Criminalizing the Financing

of Terrorism
Mark Pieth*

Abstract
This article begins with the widespread expectation that following the money trail
would be an effective means of hampering terrorist activity. So far, however,
that effectiveness has been less than certain, and financial services providers argue
that, at most, they would be able to check names against lists (they are adamant that
the risk-based approach does not apply here). Legal difficulties deepen the factual
problems: bold statements in international Conventions that terrorist activities are
not political crimes, do not really solve the fundamental dilemma that a distinction
needs to be made between freedom fighters and terrorists if combatants are merely
aiming at the restoration of the democratic order. On a more practical level, interna-
tional organizations (namely the United Nations and the Financial Action Task Force
on Money Laundering) have created a system of mechanisms to freeze suspected
funds of terrorism. So far, the procedures for freezing and de-freezing do not meet the
generally accepted standards of a fair hearing (as defined by the International
Covenant on Civil and Political Rights or the European Convention on Human
Rights). The author concludes that the current way of dealing with the issue of
financing of terrorism is far from convincing.

1. Introduction
When the hijacked airplanes struck the twin towers of the World Trade
Center on 9/11, most observers would have considered it an obvious move to
mobilize all possible means to prevent terrorism in the future, including the
interception of terrorist access to financial assets.1 It is no coincidence that the
Financial Action Task Force on Money Laundering (FATF) the specialized
organization tasked with preventing the laundering of illicit proceeds from
crime immediately began to explore ways of freezing such funds more

* Professor of Criminal Law, University of Basel, Switzerland. [Mark.Pieth@unibas.ch]

1 The 9/11 Commission Report, Final Report of the National Commission on Terrorist Attacks upon
the United States (1st authorized edn., New York, London: W.W. Norton & Company, 2005),
381 et seq. addresses how to starve the terrorists of money.
............................................................................
Journal of International Criminal Justice 4 (2006), 1074^1086 doi:10.1093/jicj/mql062
Oxford University Press, 2006, All rights reserved. For permissions please email: journals.permissions@oxfordjournals.org
 Criminalizing the Financing of Terrorism 1075

effectively and of criminalizing those who help fund terrorist activities.

The FATF has made substantial efforts to raise awareness within the
financial services industry (including the introduction of specific notification
obligations) with regard to such financial operations. Among the most
prominent requirements of the FATF Special Recommendations on
Terrorist Financing2 is the Recommendation to ratify and implement the
1999 United Nations International Convention for the Suppression of the
Financing of Terrorism3 and to implement the relevant Security Council
resolutions. This implies, in particular, the criminalization of the financing
of terrorism and the freezing and confiscation of terrorist assets. However,
the seemingly obvious strategy of going for the money and weakening
the operational capacity of terrorists4 raises several questions. Why has the
world only now turned to this strategy? Is it really as effective as one
would expect?

A. A New Delicate Issue on the Political and Legislative Agenda

Attacking the money management of macro-criminality (a collective term used
for transnational economic and organized crime as well as terrorism and state
crime), is a relatively new approach, closely linked to the recent increased pace
of economic globalization. Even if the term money laundering was first used in
Europe within the context of combating terrorism the Council of Europe
addressed the threat by the Rote Armee Fraktion in Germany and the Brigate
Rosse in Italy in its Recommendation No. R (80)10,5 asking providers
of financial services to thoroughly identify their clients and to hand the
information over to law enforcement agencies upon request money
laundering was overall conceptualized internationally as a strategy against
the illegal drug trade. In the run-up to the 1988 UN Convention Against
Illicit Traffic in Narcotic Drugs and Psychotropic Substances,6 the travaux
pre paratoires (Comprehensive Multidisciplinary Outline of Future Activities in
Drug Abuse Control) originally focused entirely on the forfeiture of profits,

