UN Instruments and Other Relevant International Standards on Money-Laundering and Terrorist Financing
International efforts to curb money-laundering and the financing of terrorism are the reflection of a strategy aimed at, on the one hand, attacking the economic power of criminal or terrorist organizations and individuals in order to weaken them by preventing their benefiting from, or making use of, illicit proceeds and, on the other hand, at forestalling the nefarious effects of the criminal economy and of terrorism on the legal economy. The 1988 United Nations Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances is the first international legal instrument to embody the money-laundering aspect of this new strategy and is also the first international convention which criminalises money-laundering.
In September 2003 and December 2005, the UN Convention against Transnational Organized Crime and the UN Convention against Corruption respectively came into force. Both instruments widen the scope of the money-laundering offence by stating that it should not only apply to the proceeds of illicit drug trafficking, but should also cover the proceeds of all serious crimes. Both Conventions urge States to create a comprehensive domestic supervisory and regulatory regime for banks and non-bank financial institutions, including natural and legal persons, as well as any entities particularly susceptible to being involved in a money-laundering scheme. The Conventions also call for the establishment of Financial Intelligence Units (FIUs).
The International Convention for the Suppression of the Financing of Terrorism came into force in April 2002. It requires Member States to take measures to protect their financial systems from being misused by persons planning or engaged in terrorist activities.
Following the events of September 11, 2001, Member States and jurisdictions underlined the links between terrorism, transnational organized crime, the international drug trade and money-laundering, and called on countries that had not done so to become parties to the relevant international conventions. In September 2001, the UN Security Council adopted Resolution 1373 through which it imposed certain obligations on Member States, such as the prevention and the suppression of the financing of terrorist acts, the criminalization of terrorism-related activities and of the provision of assistance to carry out those acts, the denial of funding and safe haven to terrorists and the exchange of information to prevent the commission of terrorist acts. In the same resolution, the Council also established the Counter-Terrorism Committee (CTC) to monitor the implementation of the resolution.
The United Nations Global Counter-Terrorism Strategy was adopted by the UN General Assembly on 8 September 2006. The strategy - in the form of a Resolution (A/RES/60/288) and a Plan of Action - is a unique global instrument that will enhance national, regional and international efforts to counter terrorism. This is the first time that all Member States have agreed to a common strategic approach to fight terrorism, not only sending a clear message that terrorism is unacceptable in all its forms and manifestation but also resolving to take practical steps individually and collectively to prevent and combat it. Those practical steps include a wide array of measures ranging from strengthening state capacity to counter terrorist threats to better coordination of the UN's counter-terrorism activities. The adoption of the strategy fulfils the commitment made by world leaders at the 2005 September Summit and builds on many of the elements proposed by the Secretary-General in his 2 May 2006 report, entitled Uniting against Terrorism: Recommendations for a Global Counter-Terrorism Strategy.
In April 1990, the Financial Action Task Force on Money-Laundering (FATF) issued a set of 40 Recommendations for improving national legal systems, enhancing the role of the financial sector and intensifying cooperation in the fight against money-laundering. These Recommendations were revised and updated in 1996 and in 2003 in order to reflect changes in money-laundering techniques and trends. The 2003 Recommendations are considerably more detailed than the previous ones, in particular with regard to customer identification and due diligence requirements, suspicious transactions reporting requirements and seizing and freezing mechanisms.
The FATF extended its mandate in October 2001 to cover the fight against terrorist financing and issued 8 Special Recommendations on combating the financing of terrorism. A 9th Special Recommendation was adopted in October 2004. These new standards recommend the criminalization of the financing of terrorism in accordance with the UN Convention for the Suppression of the Financing of Terrorism, address practices used by terrorists to finance their activities (such as the misuse of wire transfers, alternative remittance systems and non-profit organizations) and call for the implementation of specific asset freezing, seizing and confiscation mechanisms.
Taken together, the FATF 40 Recommendations and the 9 Special Recommendations on terrorist financing provide a comprehensive set of measures for an effective legal and institutional regime against money-laundering and the financing of terrorism.
Resolution 1617 (2005) of the UN Security Council and the Annexed Plan of Action of Resolution 60/288 of the UN General Assembly (20 Sept 2006), stress the importance of the implementation of the FATF 40 Recommendations and the 9 Special Recommendations on terrorist financing.