On 11th April 2018 the Robert Schuman Foundation organised a high-level conference at Egmont Palace, Brussels on the theme of "Smuggling, counterfeiting and the financing of terrorism - mobilising economic stakeholders". This event brought together leading personalities, as well as representatives from public organisations involved in work to counter laundering (Tracfin, CTIF), Europol, the European Counter Terrorism Coordinator and many stakeholders from industry.
On the launch of the conference it was recalled how great a stake terrorism is at national, European and world level - a phenomenon that has to be countered in a "global, all encompassing" manner. Hence the importance of the European dimension, the involvement of economic stakeholders and other players in addressing the theme of countering the financing of terrorism, to achieve a "better collective and global" commitment against this scourge. Some significant data on the financing of terrorism, smuggling and counterfeiting were presented: the overall economic and social cost of counterfeiting and piracy was estimated at a total of 800 billion $ in 2013 and the share of illegal trade in operations financing terrorist organisations totalled 20%.
What is being done at European Union level? Is the present financial information adapted? Is information being shared enough? Can we improve relations between intelligence services and national institutions and between national and international institutions, between the private and public sectors? These are the questions that structured debate.
How does smuggling and counterfeiting finance terrorism and what lessons can we learn from the strategies used to counter this problem?
"The fight to counter terrorism and its financing require a multidimensional and international approach". This is why the European Union is working at present towards cooperation between its Member States and with its international partners. The European Commission is one of the players in the fight to counter money laundering and the financing of terrorism, through measures such as the "freezing of assets", thereby aiming to improve the transparency of financial flows. But an increase in monitoring has forced terrorists to change their modus operandi. This what the Union now has to take on board. A mobilisation of economic and financial players is vital with the developments of intelligence services the establishment of partnerships between the public and private sectors, to be able to identify the links between terrorism and criminal organisations. New standards regarding the exchange of information within the Union have to be developed. Increased cooperation with Europol at world level is now developing in an efficient manner. The launch of a pilot project is planned, aiming to establish "criminal information cells" within some missions, that will aid with the collation of information, to be able to communicate this to the competent bodies of the Union.
Former judges specialised in the field of countering terrorism shared their respective experiences for a better understanding of the legal framework in the fight to counter the financing of terrorism. This involves various activities and players, who directly or indirectly, legally or illegally, even officially when it comes to supporting governments, support the financing of terrorism. Some examples: donations to NGOs and covert transfers, capital laundering, the smuggling of tobacco and pieces of art and even tax evasion. The constant interaction between the groups, Al Qaeda and Islamic State were recalled. Amongst these factors the reference to an external theatre of operations (Afghanistan until 2013, Syria and Iraq since then), the link between petty crime and terrorist organisations, the use of micro-financing rather than macro-financing and finally the low cost of structures and operations, but with high yields for both organisations. The absence of any type of international cooperation between States at operational judicial level prevents the work of the European judges and mechanisms for the exchange of information are almost inexistent. It is urgent to look into micro-financing and to take on board the new, opaque methods of payment such as crypto-currencies. They said that they would like the European Union to have a "Terrorist Finance Tracking System" (TFTS) to counter the lacuna at European level in mastering financial flows. It is also vital to establish partnerships between the public and private sectors, as well as with the GAFA.
The recent diversifications and the sophistication of the sources of financing, the terrorist groups Al Qaeda and Daesh were emphasised in particular. Although the main resources of Islamic State continued to come from the occupied territories, notably via the smuggling of oil, the recent losses of these territories in Iraq and Syria were necessarily forcing Daesh to reorganise, and therefore this will strengthen the link between terrorism and organised crime. This link can notably be found in the recruitment of European fighters, who often have a criminal past. But the real lack of proof and information regarding the link between the financing of terrorism, smuggling and counterfeiting is also an obstacle. Financing ideology and radicalisation represent major sums of money, and these should be targeted since they are the true "core of this asymmetrical war against terrorism". This "fight upstream" demands "international concertation, as well as the improvement in efficiency and cooperation between the judiciary, the police, intelligence services and customs." It was recommended not to think of the fight to counter contraband trafficking and counterfeiting on the same level as the fight to counter the financing of terrorism, but as criminal activities that affect the protection of our citizens and our economic interests in the knowledge that the revenues that come from these crimes were likely to help finance terrorism, since the porosity between organised crime and terrorism is evident. When taking account of the financing of terrorism, we have to "step outside of the cataloguing of concepts", by focusing rather more on petty (organised) crime rather than major organised crime. When we look at the perpetrators of the attacks in Paris and Brussels we see that they were all small-time criminals who did not belong to the organised crime networks of which everyone now talks. There is no evidence of macro-financing, and notably of any potential links between Daesh and the smuggling of oil have been found.
