As the US Treasury continued to hold back the report on money-laundering it was due to publish last Wednesday, it started to become clear that financial investigation will bulk large in the programme of measures the global community will adopt against terrorism after last week's outrages.
Senior US law enforcement officials said over the weekend that investigators will target terrorists by seeking to "expose, isolate and incapacitate their financial holdings". The US government is creating a team headed by the Treasury which will co-ordinate its activities extensively with international intelligence agencies, financial regulators and police. The team will include the CIA, the FBI and the National Security Agency. The core of the work is to be co-ordinated by existing Treasury units - the Office of Foreign Asset Control, the Customs Service and the Financial Crimes Enforcement Network.
The problem for the US Treasury is to reconcile its obvious need to respond adequately to last week's events with its determination to protect individual financial privacy. And the Treasury is not alone in having doubts about how to approach these almost irreconcilable goals. US lobbying organisations, who have been fierce in their defence of the rights of offshore jurisdictions to offer privacy and low taxation, are as patriotic as the next man, and cannot find it easy to know what to say at such an emotional moment. The organisations representing offshore jurisdictions themselves are also faced with a dilemma: to defend themselves against proposed new powers for investigative bodies and increased international pressure for information disclosure would seem crass at this time. Yet the distinction between justified intrusion and respect for privacy is one that it is more than ever crucial to make if the world's financial system is not to slither downwards towards the Orwellian, authoritarian nightmare.
In the days since the terrorist attacks on New York and Washington, the administration has repeatedly identified terrorist finances as one of its leading strategic options for retaliation. President Bush said last week that he was winning support from world leaders in not only pursuing terrorists but also "holding those who fund them, who harbour them, who encourage them, responsible for their activities".
US Secretary of State Colin Powell said that non-military strategies could prove as important as air strikes or ground troops: "It may well be that the diplomatic efforts, political efforts, legal, financial, other efforts, may be just as effective against that kind of an enemy as military force," he said.
It is well known that major terrorist groupings have sophisticated financial empires. According to testimony earlier this year by Jamal Ahmed al-Fadl, effectively the chief financial officer of Asmana bin Laden's organisation, the corporation included a finance committee to manage its financial holdings. Mr al-Fadl identified a corporate shell in Sudan - called Wadi al-Aqiq - that served as a parent company. The business network included Taba Investment, a currency trading firm, and Ladin International Company, an import-export business. A branch of Taba Investment was also established in Kenya, where the company dealt in gems. The group's web of bank accounts extend across the world, including accounts in Barclays Bank in London as well as other accounts in Hong Kong and Malaysia.
It is too early to guess at what new powers will be given to US investigators, but Attorney-General John Ashcroft, returning from meetings with President Bush at Camp David over the weekend, said in several appearances that he wanted the same authority to investigate terrorism that Justice officials had for going after organized crime and drug traffickers. He also called for new powers to fight money laundering and to establish penalties for those who harbor terrorists. "We need to make sure that we provide the maximum capacity against terrorists in the United States," he said.
The Justice Department plans to send a wide-ranging set of proposals to Capitol Hill this week that would include more power to conduct wiretaps, detain foreigners and track money-laundering cases, administration officials said.In what may be a bell-wether response to the crisis, Philippine President Macapagal-Arroyo on Saturday linked money laundering to terrorism and vowed to "take any possible executive action" immediately against it, saying: "Last week, it (money laundering) was an economic and political issue. From now on, it is an international political issue. It has moved from being a question of financial corruption and has become a question of abetting terrorism."
"Money laundering is now linked, in the investment community’s mind, to terrorism. Let us not make the world believe that the Philippines is a haven for terrorist money and that terrorist cells are not far behind them," the President said. She warned that money laundering, if not checked immediately, might even give the impression that the Philippines is among the countries not fighting terrorism.
The Philippines is under urgent pressure from the Financial Action Task Force to pass anti-money laundering laws, but Mrs Macapagal's words or similar ones will be spoken by many a leader over the weeks and months to come.
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