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GSMA and MasterCard remittances project to finance terrorism?

Week 09, 2007

Money laundering and terror finance experts have called the project "A terrorist dream comes true". Rachel Ehrenfeld, the Director of the American Center for Democracy and international expert on terrorism funding, points out the danger that money transfers through mobile phones pose as a simple and relatively uncontrollable way through which terrorists and their supporters can move money around the world.

The Paris-based International Organization Financial Action Task Force, along with regional bodies such as the European Commission Counter-Terrorist Unit or FinCEN in the US, issues recommendations dealing with Anti Money Laundering (AML) and Counter Terrorism Financing (CTF) that are translated into national laws and regulations all over the world. Among other things, banks are obliged to carry background ’Know Your Customer’ checks, to do positive identification of money senders, and to report unusual or suspicious transactions to their national Financial Intelligence Units.

Now, new money transfer means, such as the GSMA – MasterCard project are creating a new weaknesses in the control system, as they are, so far, unregulated. On the other hand, large money transfer companies, such as PayPal or Western Union, do take compliance seriously. According to Rachel Ehrenfeld, the Remittances project “would undoubtedly defeat most efforts to identify the users and follow the money trail.”

Shouldn't there be some solution to track funds found before launching the GSMA-MasterCard Remittances project?

Thierry Spanjaard
Chief Editor
Smart Insights