2 FATF, Special Recommendations on Terrorist Financing (2001, revised version 22 October

2004); see also Interpretative Notes, in particular to Special Recommendation II
(Criminalizing the Financing of Terrorism and Associated Money Laundering) and to Special
Recommendation III (Freezing and Confiscating Terrorist Assets), as well as FATF, Freezing of
Terrorist Assets, International Best Practices (3 October 2003).
3 United Nations International Convention for the Suppression of the Financing of Terrorism,
UN Doc. A/RES/54/109, 9 December 1999 (henceforth cited as 1999 UN Convention).
4 J.M. Winer, Globalization, Terrorist Finance and Global Conflict ^ Time for a White List? in
M. Pieth (ed.), Financing Terrorism (Dordrecht, Boston, London: Kluwer Academic Publishers,
2002) 5^40, at 6; The 9/11 Commission Report, supra note 1, at 381 et seq.
5 Council of Europe Legal Affairs, Measures Against the Transfer and the Safekeeping of Funds of
Criminal Origin, Recommendation No. R (80)10 adopted by the Committee of Ministers of the
Council of Europe on 27 June 1980, and Explanatory Memorandum 1981.
6 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances, 19 December 1988 (henceforth cited as 1988 UN Convention).
1076 JICJ 4 (2006), 1074^1086

whereas the criminalization of those helping to hide such proceeds was

introduced into the Convention only at a later date.7
Confiscation of property fell into disuse after the absolutist monarchies in
the eighteenth century indiscriminately used asset forfeiture to dispossess the
beneficiaries of industrialization and to fill their caisses de guerre. Human rights
declarations, as is nowadays frequently forgotten, argued just as much against
the confiscation of assets, which was viewed as a form of civil death penalty,
as against the physical death penalty itself.8
This approach was reintroduced, astonishingly enough, without provoking
major intellectual or political debate. Its expansion from drugs to other forms
of serious economic and organized crime as well as the financing of terrorism
lasted throughout the entire 1990s.9
The fact that the concept was not automatically adapted to other forms of
crime, including the financing of underground armies, who use excessive and
brutal violence against civilians, clearly stems from the political difficulties
in drawing a clear line between freedom fighters and terrorists;10 in the past
this was relevant when dealing with money collectors for the ETA, GIA, IRA,
Hizbollah, LTTE or the Mujaheddin.
In particular, the distinction between charitable functions and the support
of guerrilla warfare is not easy, and the problem has not really been resolved by
the new FATF rules developed within its Special Recommendation VIII and the
Interpretative Note to Special Recommendation VIII.

B. Uncertain Effectiveness
In the 9/11 Commission hearings in the United States, it was estimated that
the entire preparation of the attacks on the World Trade Center (including
the training of commercial pilots, travel expenses, etc.) cost no more
than $500,000.11 Day-to-day guerrilla warfare, such as using suicide
bombers, involves even more modest operational costs. Even the cost of
maintaining an organization over a longer period of time for such
purposes comes nowhere near the financial dimensions of other forms of
macro-crime (especially mafia-type operations). Some authors have used

7 1988 UN Convention, supra note 6, Target 23, at 63 et seq.: Forfeiture of the Instruments and
Proceeds of Illegal Drug Trafficking; the issue of criminalizing money laundering, however,
was introduced in Art. 3 of the Convention, ibid., and in the political Declaration of the General
Assembly in the GA Res. S-17/2, 15 March 1990.
8 M. Pieth, Financing of Terrorism: Following the Money, in Pieth (ed.), supra note 4, 115^126,
at 118.
9 For details about this development see M. Pieth and G. Aiolfi, A Comparative Guide to Anti-Money
Laundering: A Critical Analysis of Systems in Singapore, Switzerland, the UK and the USA (1st edn.,
Cheltenham, UK/Northampton, USA: Edward Elgar, 2004), 3 et seq.
10 See also the contributions of G.P. Fletcher, T. Weigend and A. Cassese in this issue.
11 J.M. Winer, supra note 4, at 5.
 Criminalizing the Financing of Terrorism 1077

the term micro-finance.12 Retail banking instead of private banking is

involved. The screening systems of retail banking are far more depersonalized
by necessity. Automated systems can pick up certain unusual patterns or
compare the client base to certain lists of individuals or organizations.13 To
expect financial services providers to be able to proactively discover beyond
automated routine operations the clandestine preparations for a suicide
attack by a group of students is rather unrealistic. If specific behaviour does
attract the attention of a client manager, this would most likely be by a stroke
of luck. One should, therefore, be careful not to raise expectations about
combating terrorism by following the money. Measures must be proportionate
to their potential effectiveness. It should not be overlooked that over the last
decade the overall effectiveness of confiscation to combat macro-crime has not
been very impressive.14