Links have to be made between the police, customs and judicial services. We have to show greater capacity to work transparently with the private and public sectors with the aim of sharing information.
One the more specific themes - counterfeiting, the importance of intellectual property for the European economy was recalled, since "42% of our GDP is produced by intellectual property intensive companies" as well as other significant figures: "counterfeiting represents 2.5% of world trade and 5% of the products imported into the Union are counterfeit." These two sectors, due to their profitability, necessarily attract terrorist organisations, "but we have no proof of this link, because information is not shared." Counterfeiting has fallen in the list of political priorities and it is difficult to convince public authorities of the need to fight it firmly. "It is high time to consider counterfeiting not only as a means in the financing of terrorism, but also to commit terrorist acts." We have to create new structures, which are already extremely efficient, they simply have to work together.
It was regretted that counterfeiting was not part of the political priorities in the fight to counter organised crime and that many complaints made by large groups in the luxury industry in the Union had simply been closed.
An overview of smuggling and counterfeiting in Tunisia was presented. Parallel imports are said to represent 2.5% of the Tunisian GDP and total sales are estimated at 2.2 billion € per year. Counterfeiting is said to represent 6 million of the products placed on the Tunisian market since 2006, mainly coming from China and Turkey. The unstable political situation of the country after the revolution in 2011 provided a prosperous breeding ground for the development of illegal networks and for the infiltration of terrorism into these circuits, given a that the State was "overwhelmed".
Economic and public health issues involved in the counterfeiting of tobacco are considerable. They are said to represent one third of the tobacco consumed in the country. The extent of tobacco counterfeiting was stressed, since counterfeit cigarettes represent 10% of all cigarettes sold in the world. The profit made from these sales is colossal and the punishment very slight - tobacco counterfeiting is a very effective means to finance terrorist organisations.
In conclusion of this first round table the need for a multidimensional and pluri-disciplinary approach in the fight to the financing of terrorism was made clear, as well as cooperation between information and investigation services. It was however highlighted that there were no recurrent sample cases or proof of the link between the financing of terrorism and smuggling or counterfeiting and that it was difficult for the legal system to incriminate the financing of terrorism "an offence that is not used very much." In order to close this lacuna it is vital to trace the original legal or illegal funds, to have technical indicators, as well as to undertake a pro-active fight by having sensors that will help anticipate action. The TFTS project has to be continued as an imperative via the sharing of information, the strengthening of the public-private partnership and the analysis of financial behaviour by individuals, obtaining information to detect potentially dangerous financial behaviour. Financial information is not just used in the fight to counter the financing of terrorism but also to find terrorists.
The International Conference on the financing of terrorism that took place in Paris on 25th and 26th April 2018, in a mixed format, brought together 70 countries and 15 international organisations, the aim of which was to "open up the ministries (interior, justice, finance, MEAE)" in order to increase the number of players and to determine collectively how to extend and make better use of already existing measures in terms of the fight to counter the financing of terrorism.
The obstacles that have to be established to slow the financing of terrorism
Speakers recalled the importance of the rapid introduction of a partnership between governments, organisations, businesses and GAFA, stressing the vital aspect of work between public and private in the exchange of data.
The prerogatives of the national, European and international intelligence services were recalled, whose role is to "minimise the risk of attack whilst protecting citizens' fundamental freedoms." Industry representatives explained that the legal framework surrounding these exchanges must reflect society by integrating artificial intelligence for example. Many changes must therefore be made notably in cloud-computing. "Before we provided technology that organisations used according to their own criteria. Now we are guardians of the most sensitive data which are also the most precious." Hence the wish for measures based on the exchange of information was expressed, since "information is a coordinated chain". Greater cooperation at national, European and international levels and at public and private level will lead to greater efficacy. Good practice should also be improved, and more means should be given to the courts, whilst acknowledging that the crimes against intellectual and industrial property is primordial. It was stressed that certain trafficking networks are "better organised than we are". They use the same routes for the trafficking of arms, people and drugs.
