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EU Fight against money laundering and terrorist financing

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The European Commission is today adopting a Communication and four reports that will support European and national authorities in better addressing money laundering and terrorist financing risks. The Juncker Commission put strong EU rules in place with thefourth and the fifth Anti-Money laundering directives and reinforced the supervisory role of the European Banking Authority. The reports stress the need for their full implementation while underlining that a number of structural shortcomings in the implementation of the Union’s anti-money laundering and counter terrorist financing rules still need to be addressed. Today’s package will serve as a basis for future policy choices on how to further strengthen the EU anti-money laundering framework.

Frans Timmermans, First Vice-President said: “We must close off all opportunities for criminals and terrorists to abuse our financial system and threaten the security of Europeans. There are some very concrete improvements which can be made quickly at operational level. The Commission will continue to support Member States in this, whilst also reflecting on how to address the remaining structural challenges.”

Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “A credible framework for preventing and fighting money laundering and terrorist financing is essential to maintain the integrity of the European financial system and reduce risks to financial stability. Yet, today’s analysis gives more proof that our strong AML rules have not been equally applied in all banks and all EU countries. So we have a structural problem in the Union’s capacity to prevent that the financial system is used for illegitimate purposes. This problem has to be addressed and solved sooner rather than later.”

Věra Jourová, Commissioner for Justice, Consumers and Gender Equality said: “We have stringent anti-money laundering rules at EU level, but we need all Member States to implement these rules on the ground. We don’t want to see any weak link point in the EU that criminals could exploit. The recent scandals have shown that Member States should treat this as a matter of urgency.”

The Towards a better implementation of the EU’s anti-money laundering and countering the financing of terrorism framework Communication gives an overview of the four reports published today: the supranational risk assessment report provides an update of sectorial risks associated with money laundering and terrorist financing. The assessment of recent high-profile money laundering cases in the financial sector, the Financial Intelligence Units and the interconnection of central bank account registries’ reports analyse the shortcomings in current anti-money laundering supervision and cooperation, and identifies ways to address them.

Assessment of money laundering risks across the internal market

The supranational risk assessment report is a tool to help Member States identify and address money laundering and terrorist financing risks. It is adopted every two years by the Commission since 2017.

The report shows that most recommendations of the first supranational risk assessment have been implemented by the various actors. However, some horizontal vulnerabilities remain, particularly with regard to anonymous products, the identification of beneficial owners and new unregulated products such as virtual assets. Some of these will be addressed by the upcoming transposition of the fifth Anti-Money Laundering Directive. The report also recalls that Member States still have to fully transpose the fourth Anti-money laundering directive. The Commission calls upon Member States to implement the directive fully and follow the recommendations of this report. This would improve cooperation between supervisors, raise awareness among obliged entities and provide further guidance on beneficial ownership identification.

Assessment and lessons from recent money laundering cases

Following a number of exchanges with the European Parliament and a request from the Council in December 2018, the European Commission has analysed ten recent publicly known cases of money laundering in EU banks to provide an analysis of some of the current shortcomings and outline a possible way forward.

While not being exhaustive, the report shows that:

Banks, in a number of the cases analysed, did not respect effectively or sometimes did not comply at all with anti-money laundering requirements. They lacked the right internal mechanisms to prevent money laundering and did not align their anti-money laundering/counter terrorism financing policies when they had risky business models. The findings also highlighted a lack of coordination between such policies, either at the level of individual entities or at group level.

National authorities responded with significant differences in terms of the timeliness and effectiveness of their supervisory actions. There were major divergences in terms of prioritisation, resources, expertise and available tools. More particularly with respect to the supervision of a banking group, the supervisors had a tendency to rely excessively on the anti-money laundering framework of host Member States and this impinged on the effectiveness of supervisory actions in cross-border cases at EU level. In addition, the division of responsibilities led to ineffective cooperation between anti-money laundering authorities, prudential authorities, Financial Intelligence Units and law enforcement authorities.