2. International Instruments to Combat

the Financing of Terrorism
Since 1970, the UN system of treaties against terrorism has evolved. It first
addressed specific threats, i.e. to civil aviation15 and maritime navigation.16
Gradually, the system became more generalized, starting with the protection
against the taking of hostages,17 followed by the Convention for the
Suppression of Terrorist Bombings18 and finally, in 1999, the International
Convention on the Suppression of the Financing of Terrorism.19 The 1999 UN
Convention entered into force on 10 April 2002; at present, 154 states are
parties to the Convention. Key obligations taken from the Convention were
declared binding by the Security Council immediately after 9/11 in a Chapter
VII Resolution.20

12 U. Cassani, Droit penal economique 2003^2005: actualite legislative (responsabilite penale de

lentreprise, financement du terrorisme, corruption), in W. Fellman and T. Poledna (eds),
La pratique de lavocat (2005), 671^709, at 6^9.
13 E.g. the OFAC list in the United States or the UN list established by SC Res. 1267 (1999).
14 Cf. M. Kilchling, Die Praxis der Gewinnabschopfung in Europa (Freiburg i.Br.: Max Planck-Institut,
2003), at 449 et seq.
15 Convention for the Suppression of Unlawful Seizure of Aircraft, 16 December 1970; Convention
for the Suppression of Unlawful Acts Against the Safety of Civil Aviation, 23 September 1971;
Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International
Civil Aviation, Supplementary to the above 1970 Convention, 24 February 1988.
16 Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation,
10 March 1988; Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed
Platforms Located on the Continental Shelf, 10 March 1988. For an analysis of UN responses to
terrorism see also the contributions of K. Nuotio and M. Sasso'li in this issue.
17 International Convention Against the Taking of Hostages, 17 December 1997.
18 International Convention for the Suppression of Terrorist Bombings, 15 December 1997.
19 1999 UN Convention, supra note 3.
20 SC Res. 1373, 28 September 2001.
1078 JICJ 4 (2006), 1074^1086

After 9/11, it was the work of task forces that were applied successfully
in other areas like money laundering and precursor chemicals to boost regula-
tory development within a very short timeframe. The FATF developed a rapid
sequence of Recommendations, Interpretative Notes and Best Practices on the
particular issue of financing of terrorism. Regional organizations,21 like the
Council of Europe and the European Union, rose to the challenge and adopted
complementary instruments. The Council of Europe had already enacted a
Convention on the Suppression of Terrorism in 1977.22 In 2005, it adapted
its Convention 141 of 199023 to the new realities, including the financing of
terrorism, and enacted the Convention on Laundering, Search, Seizure and
Confiscation of the Proceeds from Crime and on the Financing of Terrorism
(the COE Convention).24
Also the European Union had, especially during the 1990s, enacted a dense
network of Action Plans, Council Conclusions, Council Joint Actions, etc.
that ultimately led to the EU Council Framework Decision of 13 June 2002 on
Combating Terrorism.25 It contained detailed definitions of terrorist offences
as well as obligations for Member States to criminalize certain behaviour.
The different criminalization instruments follow a similar pattern: they define
the offence, oblige State Parties to criminalize and adequately punish
them, and address freezing, seizure and forfeiture, mutual legal assistance
and extradition. Typically, they also contain detailed rules on the liability of
legal persons and on jurisdiction. Depending on the nature of the organization,
they may also include monitoring provisions.26
The following text discusses, in particular, the provisions of the
1999 UN Convention as well as the system of norms of seizure and
confiscation. It will leave aside the preventive rules developed alongside
criminal law.27

