EU vows to cut off terrorists’ financing networks

Cracking down on terrorists’ financing networks is easier said than done.

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Europe’s justice and interior ministers tasked the Commission on Friday with finding ways to starve terrorist groups of their funding, in response to last week’s attacks in Paris by Islamic State (ISIL).

The list of targets is long: anonymous payments, remittances, virtual currencies, pre-paid cards, virtual currencies and gold and precious metals.

“Without terror financing, there’s less terror,” said German Interior Minister Thomas de Maizière, at the end of a meeting in Brussels which also looked at ways to improve cooperation between EU law enforcement and financial intelligence agencies.

The tools used for the Paris attacks may not have cost vast amounts of money — a rented car, Kalashnikov assault rifles, home-made bombs — but the network underpinning such attacks is expansive.

The U.S. government declared its determination to target terrorist financing networks at the G20 meeting in Anatalya, Turkey last weekend. The 28 EU member countries need to agree to a common plan, with support from the European Parliament and Commission.

“It all depends on our ability to stem the flow of different finance streams, and for that we also need an exchange of information. We also need the option that fortunes that raise suspicion can be frozen immediately,” said de Maizière.

The EU adopted an anti-money laundering directive earlier this year. Virtual currencies weren’t tackled in the directive, with the Commission instead launching an assessment of money laundering and terrorism financing risks, including the use of virtual currencies. That assessment is due for release in June 2017, but a Commission source said it might be released early ahead of the next meeting of the justice and home affairs ministers in December.

While crypto-currencies such as bitcoin are in vogue, experts say more old-fashioned methods of money laundering should remain the main concern.

“Our impression is that in terms of the risks of money laundering, the risks are quite low in terms of bitcoin,” said Carl Dolan, the director of Transparency International. “There are simpler ways to move money around in disguise, to hide where the money comes from and where it’s going.”

“It takes 10 minutes and €690 to set up a shell company,” he added.

One bitcoin expert, speaking on condition of anonymity, said bitcoins are “literally the last currency a terrorist organization would want to touch.”

That’s because while bitcoin wallets can be created anonymously, in practice the act of sharing the private key to a particular wallet between several people means their activities can be easily linked through the blockchain public register.

Commission sources said EU countries were dragging their feet on the implementation of the anti money-laundering directive.

Speaking after the Council meeting Friday, Vĕra Jourová, the European Commissioner for justice and consumers affairs, said: “All member states promised in February to speed up the implementation [of the directive] and now I count on them to deliver.”

Other measures, such as the Schengen Information System (SIS II) used by border and law enforcement throughout the EU, are also falling by the wayside. National authorities are meant to enter data on all suspected foreign fighters but it is not happening.

“The EU has efficient tools allowing for exchange of information on such individuals, for example SIS II. We need to make full use of instruments already at our disposal,” said Etienne Schneider, Luxembourg’s minister for internal security and defence.

“But we need to be realistic,” Schneider added. “If that hasn’t worked so far, it’s because we haven’t overcome the problems with the exchange of data between law enforcement authorities.”

Kate Day contributed to this story.