These deficiencies point to outstanding structural issues in the implementation of EU rules, which have been addressed only in part. The regulatory and supervisory fragmentation, coupled with the diversity of tasks, powers and tools available to public authorities, create weaknesses in the implementation of EU rules. Shortcomings in anti-money laundering policies and supervision are more prominent in cross-border situations, both within the EU but also in relation to non-EU countries. While significant actions have been taken by banks and supervisors, more remains to be done. There is, for instance, a need for further harmonisation across Member States and strengthened supervision.

The need for reinforced cooperation between Financial Intelligence Units (FIU)

Financial Intelligence Units play a key role in identifying money laundering risks in each country. The EU FIU’s Platform, which is an expert group of the Commission, has greatly improved the cooperation over the last years, but the Commission has identified remaining issues:

Access by FIUs to information: due to their different status, powers, and organisation, some FIUs are not able to access and share relevant information (financial, administrative and law enforcement).

Information sharing between FIUs remains insufficient and is often too slow.

IT tools: FIUs also sometimes lack the proper IT tools to efficiently import and export information to/from the FIU.net.

Limited scope of the EU FIUs’ Platform, which cannotproduce legally-binding templates, guidelines and standards.

The report suggests some concrete changes, such as a new support mechanism, that would further improve the cooperation between Financial Intelligence Units (FIU) across the EU.

Interconnection of central bank account registries

The report on the interconnection of central bank account registries sets out a number of elements to be considered for a possible interconnection of bank account registries and data retrieval systems. The Commission suggests that such a system could possibly be a decentralised system with a common platform at EU level. To achieve the interconnection, legislative action would be required, following consultation with Member States’ governments, Financial Intelligence Units, law enforcement authorities and Asset Recovery Offices.

Next steps

Today’s reports will inform the future debate on further action in this area, including with regard to the obligations of financial institutions and the powers and tools necessary for effective supervision. The current degree of integration of the banking market will also require further work on the cross-border aspects of the anti-money laundering/terrorist financing framework. The Commission will continue to monitor closely the implementation of EU anti-money laundering rules by the Member States.

Background

Under the Juncker Commission, the EU has strengthened the anti-money laundering/ counter terrorist financing framework by adopting the fourth Anti-Money Laundering Directive that had to be transposed by Member States by June 2017. The Commission is assessing the transposition of the fourth Anti-Money Laundering Directive, while also working to verify that the rules are correctly implemented by Member States. The Commission has launched infringement procedures against a majority of Member States as it assessed that the communications received from the Member States did not represent a complete transposition of this Directive.

The fifth Anti-Money Laundering Directive will improve the powers of Financial Intelligence Units, increase the transparency around beneficial ownership information, as well as regulate virtual currencies and pre-paid cards to better prevent terrorist financing. Member States are due to transpose the Directive into national law by January 2020.

Following the uncovering of several money laundering cases in 2018, the Commission set up in May 2018 a joint working group together with the European Supervisory Authorities and the European Central Bank. On the basis of the working group’s recommendations, the Commission issued in September 2018 a Communication on strengthening the AML and prudential frameworks and new rules to strengthen the role of the European Banking Authority. This led to the reinforcement of the anti-money laundering and terrorist financing dimension in prudential banking legislation through the adoption of the fifth Capital Requirements Directive in December 2018.

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How 4chan Radicalizes Youth and Grooms Them Towards Terrorism

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The image board was started in 2003 to discuss anime and various other topics but festered into a safe space for hateful rhetoric soon after. In the aftermath of yet another racially motivated mass shooting by a frequent user, its dangers have finally reached the mainstream.

4chan is an extremely unique website. It has been running since 2003, and over the course of almost 20 years, has influenced many internet memes and phenomena. However, in the wake of the European Migrant Crisis in 2015 and the 2016 Presidential Election, it became associated with white supremacy, especially on its /pol/ board. This hateful rhetoric festered, worsening in 2020 during the COVID pandemic and George Floyd protests. 4chan was sprung into the spotlight once again on May 14th, 2022, when a white supremacists livestreamed his massacre of a supermarket.

