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Fraud is without doubt one of the hottest strategies now used to fund terrorist actions. However the connection between fraud and terrorism financing within the UK has been missed by successive governments, regardless of an acknowledgement of that hyperlink.
Worryingly, the UK authorities’s new fraud and counter-terrorism methods supply no insurance policies to deal with the issue.
Till the terrorist assaults within the US in September 2001, the worldwide group had centered its monetary crime efforts on tackling cash laundering. On account of 9/11, governments instigated a “monetary warfare” on terrorism which has restricted the sources accessible to terrorist teams. Now comparable work is required to deal with the acts of terror funded by fraud.
My analysis focuses on the quite a few terrorist assaults which have been financed by fraud. This work has recognized a terrorism financing file, which incorporates passport fraud, immigration fraud, determine theft, monetary fraud and tax fraud.
Profit fraud is without doubt one of the commonest strategies used to fund terrorism in Europe, particularly in Belgium, Scandinavia and the UK. Bank card, private mortgage and financial institution fraud is prevalent in terrorism networks within the US and the UK. And never-for-profit organisation fraud and tax fraud are additionally prevalent within the US, UK and Spain.
The UK authorities has launched a collection of measures to attempt to deal with these points. These embrace the Financial Crime (Transparency and Enforcement) Act 2022 and the financial crime and company transparency invoice (2022), which remains to be going by parliament. Each are supposed to increase the UK’s sanctions regime and enhance using unexplained wealth orders (which permit for the confiscation of property with out proving criminality).
Nevertheless, there aren’t any particular measures to deal with the affiliation between fraud and the financing of terrorism. This implies there are nonetheless plenty of loopholes that terrorists may exploit. And organisations are underneath no obligation to report fraud to the safety companies. However terrorists have used fraud to assist finance assaults within the UK over the previous 20 years.
UK terror assaults
In July 2005, 4 suicide bombers killed 52 folks and injured greater than 770 others after detonating 4 improvised explosive gadgets in London. The financing of this terrorist assault and its affiliation with fraud stretch again to 1995.
That’s when HMRC linked a number of suspected frauds with Shehzad Tanweer, one of many terrorists. But this info was not disclosed to both the UK’s Monetary Intelligence Unit or the safety and intelligence companies by HMRC.
In Could 2017, Salman Abedi detonated an improvised explosive system within the Manchester Enviornment, killing 22 folks and injuring greater than 800 others. Abedi had fraudulently used scholar loans and his upkeep grant to fund the assault.
He acquired £7,000 from the Pupil Loans Firm after securing a spot at college in October 2015. Larger training establishments are underneath no authorized obligation to report any suspicions of fraud or terrorism financing to the Nationwide Crime Company (NCA).
In June 2017, Khuram Butt, Rachid Redouane and Youssef Zaghba used a van to knock down a number of pedestrians on London Bridge earlier than persevering with their terrorist assault on foot. In whole, eight folks had been killed and 48 others had been injured.
Butt had been investigated and arrested by Scotland Yard on suspicion of falsely reporting fraudulent exercise on three separate financial institution accounts in October 2016. After his arrest, Butt was granted bail and the fraud expenses had been ultimately dropped because of inadequate proof. However the banks had been underneath no authorized obligation to submit a report back to the NCA.
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Doubtful partnerships: new plans to curb wrongdoing by UK-registered companies are riddled with loopholes
What these examples exhibit is that the present reporting obligations are unable to forestall such terrorism financing threats. In gentle of those circumstances, the reporting of fraud ought to change into necessary for organisations. It might place fraud on the identical legislative footing as cash laundering, for instance, which is already recognised as an essential supply of terror finance.
The UK authorities additionally must rethink its present fraud and counter terrorism methods. They need to embrace measures that target utilizing fraud investigation as a disruptive mechanism to forestall future acts of terrorism.
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