Last week The Economist prominently placed a “Leader” calling for a decrease in the regulations that govern sending remittances from rich countries to poor ones. While it is certainly noble and right to want to make it less expensive for the world’s poorest citizens to access the international financial system, we disagree and worry that such reforms would make it easier for terror organizations to move money around the globe.
For one thing, the graphic that accompanies the article belies the point the article makes. The graphic show remittances increasing over the last fifteen years just as regulations have been tightened. While the regulations in place to help curb the flow of money to terrorists may raise costs, they are obviously not raising costs so much as to deter the flow of money to those who need it.
After 9/11 the U.S. government found that much of the global movement of money by terrorist organizations was through low tech, traditional methods such as the commonly used remittance systems that The Economist says should be more loosely regulated. The very changes to these systems that The Economist decries were put in place as a result of close study of what led to the 9/11 attacks and what could be done to help prevent such atrocities in the future.
The Economist also calls for the changes to be made in how the Financial Action Task Force (FATF) regulates international cash transfers to better allow legitimate remittances to flow to poor countries. We believe that the FATF is a crucial component of the international community’s efforts to fight terrorism by cutting off extremist groups’ access to the international financial system. Bringing FATF’s focus to terror finance has been an important victory in this fight, and without FATF’s policy apparatus at full strength, the world will be fighting an already difficult battle with its arms tied behind its back.
Finally, The Economist calls for a relaxation of penalties against banks that follow a minimum level of anti-money laundering protocol. While we have certainly seen some aggressive prosecutions of banks as questionable, banks de-risking away from those associated with terrorist organizations can also be an important tool used to fight against extremists who take shelter behind Western liberalism or charitable organizations. If Western governments do not aggressively fight terror groups through their sources of funding they are depriving themselves of one of the most effective tools they have against this scourge.
Western governments cannot muzzle a free press, and it is impossible to shut down the social media sites that terror groups use for recruitment. Unfortunately, no Western government can legislate away all of the problems, hardship and oppression that drives young individuals in the developing world to commit heinous acts of violence. The one place where the West can exercise some measure of control is in the international financial system, which has been seen to be crucial to these global terror networks. To give up some measure of this control, or to lessen the regulations that are preventing terrorists from sending money around the world would be not only counterproductive, but dangerous.