21 Cf. also the Organization of American States Convention to Prevent and Punish the Acts of
Terrorism Taking the Form of Crimes Against Persons and Related to Extortion that are of
International Significance, 2 February 1971; Inter-American Convention against Terrorism,
3 June 2002; Arab Convention for the Suppression of Terrorism, League of Arab States,
22 April 1998; Organisation of African Unity Convention on the Prevention and Combating of
Terrorism, 14 July 1999; Convention of the Organisation of the Islamic Conference on
Combating Terrorism, 1 July 1999.
22 Council of Europe Convention on the Suppression of Terrorism, 27 January 1977, CETS No. 90.
23 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds
from Crime, 8 November 1990, CETS No. 141.
24 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds
from Crime and on the Financing of Terrorism, 16 May 2005, CETS No. 198.
25 European Union Council Framework Decision on Combating Terrorism (2002/475/JHA),
OJ L164/3, 13 June 2002, (henceforth cited as 2002 EU Council Framework Decision).
26 E.g. Art. 48, 2005 COE Convention, supra note 24; Art. 11, 2002 EU Council Framework
Decision, supra note 25.
27 For identification, awareness and notification standards see Art. 18, 1999 UN Convention, supra
note 3; and FATF Special Recommendation IV, supra note 2.
 Criminalizing the Financing of Terrorism 1079

3. The Elements of the Offence According

to the 1999 UN Convention
A. Peculiarities
The definition of the offence of financing of terrorism in Article 2 of the 1999
UN Convention is rather striking in two respects, which I will briefly discuss
below.

1. A Patchwork Definition of Terrorism

The drafters obviously struggled with defining terrorism, terrorist offences or
terrorist groups. The result is not very convincing, even though it comes far
closer to a definition than earlier attempts.28 In the 1999 UN Convention, the
first section refers to a list of treaties in the Annex to the Convention.
These treaties themselves reflect the rather patchwork-like approach of the
international community to the issue of terrorism that has evolved over the
years from 1970 to 1999. The reference is also unsatisfactory, because not all
countries are bound by the full set of annexed treaties; the consequence is that
Article 2(1)(a) has a different reach in every State Party.29 In addition to this
reference to treaty law, Article 2(1)(b) of the Convention undertakes to establish
a general definition of terrorism. It defines terrorism as any other act intended
to cause death or serious bodily injury to a civilian, or to any person not taking
an active part in the hostilities in a situation of armed conflict, when
the purpose of such act by its nature or context is to intimidate a population
or to compel a Government or an international organization to do or to abstain
from doing any act.
Other organizations, especially the European Union, have gone further in
their attempts to capture the various forms of aggression used to blackmail or
intimidate by listing concrete indicators of aggression in their instruments.

2. Reliance on mens rea

The second peculiarity of this definition is that virtually all
discriminating elements of some weight address the subjective side in
the mens rea component,30 raising serious concerns about due process,

28 Cf. the early attempts of the League of Nations Convention on the Prevention and Punishment
of Terrorism (1937) and the more recent discussion of the difficulties in the literature.
According to Antonio Cassese in more recent times it has been erroneously stated that there
is a lack of definition. He rather diagnoses the problem as there being a lack of agreement on a
possible exception for freedom fighters; see A. Cassese, International Criminal Law (Oxford:
Oxford University Press, 2003), 120 et seq. See also his contribution in this issue.
29 Cf. Art. 2(2), 1999 UN Convention.
30 See also the contribution of T. Weigend in this issue.
1080 JICJ 4 (2006), 1074^1086

especially as judges are expected to deduce the mens rea from objective
factors.31
I will discuss the elements in the order of their appearance in the text,
starting with the objective criteria.

