytimes.com.
Harris, D. (2002) Racial profiling revisited: ‘Just common sense’ in the fight against terror. Criminal Justice 17 (2): 36–41.
A number of international legal instruments (for example Article 1 of the Universal Declaration of Human Rights 1948 and Article 2(1) and 26 of the International Covenant on Civil and Political Rights 1966) and the US Constitution prohibit discrimination and require equality before the law.
Lee, C. (2006) Constitutional cash: Are banks guilty of racial profiling in implementing the United States patriot act? Michigan Journal of Race and Law 11 (Spring): 557–604, at 562.
Lee, above n 87, at p. 558. Similar trends can be observed in the United Kingdom. For example, in 2003/2004 Asian people were about 2.9 times more likely and black people about 3.3 times more likely, to be stopped and searched under anti-terrorism legislation than white people. After the London bombings of July 2005 this ratio increased 12-fold for Asian people. See Home Office. (2006) Statistics on Race and the Criminal Justice System – 2005. London: Home Office, p. 31.
Lee, above n 87, at p. 564.
See, for example, Shaw v. Reno, 509 US 630, 643–644 (1993); Edmonson v. Leesville Concrete Co., 500 US 614, 630–631 (1991).
See Lee, above n 87, at p. 564.
See FinCEN. (2002) The SAR Review and Activity Tips and Trends Issue 4. Washington: FinCEN.
There were 1016 SARs that recorded $0 as the violation amount.
Ramirez defines racial profiling as ‘the inappropriate use of race, ethnicity or national origin, rather than behaviour or individualised suspicion, to focus on an individual for additional investigation. See Ramirez, D. Hoopes, J. and Quinlan, T. (2003) Defining racial profiling in a post-September 11. World American Criminal Law Review 40: 1195–1233, at 1202–1207.
Gross, S. and Livingston, D. (2002) Essay, racial profiling under attack. Columbia Law Review 102: 1413–1438, at 1415. The US jurisprudence also confirms this view that a prohibition of racial profiling would not obligate law enforcement agencies from investigating only members of a particular race or origin if they are seeking a specific perpetrator who has been identified as a member of that race. See, Brown v. State, 592 So. 2d 1237 (Fla. Dist. Ct. App. 1992); Commonwealth v. Mercado, 663 N.E.2d 243 (Mass. 1996) and Commonwealth v. McDonald, 740 A.2d 267 (Pa. Super. Ct. 1999).
US v. Kim, 25 F.3d 1426, 1431 n.3 (9th Cir. 1994).
See, for example, US v. Waldon, 206 F.3d 597, 604 (6th Cir. 2000).
The Equal Protection Clause of the Fourteenth Amendment to the US Constitution provides that ‘no State shall … deny to any person within its jurisdiction the equal protection of the laws.’ The Supreme Court in Yick Wo v. Hopkins 118 US 356, 369 (1886) has recognised that the Equal Protection Clause is applicable ‘to all persons within the territorial jurisdiction, without regard to any differences of race, of color, or of nationality’.
See Cole, D. (2000) No Equal Justice. New York: New Press.
Taylor, S. (2004) The skies won’t be safe until we use commonsense profiling. In: K. Darmer et al (eds.) Civil Liberties vs National Security: In a Post 9/11 World. New York: Prometheus Books.
Harris, D. (2004) Racial profiling revisited: Just common sense in the fight against terror?. In: K. Darmer et al (eds) Civil Liberties vs National Security: In a Post 9/11 World. New York: Prometheus Books.
See Bahdi, R. (2003) No exit: Racial profiling and Canada's war against terrorism. Osgoode Hall Law Journal 41: 231–293.
Loving v. Virginia 388 US 1, 11 (1967).
McLaughlin v. Florida 389 US 184, 196 (1964); Adarand Constructors, Inc v. Pena 515 US 200, 227 (1995). Similarly, in the United Kingdom, the House of Lords held that ‘unless good reason exists’, differential treatment based on race ‘are properly stigmatised as discriminatory’. See, Ghaidan v. Godin-Mendoza 2004 UKHL 30, para 9.
Rudovsky, D. and Banks, R. (2007) Racial profiling on the war on terror. University of Pennsylvania Law Review 155: 173–184.
Human Rights Committee, general comment no. 18: Non-discrimination (1989), para. 13; Human Rights Committee, Broeks v. The Netherlands, communication No. 172/1984 (CCPR/C/OP/2), para. 13 (1990); Belgian Linguistics Case (No. 2) (1968) 1 EHRR (European Human Rights Reports) 252, para. 10; Proposed Amendments to the Naturalization Provisions of the Constitution of Costa Rica, Advisory Opinion OC-4/84, Inter-American Court of Human Rights (Ser. A) No. 4 (19 January 1984), para. 57.
For detailed discussion on this issue see Moeckli, D. (2008) Human Rights and Non-discrimination in the ‘War on Terror. Oxford: Oxford University Press.
Leiken, R. and Brooke, S. (2006) The quantitative analysis of terrorism and immigration: An initial exploration. Terrorism and Political Violence 18 (4): 503–521.
On the topic of construction of race before and after September 11, see Joo, T. (2002) Presumed disloyal: Executive power, judicial deference and the construction of race before and after September 11. Columbia Human Rights Law Review 34: 1–47.
