Clearly, this is a huge area. As I mentioned earlier, we must always bear in mind the fight against terrorist financing as we know it today. I also talked about the two strategies. They are both targeted sanctions similar to the UN system and financial intelligence practices. Initially, the fight was against money laundering, but the terrorist financing aspect was added later.

Internationally, the interesting part is that a report published in June 2001 said that anti-money laundering measures were not suitable in the fight against terrorist financing. Then, the events of September 11, 2001, happened. Terrorist financing was then included in the recommendations. We know that terrorist financing is unique in the sense that it does not always come from an illegal source. The funds are not necessarily illegal, but the destination may be. The amounts are often relatively small.

The tension between these two aspects has to do with the overvaluation of terrorist financing. We used to think that financial intelligence could eventually prevent some terrorist attacks or problems. However, it turns out that its use is most effective after an attack, in the context of a classic criminal investigation, when an attack is committed by one or more individuals. That is the starting point for trying to trace the financial trail and to establish financial relationships in order to “map” a number of relationships between potential suspects. The idea is to use this method after an attack, as an investigation.

The emphasis on targeted sanctions is another issue. I am thinking of the UN measures dealing with al-Qaeda and the Taliban. The idea is to identify individuals or groups and then freeze their bank accounts. However, it is not easy to tell whether those individuals are actually using bank accounts. Another practical challenge is the major controversy over the way individuals and groups are designated. By this we mean respecting rights and knowing why someone is on any given list and how they can defend themselves if they think a mistake was made.

However, I think there is a pivotal issue that has not yet been raised today. It has to do with the practical challenges in freezing assets. We assume that, once the person or group is on the list, their bank account will be automatically frozen, without further analysis. In reality, bankers have a great deal of trouble identifying and detecting the individuals on lists because they often don't have identifiers. They sometimes have a last name or a first name, but that's it. Imagine if they just have the first name Anthony. The challenge is that they then have to filter several million financial transactions every day and for each bank to determine whether it is the real Anthony they found, the person on the list, or whether it is what is called a “false positive”.

It is important to always keep in mind that the balance lies in countering terrorism, of course, but without disrupting the existing financial order. That is how the system was designed. The two objectives are to protect the existing financial system and to counter terrorism, but if the fight against terrorism disrupts the financial system, problems will ensue. The flow of money must not slow down while terrorism is being countered. Clearly, it is difficult to do that right now.

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