B. Objective Elements of the Offence: Unlawful Collection or

Provision of Funds
Article 2(1) of the 1999 UN Convention defines the criminal act as the
provision or collection of funds. Article 1(1) makes it clear that funds means
assets of every kind, whether tangible or intangible, moveable or immoveable,
however acquired. It is crucial in defining the financing of terrorism that the
origin of the funds is immaterial: [A]ny funds, whether from a legitimate
or illegitimate source are included.32 Equally, it does not matter how the
collecting or providing takes place (by any means, directly or indirectly).
Yet, the objective definition does contain one essential qualifier: the funds
have to be provided or collected unlawfully. If this addition is to have any
meaning, it must be possible for national law to allow for defences and
exceptions.
In the travaux pre paratoires and in national implementation discussions,
the following traditional examples are put forward: on the one hand, the
case of humanitarian organizations funding within their disaster relief
programmes local groups that pursue humanitarian and terrorist goals
alike; on the other hand, exceptions are mentioned for ransom payments
made in order to free hostages.33
The impact of the qualifier unlawful could, however, be of far greater
significance: one of the key problems in dealing with the financing of
terrorism, and particularly in defining terrorist groups, has been the
distinction between freedom fighters and terrorists, especially as views are
likely to diverge from one State Party to another.
In the past, such disagreements led to ineffectiveness of any action against
the financing of traditional terrorist organizations like ETA or the IRA.
Therefore, Article 6 of the 1999 UN Convention replicates the radical depoliti-
zation approach, already contained in the 1977 COE Convention on the
Suppression of Terrorism:34 Each State Party shall adopt such measures as

31 The Interpretative Note to Special Recommendation II, supra note 2, says in note 11: The law
should permit the intentional element of the terrorist financing offence to be inferred from
objective factual circumstances.
32 See also FATF, Interpretative Note to Special Recommendation II, supra note 2.
33 The Swiss legislator referred to Annex III of the Report by the Chairman of the Working Group
of 26 October 1999, UN Doc A/C.6/54/L.2: Botschaft betreffend die Internationalen
Ubereinkommen zur Bekampfung der Finanzierung des Terrorismus und zur Bekampfung
terroristischer Bombenanschlage sowie die A nderung des Strafgesetzbuches und die
Anpassung weiterer Bundesgesetze vom 26. Juni 2002 (02.052), at 5404.
34 Art. 1, COE 1977 Convention, supra note 22; cf. also UN GA Res. 49/60 (1994), I. 3.
 Criminalizing the Financing of Terrorism 1081

may be necessary, including, where appropriate, domestic legislation, to ensure

that criminal acts within the scope of this Convention are under no circum-
stances justifiable by considerations of a political, philosophical, ideological,
racial, ethnic, religious or other similar nature.
National attempts to come to terms with the problem demonstrate, however,
that this radical approach might not be a viable solution. For example, the
Swiss Parliament, in implementing the 1999 UN Convention, introduced two
explicit exceptions: First, Article 260 quinquies (3) Swiss Criminal Code states:
The act is not considered financing of a terrorist offence, if it is directed at
introducing or restoring democracy and the rule of law or if it is directed at the
application and protection of human rights. Obviously, this exception intends
to acknowledge the legitimacy of murdering the tyrant in extreme cases, e.g.
the exponents of the Nazi regime. It is, however, difficult to envisage how
human rights can be restored by terrorist means as described in the aforemen-
tioned definition. A second exception contained in the Swiss Criminal Code
tries to prevent the raising of standards for freedom fighters beyond those for
regular combatants by stating that the rules on financing of terrorism will not
be applied, if with the financing, acts are to be supported that are not in
contradiction with the rules of international law pertaining to armed
conflicts.35 Other State Parties will most likely be confronted with similar
dilemmas. The actual consequences for the offence of financing terrorism will
be addressed below, when dealing with the subjective requirements.
The 1999 UN Convention finally makes it very clear in Article 2(3) that the
funds do not actually have to reach their criminal destination, but that their
intended use for terrorist purposes is sufficient to incriminate the behaviour.
A causal link between a terrorist act and the provision or collection of funds
need not be established. Therefore, the brunt of the distinction between legal
and illegal behaviour is placed on the subjective criteria.

