© 2003 by the International Monetary Fund
Editing: Glenn Gottselig and Paul Gleason
Composition: Glenn Gottselig and Chris Matson
Cover Design: Martina Vortmeyer
Suppressing the financing of terrorism : a handbook for legislative drafting – [Washington, D.C.] : International Monetary Fund, Legal Dept., 2003.
Includes bibliographical references.
1. Terrorism. 2. Terrorism – Prevention. 3. International law. 4. International Monetary Fund. I. International Monetary Fund. Legal Dept.
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2. The Sources of International Norms and Standards on the Suppression of the Financing of Terrorism
The International Convention for the Suppression of the Financing of Terrorism
Criminalization of Financing of Terrorist Acts
Becoming a Party to the Convention
United Nations Security Council Resolutions on Terrorism Financing.
Contents of Resolution 1373 (2001)
The Financial Action Task Force (FATF) Special Recommendations on Terrorist Financing
The Special Recommendations
3. Legislating to Meet the International Norms and Standards
Designing the Implementing Legislation
Matters to Be Covered
Issues of Human Rights
4. Drafting Notes on Specific Matters
Criminalizing the Financing of Terrorism
Defining Terrorist Acts
Types of Terrorist Acts
Financing of Terrorism and Money Laundering
Aiding and Abetting, and Conspiracy as Substitute Offenses
Attempt, Participation, Organization, Direction, and Contribution
Knowledge and Intent
Liability of Legal Persons
Establishing Jurisdiction over the Financing of Terrorism Offenses
Freezing, Seizing, and Confiscating Terrorist Assets
Requirements of the Convention, United Nations Resolutions, and the FATF Special Recommendations
International Cooperation: Mutual Legal Cooperation and Extradition, Temporary Transfer of Persons in Custody, and Channels of Communications
Requirements of the Convention, the Resolution, and the FATF Special Recommendations
Extradition, Mutual Legal Assistance, and Temporary Transfer of Persons in Custody
Cooperation Among FIUs
Preventive Measures (Article 18 of the Convention and FATF SR VII)
Alternative Remittance Systems (FATF SR VI)
Interpretative Note on FATF SR VI Requirements
Nonprofit Organizations (FATF SR VIII)
Best Practice Note on FATF SR VIII
Best Practice for Disbursements of Funds to Foreign Recipient Organizations
Oversight and Sanctions
I. Table of Concordance
II. The International Convention for the Suppression of the Financing of Terrorism
III. Status of the Convention as of April 15, 2003
IV. United Nations Resolutions
V. FATF Special Recommendations on Terrorist Financing
VI. Methodology for Assessing Compliance with Anti-Money Laundering and Combating the Financing of Terrorism Standard
VII. Legislative Examples: Civil Law Countries
VIII. Legislative Examples: Common Law Countries
IX. EC Council Regulation No. 2580/2001 of December 27, 2001
1. The Annex to the Convention
2. Selected Security Council Resolutions on Terrorist Financing
3. Freezing, Seizure, Confiscation, and Forfeiture
4. Alternative Remittance Systems
5. Conclusions of the IMF/World Bank Hawala Study
1. Summary Contents of the Convention
2. Resolution No. 1373 (2001) and Corresponding Provisions of the Convention
3. Summary of FATF Special Recommendations
4. Summary of Items for Legislation
In recent years, the IMF has become actively involved in international cooperation efforts to prevent the abuse of national financial systems and to protect and enhance the integrity of the international financial system. Since 2001, the IMF’s involvement in these issues has been expanded beyond anti-money laundering measures to include efforts aimed at the suppression of the financing of terrorism. Although primary responsibility for the development and enforcement of measures to combat money laundering and the financing of terrorism will continue to rest with national authorities, the IMF is prepared to assist them in assessing the implementation of international standards related to members’ anti-money laundering and combating the financing of terrorism (AML/CFT) frameworks, as well as in providing technical assistance in the form of advice.
In early 2001, the IMF, in cooperation with other organizations, began developing what was to become the Methodology for Assessing Compliance with Anti-Money Laundering and Combating the Financing of Terrorism Standards. The Methodology is an assessment tool to be used to assess the implementation of the Financial Action Task Force (FATF) Forty Recommendations on Money Laundering, as well as its Eight Special Recommendations on Terrorism Financing. The IMF, through the Special Financial Supervisory Issues Division of its Monetary and Financial Systems Department (MFDSF) and the AML/CFT Unit of the Legal Department, conducts assessments of domestic frameworks as they relate to anti-money laundering and combating the financing of terrorism. The AML/CFT Unit also carries out technical assistance work in the form of legislative drafting and training in AML/CFT matters.
This handbook is intended to facilitate the delivery of legal technical assistance in the CFT area. It provides essential legal materials and extensive background information to officials who are responsible for drafting legislation designed to combat the financing of terrorism. The relevant international standards and obligations are presented, together with examples of legislation designed to serve as bases for drafting the laws needed to meet these standards and obligations. The issues discussed in the handbook are relevant to all countries, and the examples of legislation are provided in two separate versions, one mainly for civil law countries, the other one mainly for common law countries.
The handbook has benefited from inputs from both internal and external sources. Within the IMF’s Legal Department, Louis Forget drafted the handbook under the direction of Jean-François Thony and with the assistance of his colleagues Margaret Cotter, Ross Delston, Nadim Kyriakos-Saad, Moni Sengupta, Joy Smallwood, and Stuart Yikona. The useful comments of external readers Peter Csonka of the Council of Europe, Bess Johnson Michael of the World Bank, and Kimberly Prost of the Commonwealth Secretariat are gratefully acknowledged.
The views expressed in this handbook are those of the IMF’s Legal Department and should not be attributed to the Executive Directors or the Management of the IMF.
The General Counsel