Banks, R. (2004) Racial profiling and antiterrorism efforts. Cornell Law Review 89: 1201–1217, at 1206.
According to the lists provided by Treasury Department, the State Department, the Department of Justice, the Federal Bureau of Investigations, the UN and other allied countries there are nearly 400 000 names from 239 countries.
Department of Justice. (2003) New terrorist screening center established: Federal government consolidates terrorist screening into single comprehensive anti-terrorist watchlist. 16 September, www.fbi.gov/pressrel/pressrel03/tscpr091603.htm, accessed 16 April 2009.
FinCEN. (nd) Suspicious activity reporting guidance, http://www.fincen.gov/news_room/rp/sar_guidance.html, accessed 20 February 2009.
It is difficult to determine whether race might constitute the only factor subjecting a person to SAR or whether it constitutes only one factor among a group of factors. This is because the financial institution can usually find some basis, independent of race, which might raise suspicion. For example, acting too nervous or amount of the money transfer may be used as a criterion.
See the decision of the Bundesverfassungsgericht (the Federal Constitutional Court) of Germany in decision BVerfG, 1 BvR 518/02, 4 April 2006, http://www.bverfg.de/entscheidungen/rs20060404_1bvr051802.html, para. 28 (explaining that in the Federal State) of Nordrhein-Westfalen, 5.2 million personal data sets were collected).
See, for example, Hessischer Landtag, Kleine Anfrage des Abg. Hahn (FDP) vom 10.03.2004 betreffend Ergebnisse der Rasterfahndung und Antwort des Ministers des Innern und für Sport, Drucksache 16/2042, 18 May 2004.
Home Office. (2004) Statistics on Race and the Criminal Justice System – 2003. Home Office: London, p. 28 and Home Office, above n 89, at p. 35.
See Lawyers Committee for Human Rights. (2003) Assessing the new normal: Liberty and security for the post-September 11 United States. United States of America: Lawyers Committee for Human Rights, p. 39.
Rudovsky, above n 107, at p. 176. It is important to note that not all Arabs or people form the Middle East are Muslims. It is reported that only 20 per cent of Muslims are Arabs. See, Middle East Policy Council. (nd) Arab World Studies Notebook: Muslims Worldwide, www.mepc.org/public_asp/workshops/musworld.asp, accessed 10 January 2009.
For a detailed analysis see Kulczycki, A. and Lobo, A. (2001) Deepening the melting pot: Arab Americans at the close of the century. Middle East Journal 55 (3): 459–473.
Barak-Erez, D. (2007) Terrorism and profiling: Shifting the focus from criteria to effects. Cardozo Law Review 29: 1–8, On the consequence of the use of anti-terror policy solely on Arabs and Muslims see Council on American-Islamic Relations Research Center (2002). The Status of Muslim Civil Rights in the United States: Stereotypes and Civil Liberties, www.cair-net.org/civilrights2002/civilrights2002.pdfm, accessed 15 February 2009.
For full details of el-Masri's ordeal see, Amnesty International, ‘The Rendition of Khaled el-Masri: USA/Macedonia/Germany’, 9 August 2006, AI Index: AMR 51/133/2006.
See, for example, Cole, D. (2003) Enemy Aliens: Double Standards and Constitutional Freedoms in the War on Terrorism. London: New Press.
Hewitt, D. (2003) Understanding Terrorism in America: From the Klan to Al Qaeda. London: Routledge, p. 93.
Shaftoe, H., Turksen, U., Lever, J. and Williams, S. (2007) Dealing with terrorist threats through a crime prevention and community safety approach. International Journal of Crime Prevention and Community Safety 9 (4): 291–307.
Like security, ‘ethnic affinity’ is also a social construct that can change over time. Australian and Americans, for example, redefined themselves so that Asians are no longer excluded as inassimilable peoples. Similarly, many West Europeans regard East Europeans as fellow-Europeans, more acceptable as migrants than people from North Africa or Middle East. Who is or is not ‘one of us’ and can join the club is historically variable. Too many nineteenth century Americans and British, Africans and Caribbean were not ‘one of us’, and today for many Westerners, Muslims are not ‘one of us’.
Also note that of arrests made under the UK Anti-Terrorism, Crime and Security Act 2001 in 2003, 30 per cent of the detainees are British Citizens. See Privy Counsellor Review Committee. (2003) Anti-Terrorism, Crime and Security Act 2001 Review, Report. London: House of Commons, para. 193.
BBC News. (2007) Investigation into the latest bombings in London identified and convicted five suspects all of whom are British nationals. 1 May, http://news.bbc.co.uk/1/hi/uk/4676861.stm, accessed 21 December 2008.
The UN Human Rights Council, ‘Report of the Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism’, 29 January 2007 – A/HRC/4/26.
US Treasury Department, above n 74, at p. 6.
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Ryder, N., Turksen, U. ‘Islamophobia or an important weapon? An analysis of the US financial war on terrorism’. J Bank Regul 10, 307–320 (2009). https://doi.org/10.1057/jbr.2009.10
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DOI: https://doi.org/10.1057/jbr.2009.10