C. Subjective Elements of the Offence

Obviously, the providing and collecting of funds has to take place wilfully.36
The perpetrator must intend the funds to be used for terrorist purposes.
The text of the 1999 UN Convention adds, somewhat repetitively, or in the
knowledge that they are to be used [for these purposes]. This raises the
question of whether the Convention requires State Parties to go beyond direct
intent and also include cases of less certain mens rea possibly even down to
a dolus eventualis and recklessness or a should have known-standard.
As the funds may well stem from perfectly legitimate sources, practically
the entire distinction between legal and illegal behaviour relies on this

35 Art. 260 quinquies (4) Swiss Criminal Code; cf. also para 278c (3) Austrian Criminal Code.
36 Art. 2(1), 1999 UN Convention, supra note 3.
1082 JICJ 4 (2006), 1074^1086

subjective criterion. It is, therefore, understandable that the Convention

excludes all references to negligence. Furthermore, both intent and knowledge
may well be interpreted as representing a standard of firm, direct intent.
At least this is the interpretation given by some national laws: referring
again to the example of Article 260 quinquies, section 2 of the Swiss Criminal
Code explicitly states that if the perpetrator merely speculates about the possi-
bility of financing terrorists, he will not be punishable according to this law.
The statement is made in this explicit manner because the formula chosen for
money laundering is far more ambiguous.37
The requirement of actual knowledge38 of the terrorist destination of funds,
and even more so the possible exception for (mere) speculation about legitimate
uses, mean that consideration for possible freedom fighters or respect for
international rules for armed conflict have opened up a broad range of excuses,
especially for those far removed from the actual terrorist organizations,
i.e. bankers and financial intermediaries.39
As indicated earlier, the 1999 UN Convention offers a dual approach: first, a
general reference to all offences within the scope of the treaties listed in the
Annex; and second, an independent definition of terrorism. At the heart of
this definition is that the purpose is . . . by its nature or context, to intimidate a
population or to compel a government or an international organization to do or
to abstain from doing any act. The means used to compel the acts are
. . . intended to cause death or serious bodily injury to a civilian, or to any
person not taking an active part in the hostilities in a situation of armed
conflict . . ..
The European Union Council in its 2002 Framework Decision40 has
attempted to simplify the approach by spelling out what the offences listed
in those annexed treaties actually are. The Framework Decision also adds
to what the typical overall purpose of terrorist acts are by mentioning
that they furthermore aim at . . .seriously destabilising or destroying the
fundamental political, constitutional, economic or social structures of a
country or an international organisation.

4. Ancillary Offences
A. Attempt
Article 2(4) and Article 4 of the 1999 UN Convention together require attempts
to be criminalized. Read together with Article 2(3), this includes the
criminalization of what could technically be called an attempt of a preparatory

37 Art. 305 bis Swiss Criminal Code.

38 Botschaft, supra note 33, at 5430.
39 Critical: U. Cassani, supra note 12, at 693.
40 Art. 1(1), 2002 EU Council Framework Decision, supra note 25.
 Criminalizing the Financing of Terrorism 1083

act (i.e. collecting funds with the specific required intent, even without
achieving the envisaged goal).

B. Co-perpetration and Complicity

Art. 2(5) of the 1999 UN Convention deals with three forms of co-perpetration
and participation in a crime and obliges State Parties to criminalize these
modes of participation under their national laws accordingly. The different
categories that need to be covered are: actual accomplices as specified by
section (a), organizers and instigators as specified by section (b), and those
contributing to the commission through a group as specified by section (c).
Subsection (ii) of (c) goes rather far in covering even non-members of the
group as soon as they have knowledge of the groups intention to commit a
relevant offence.
Overall, Article 2(5) is inspired by the regulation technique used
continuously since the 1988 Convention on Illicit Trafficking in Drugs,41
intending to capture all possible preparatory and ancillary acts.