Regarding the financing of terrorism, it was recalled that 99% of terrorist acts are committed by small groups "established within our territories, by people from petty crime circles." The Kouachi brothers and Amedy Coulibaly were known for crime they had committed in their own suburbs, before they committed these attacks. It was according to this rationale that the unique cartography drafted by the OECD was presented. The latter quantifies the world's black market and highlights the lacuna, the closure of which would enable the reduction of the demand for counterfeit products. The aim of this study is to gain a general overview of the type of policy to be implemented at global level.
An example of counterfeiting, the consequences of which are disastrous was presented: that of alcohol. In Poland 200 people were hospitalised after having drunk spirits made of counterfeit ethanol. The introduction of a common public-private programme to raise citizens' awareness of the damaging effects of counterfeit goods, notably to fight against unfair competition and illegal trade is therefore a cause related to public health.
The particular case of illegal trafficking from the periphery of Europe.
This round table focused more particularly on the problem of Africa. The lack of any real definition of the EU's borders facilitates trafficking. The so-called "transition" countries - like the Western Balkans - are gradually subject to European rules and notably to the sharing of data for the intelligence services and Europol. But countries in crisis also lie near to Europe, like Libya, the Sahelian strip notably comprising South Sudan and Mali, - countries in which illegal trade is a reality, often under-estimated by the international community. A Union financed programme, introduced by Interpol, WAPIS, has led to the creation of an intelligence system in the countries of West Africa for increased knowledge of movement, notably that of the traffickers.
There is an evident link between organised crime and corruption, which leads to terrorism and its financing. "Organised crime is the main driver behind illegal trade." In 2016 the Syracuse Institute published its research on the extent of financing in this area with the aim of drafting "international criminal laws".
It was recalled by some stakeholders in the field, that in a certain number of African countries there is still no talk of a legal framework, since there is no set institutional or governmental framework. Political, institutional, climate and economic weaknesses are leading to instability symbolised by the governments' incapacity to control their territories and borders. "Ask those living on the borders and you will see that the very idea of border is sometimes challenged." Indeed, many people see these national borders as the result of colonisation, whilst many tribes live on either side of the border and share the same language and the same values. The fight against counterfeiting is therefore not a priority in these countries, even though they affect the population head on. In Africa there are correlations between the zones of conflict and post-conflict and the preferred zones for trafficking: this is the case in Guinea-Bissau regarding diamonds, the Democratic Republic of Congo regarding precious stones, the Sahel for the recycling of arms from the Libyan conflict etc ... "Smugglers go for the weak links, these are the African countries with weak governance, large expanses of land that are difficult to control, small populations that are difficult to contain and young people in quest of well-being." Some countries are drawn into a vicious circle: the smugglers get rich with dirty money, they then become respectable dignitaries who have the means to take direct or indirect part in the financing of electoral campaigns and the election of MPs, and even the power to get certain high-ranking executives into office. There is an internal resilience to a corrupted system. The governments of Africa are not able to investigate the trafficking most of the time, given that they do not have the adequate tools to do so. They argue that they do not have enough proof and "as long as they see no physical transfers they will deny it." This is why many strategies such as the one established between the EU and Sahel in terms of security are being introduced. The countries of Africa must be able to establish more powerful political and financial support than that of the traffickers and the "Union must look into the imperative of enhancing public-private partnerships."
In conclusion, the role of the social networks and the sharing of information provided by the GAFA and the governments in tracking individuals was pointed out. The social networks help investigators to gain a wide view of a terrorist organisation in order to identify it. If they are attentive enough they can reconnect all of the dispersed factors by creating databases. "Crime has no borders, so without cross-border cooperation we cannot bring terrorism or organised crime to an end." "Even the lone wolf needs money," especially since most of those responsible for the attacks in 2017 were isolated actors. Micro-financing is therefore a vital factor in understanding the terrorist movement, "focus should not just be turned to great quantities of money". Europol has identified different types of financing directed to terrorism: illicit trade, the black market, links with organised crime etc ... The police force must therefore look to terrorist organisations, petty crime and to those involved in organised crime who very often provide arms and false documents to help terrorists take action. "The exchanges we have today are those which will help us fight to counter terrorism."