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Document 52004DC0700
Fight against Terrorist Financing: exchanging information, transparency and traceability of financial transactions
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Fight against Terrorist Financing: exchanging information, transparency and traceability of financial transactions
After the Madrid attacks of 2004, the European Union is strengthening all aspects of its fight against terrorism, including the fight against financing of terrorist attacks and of terrorist networks. The Commission aims to prevent such financing in three ways: improved cooperation in the exchange of information, enhanced traceability of financial transactions, and greater transparency of legal entities.
ACT
Communication from the Commission to the Council and European Parliament of 20 October 2004 on the prevention of and the fight against terrorist financing through measures to improve the exchange of information, to strengthen transparency and enhance the traceability of financial transactions [COM(2004) 700 - Official Journal C 14 of 20 January 2005].
SUMMARY
In its Declaration on Combating Terrorism of 29 March 2004, the European Council committed Member States to do everything within their power "to reduce the access of terrorists to financial and other economic resources".
This Communication considers what further measures may be effective in tackling terrorist financing. In order to ensure that terrorist financiers operate in a hostile environment, we must not only apply anti-money-laundering techniques to the detection of terrorist financing but also invest in additional measures.
One course of action would be to make financial transactions and legal entities more transparent in order to make it harder for terrorists to raise money. In addition, tracking financial and other transactions is an effective means of locating terrorists and their supporters and disrupting terrorist activity. We must also foster closer cooperation and enhanced mechanisms for information exchange at national, EU and international levels both among competent authorities and between competent authorities and the private sector.
Exchanging and analysing information
As regards sharing information between competent authorities, there is a need to implement cooperation and exchange structures encompassing fiscal authorities, financial oversight bodies, the Justice Department, the intelligence community, law enforcement authorities and authorities in charge of administrative freezing. All services involved, including Europol and Eurojust, should be required to exchange information on terrorist offences, as provided for by the Proposal for a Council Decision annexed to the Communication on Terrorism COM(2004) 221.
The FIU.NET network, funded by the Member States and the Commission with the task of establishing a computer network for the exchange of intelligence among Financial Intelligence Units (FIUs), will become an important element in facilitating the sharing of intelligence. Joint Investigation Teams must be further promoted in cross-border investigations of terrorist financing.
Cooperation between authorities and the private sector also has an important role to play in the fight against the financing of terrorism. A possible means of ensuring information is exchanged between the two sides is to give FIUs full access to dedicated databases located in and under the control of the financial community. High-level contacts could also be established and maintained between law enforcement agencies specialised in terrorism and private sector representatives.
Traceability of financial transactions
Four courses of action should be followed in order to follow money trails backwards to the person providing finance and forwards to terrorist cells:
Transparency of legal entities and the non-profit sector
The absence of international standards in key mechanisms used in global financial transactions, including international business companies, trusts and offshore funding vehicles creates a degree of financial opacity of real advantage to those financing terrorism. This is also true for the non-profit sector. Introducing mechanisms for the disqualification of individuals or firms convicted of offences related to terrorism or organised crime would help to highlight such unlawful use of the private sector.
Horizontal actions
Other existing measures, if improved, could also contribute to the fight against terrorist financing. For instance:
Background: combating the financing of terrorism
This Commission Communication is one of a series of four Communications putting forward solutions to priority issues identified at the Brussels European Council of 18 June 2004 in the Revised EU plan of action on combating terrorism, namely:
The Council's plan of action on combating terrorism stresses the need to adopt measures to prevent the financing of terrorism.
The European Union's Strategy on combating the financing of terrorism was presented in December 2004. This document, which was drawn up on the basis of joint proposals from the Commission and the Secretary-General/High Representative for the Common Foreign and Security Policy (CFSP), documents the steps already taken in this field and gives a list of recommendations to enhance the EU's action.
RELATED ACTS
Commission Communication to the Council, the European Parliament and the European Economic and Social Committee - "The prevention of and fight against terrorist financing through enhanced national-level coordination and greater transparency of the non-profit sector" [COM(2005) 620 final - Official Journal C 122 of 23 May 2006].
Communication from the Commission to the Council and the European Parliament of 20 October 2004 - "Prevention, preparedness and response to terrorist attacks" [COM(2004) 698 final - Not published in the Official Journal].
Communication from the Commission to the Council and the European Parliament of 20 October 2004 - "Preparedness and consequence management in the fight against terrorism" [COM(2004) 701 final - Not published in the Official Journal].
Communication from the Commission of 20 October 2004 - "Critical Infrastructure Protection in the fight against terrorism" [COM(2004) 702 final - Not published in the Official Journal].
Further information:
"Freedom, Security and Justice" website of the Directorate-General for Freedom, Security and Justice of the European Commission:
European Council website:
Last updated: 28.08.2006