C. Money Laundering
Immediately after 9/11, the FATF introduced an additional aspect that creates
an uneasy tension with regard to the financing of terrorism. In its
Special Recommendation II42 the FATF requests countries to criminalize
the financing of terrorism, terrorist acts and terrorist organizations. It adds
that [c]ountries should ensure that such offences are designated as money
laundering predicate offences. This would be justified for terrorist acts that
occasionally procure illegal proceeds (like a bank robbery intended to generate
funds for the IRA). However, according to the rule created by the FATF,
accepting funds of licit origin, collected for the purpose of funding terrorist
activities, would not only constitute financing of terrorism, but also money
laundering.43 This concept is developed further by the Council of Europe in
its 2005 Convention44 in so far as it allows the freezing, seizure and
confiscation of assets used or destined to be used for the financing of terrorism.
This equation has been denounced as unsound, not only from a criminal law
perspective, but especially from the bankers vantage point: countering the
financing of terrorism presupposes a different risk perception concept than
that of classic anti-money laundering.45

41 1988 UN Convention, supra note 6.

42 FATF, Special Recommendations on Terrorist Financing, supra note 2.
43 Botschaft, supra note 33, at 5443.
44 Arts 2 and 9, 2005 COE Convention, supra note 24.
45 A. Kersten, Financing of Terrorism a Predicate Offence? in Pieth (ed.), supra note 4, 49^56;
Pieth, supra note 8, at 123.
1084 JICJ 4 (2006), 1074^1086

5. Corporate Liability
In the meantime it has become standard practice for an international treaty
providing for the criminalization of certain behaviour to require corporate
liability. Typically, such conventions do not prejudge whether liability should
be criminal, civil or administrative. Whereas Article 5 of the 1999 UN
Convention46 fits this pattern, the FATF in keeping with the 40
Recommendations47 primarily requires criminal corporate liability when-
ever possible under the respective legal system. It would be insufficient,
however, if such liability were made dependent on the criminal liability of
individuals again a standard also upheld in other conventions.48 Also in
line with most other international instruments in the field of criminal law,
especially the EU and the COE standards, the 1999 UN Convention requires
that sanctions be effective, proportionate and dissuasive.49

6. Jurisdiction
The chapter on jurisdiction in the 1999 UN Convention is also rather classical
as it requires territoriality, extended territoriality (the flag principle) and
nationality as a mandatory basis for jurisdiction.50 In requiring
nationality, it goes beyond some of the other conventions and also forces
countries like Canada to depart from their exclusively territorial jurisdiction.
In Article 7(2), the UN Convention includes several additional, non-mandatory
jurisdictional principles. What is mandatory, however, is the principle of
aut dedere aut iudicare (either extradite or try yourself) in Article 10 of the
Convention.

7. Mutual Legal Assistance and Extradition

Also, the requirements of mutual legal assistance51 and extradition52 are, on
the whole, standard. However, the 1999 UN Convention, in line with Article 6,
tries to exclude easy excuses in its defiscalization and its depolitization
clauses.53 To counterbalance the strict depolitization rule, Article 15 contains

46 FATF, Interpretative Note to Special Recommendation II, supra note 2.

47 FATF, The Forty Recommendations, 20 June 2003, R 2(b).
48 Art. 5(2), 1999 UN Convention, supra note 3; see also Art. 2, OECD Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions, 21 November 1997,
and the corresponding monitoring practice.
49 Art. 5(3), 1999 UN Convention, supra note 3.
50 Ibid., Art. 7(1).
51 Ibid., Art. 12.
52 Ibid., Art. 11.
53 Ibid., Arts 13 and 14.
 Criminalizing the Financing of Terrorism 1085

an anti-discrimination exception for cases where the extradition request is an

attempt at political, racial and other persecution.

8. Freezing, Seizure and Confiscation

The provision of Article 8 of the 1999 UN Convention on identification,
detection, freezing, seizure and confiscation of funds needs to be seen in a
wider context: the rationale of starving the terrorists of money54 is primarily
focused on rapid intervention and the freezing of assets. Permanent
confiscation is clearly a secondary interest.

