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Cutting off funds for terror



By CNN's Becky Anderson

LONDON, England (CNN) -- On Saturday, EU finance ministers are meeting in Belgium. At the top of their agenda: cutting off the supply of money that funds terrorism.

But while any new proposals to follow the terrorist paper trail may be good in theory, making them work in practice may prove very challenging.

The tragedies in New York and Washington not only took careful coordination they also took money moving through western countries and banks.

At any one time, say experts, $500 billion in dirty money is thought to be circulating around the globe -- much of which may be traced to terrorist groups.

"Terrorists do what criminals do. Most of the money is drug money. But terrorists deal in drugs to finance their atrocities. The lines are not very distinct between terrorism and global crime," says Jeffrey Robinson, author of "The Laundrymen."

Governments, particularly Britain's, say they will try to clamp down and make the flow of funds that finance terrorism more transparent.

"Where there is suspicion of terrorist activities we must have a system of monitoring and reporting," says Gordon Brown, Britain's chancellor of the exchequer.

"We are going to have to deal with industries and sectors in the financial services industry where there has not been proper compliance in the past -- where there are too many loopholes. We also have to look at the position of offshore havens in this regard."

At present, international banks are required to report only suspicious funds -- money believed to be coming from criminal activities like drug trafficking.

Suggestions are now being made to force banks to report on funds associated with any suspect business.

"Terrorists and others will use corporate names to basically disguise their transactions," says Donald Johnston, secretary-general of the Organisation for Economic Cooperation and Development (OECD). "The important part for all countries and all legal regimes and the free democracies is to ensure that the beneficial ownership of these companies is known so that funds can be traced."

But this kind of transparency brings many challenges. Tracking the movement of money is complex and costly. And the issue of client confidentiality is set to become heated.

Swiss banks, noted for their secrecy laws, are pledging to join the search for terrorist money. But they are warning it won't be easy.

"it is difficult to find out whether transactions or money are seen in connection with criminal activities - be it drugs, criminal acts or even terrorism," says Urs Roth of the Swiss Bankers Association.

While most experts say it's unlikely investigators will ever cut off the supply of terrorist funds entirely, European finance ministers this weekend hope to give themselves the powers to severely restrict them.





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• UK Treasury
• OECD
• Swiss Bankers Association

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