As the shock waves of 11 September still reverberate ac-ross the globe, the attention of financial regulators is devoted to the unravelling of the paper trail to reveal how this international terrorist gang was financed and how that money was transferred and applied by the terrorists.
It is inevitable that many financial centres, both 'onshore' and 'offshore', are likely to be implicated in one way or another. Already, accounts in London have been frozen. Offshore regulators are particularly concerned to ensure that terrorist money has no safe haven in their jurisdictions. While the focus of initiatives such as that of the Organisation for Economic Cooperation and Development have changed with the modified attitude of the new US administration, offshore centres are still conscious of being under the microscope and are keen to demonstrate their willingness to assist the investigators.
One of the positive effects of the attention given to the Channel Islands and other offshore centres has been a heightened awareness of the importance of anti-money laundering measures throughout the offshore finance industry.
The Guernsey Financial Services Commission has taken the unprecedented step of circulating the latest FBI intelligence regarding the hijackers, and Guernsey financial institutions have, along with financial institutions elsewhere, been checking client accounts to ensure that there has been no unusual activity that could be linked to the attacks. Reports so far show no evidence of any links between Guernsey banks and Osama bin Laden or any of his associates. However, as the director general of the commission Peter Neville has reported: “We can never be sure that there are no funds in Guernsey linked to terrorism. It would not be sensible for any financial centre to say it could not be used for money laundering.”
In Jersey, investigators are still working with the FBI on a number of possible leads. The Jersey investigators are hindered by the fact that the bin Laden family in Saudi Arabia is well respected and involved in reputable businesses that have held funds in Jersey for many years.
The Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law 1999 (the 1999 law), closely modelled on the UK Criminal Justice Act of 1993, creates a number of offences for those who become involved in assisting persons laundering the proceeds of criminal conduct. To the extent that the terrorists in the US were financed by the proceeds of criminal conduct, should any money be found to have passed through Guernsey, the 1999 law could be applied. It is well known that terrorist activity and drug smuggling, for example, go hand in hand, and that frequently the one assists in perpetuating the other. Estimates are that 80 per cent of the heroin consumed in Europe originates from Taliban-controlled Afghanistan.
It has also been suggested that those who were aware of the planned attack profited from stock trading by selling equities of companies likely to be affected. If the proceeds were found to have been routed through Guernsey, every assistance would be afforded to the investigators by the local authorities by virtue of the offshore centre's fraud and insider dealing legislation.
Certain newspaper reports have claimed that President Bush's threatened crackdown on banks that handle money for terrorists was welcomed by some European countries as being a long-overdue crackdown on offshore tax havens. If such observations were made with Guernsey in mind, they are misguided. As the Offshore Group of Banking Supervisors reported last year, Guernsey has a robust arsenal of legislation, regulation and administrative practices to counter money laundering.
Bin Laden is known to have interests in banking institutions in the Middle East and Africa. From there he would have ready access to the international banking system. The international banking system, both on and offshore, is exposed to the risk of being exploited by terrorists. While Guernsey, as elsewhere, has an impressive armoury of legislation seeking to deter those wishing to take advantage of the facilities available here for unlawful purposes, it is difficult to see how such laws and regulations could deter someone who is willing to die for what they believe in, however misguided those beliefs are. There seems little more that we can do other than to ensure a heightened state of vigilance.