A. Freezing and Seizure

The UN Security Council has, in several resolutions, created a system of lists of
individuals and groups whose assets need to be frozen by the Member States.
With Resolution 1267 (1999)55 the Security Council established the (Al Qaeda
and Taliban) Sanctions Committee. The list compiled by this Committee is
binding and mandatory for all UN Member States, whereas SC Res. 1373
(2001) creates an additional mechanism by which individual countries can
suggest the freezing of specific funds to other Members. The recipient of the
request, however, can exercise a certain amount of discretion in deciding
whether to cooperate or not.
Again, regional and national bodies have further refined UN freezing
mechanisms. The most detailed rules are probably found in the 2005 COE
Convention56 and within the European Union. The hitherto unresolved pro-
blem concerning the administrative or executive freezing provisions has led to
the lack of sufficient de-freezing procedures: several rules require the creation
and public announcement of de-listing and de-freezing procedures.57
Furthermore, it has become obvious that exceptions are inevitable with
regard to basic expenses, professional fees and the maintenance of frozen
economic resources. However, the practice is far from convincing. The UN
Sanctions Committee, set up persuant to Security Council Resolution 1267
(1999), has enacted certain Guidelines on how to launch petitions for de-listing
or de-freezing. However, the rule is that petitions need to be introduced via the
governments of residents or citizens. Individuals are not accorded the right to
be heard by the Sanctions Committee themselves.58

54 9/11 Commission Report, supra note 1, at 381.

55 See also SC Res. 1333 (2000).
56 2005 COE Convention, supra note 24.
57 On de-listing see FATF, Freezing of Terrorist Assets, supra note 2, at note 5 (V).
58 See Guidelines of the Sanctions Committee for the Conduct of Its Work, 7 November 2002,
amended 10 April 2003 and revised 21 December 2005.
1086 JICJ 4 (2006), 1074^1086

The Court of First Instance of the European Communities, when requested

to examine the legality of an implementing law, did not criticize the UN
Sanctions Regime, even though it forces the EU and its Member States to
blindly follow a process that most likely violates fundamental human rights
like the right to a fair hearing and effective judicial review.59

B. Confiscation
Concurrent with the administrative and executive freezing, State Parties
are invited to develop provisory measures within the context of criminal
procedure, possibly leading to the permanent confiscation of assets.60 Both
the 1999 UN Convention and the 2005 COE Convention contain rules on the
compensation for victims61 and on the sharing of confiscated assets with other
states.62

9. Conclusion
Based on the expectation that terrorist activity could be seriously hampered
by a comprehensive, worldwide system to counter its financing, which is
similar to the one against money laundering, new criminalization provisions
have been adopted internationally and implemented on a national level.
Criminalization goes hand in hand with forfeiture and notification obligations.
The definition of the offence, however, raises serious issues of clarity and
certainty and does not really solve the underlying key problem, the distinction
between terrorism and other forms of armed combat. Even though one can
easily agree on extreme cases, the grey zones of informal armies trying to
establish a democratic order by means of violence remain unresolved.
Additionally, based on a system of UN Security Council resolutions, freezing
mechanisms for suspected funds of terrorists have been put into place.
The procedures do not allow for a direct hearing for the beneficiaries of the
frozen funds, and there is no adequate direct judicial appeal of the decisions of
the UN Sanctions Committee. Furthermore, regional and local courts
(including the Court of First Instance of the European Communities) are reti-
cent in criticizing the lack of sufficient freezing and de-freezing procedures,
even though the national authorities must supervise and implement these
decisions without necessarily asking questions.

59 See Judgement of the Court of First Instance of the European Communities in case T-315/01
Yassin Abdullah Kadi, 21 September 2005.
60 Art. 8(2), 1999 UN Convention, supra note 3; Arts 23 et seq., 2005 COE Convention, supra note
24.
61 Art. 8(4), 1999 UN Convention, supra note 3; Art. 25(2), 2005 COE Convention, supra note 24.
62 Art. 8(3), 1999 UN Convention, supra note 3; Art. 25(3), 2005 COE Convention, supra note 24.