This attack, fresh in American’s minds, led many to question why 4chan is still allowed to exist. This comes after 4chan’s rhetoric inspired a 2015 mass shooting in Oregon and its users aided in the organization in the Unite The Right Rally and the January 6th Riots. Clearly 4chan is a hotbed for far-right terrorism. But why is this image board the way it is? The answer lies in its lax moderation of content.

Upon looking at 4chan, you will find it is mostly made up of pornography. However, if you go on the site’s /pol/ board, it does not take long to find the kind of rhetoric that radicalized the Buffalo shooter. One particular post I found featured a racist joke at the expense of Black people. Another was praising fighters in the Ukrainian Azov battalion while joking about killing trans people. Yet another post complained about an “influx of tourists” due to the Buffalo shooter, who they insulted with an anti-gay slur. These memes and jokes seem to appeal to a younger, perhaps teenaged audience. It is clear that they are still trying to recruit youth into their ranks even after the tragedy in Buffalo.

The content is, to say the least, vile. The fact that this stuff is permitted and encouraged by not just the userbase (which numbers in the millions) but also many moderators tells us that there is something fundamentally wrong with 4chan. In fact, copies of the livestreamed Buffalo massacre were spread widely on 4chan to the amusement of its userbase.

Many of the users on 4chan are social rejects who feel as if they have nothing to lose. They feel unaccepted and alienated from society, so they turn to 4chan. Many harmful ideologies, such as White supremacy and incel ideologies, seem extremely validating for these dejected youth.  Young, socially alienated men, who make up the majority of 4chan’s userbase, are also among the most vulnerable demographics for radicalization.

What can we do to prevent further radicalization of youth and deradicalize those already affected by harmful rhetoric? First of all, we need to either heavily regulate 4chan or have it shut down. There is no space on the internet for this kind of hatred or incitement to commit horrific acts like what happened in Buffalo. For those already radicalized, we need to perform a campaign of deradicalization among those affected by this rhetoric. But how can this be done?

4chan prides itself on anonymity, so it is difficult to figure out who uses it. Thus, education on radicalization and identification of propaganda is vital. This education should focus on adolescents mostly due to their predisposition towards radicalization when exposed to hateful rhetoric. While White supremacy must be emphasized, other forms of radicalization should be mentioned as well such as Jihadism and other forms of ethnic supremacy. Finally, tolerance must be fostered among all people, not just those at risk of becoming groomed into terrorism.

The age of 4chan has spawned many humorous memes, but it has since become a hotbed for hatred and terrorism. Since memes are able to convey dangerous ideas, websites like Reddit and Facebook need to be heavily regulated to prevent the dissemination of dangerous misinformation. It is unlikely that 4chan will ever moderate itself, as lack of strict moderation is its defining feature. Thus, it has overstayed its welcome and no longer has a place in today’s information-driven society.

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New ISIS Strategy and the Resurgence of Islamic State Khorasan

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ISKP Uzbek Jihadist

Unlike Abu Ibrahim al-Hashimi al-Qurayshi, the second late leader of ISIS, who was derided as a “secluded paper caliph” and “an unknown nobody” for his relative anonymity and non-publicity, the new caliph of the Islamic State, Abu al-Hassan al-Hashimi al-Quraishi, has apparently launched a new strategy to strengthen linkages to regional wilayahs (provinces) and boost the group’s global presence.

Indeed, during his short time leading the group (31 October 2019 – 3 February 2022), Abu Ibrahim al-Qurayshi never publicly addressed his followers, which negatively affected the coordination of the activities of Islamic State-Central (ISC) and its regional branch of the Islamic State Khurasan Province (ISKP). Although his killing during a US counterterrorism raid in northwest Syria in early February was a major blow to the global jihadi organization, the change in leadership nevertheless provided it with new opportunities to update its command-and-control, recruitment and propaganda campaign.

Predictably, Abu al-Hassan al-Hashimi al-Quraishi, the new ISIS overall leader, sees his historical role not only in ensuring the Caliphate’s continuity and avoiding its potential fragmentation but also in establishing a more direct and consistent command line between its core in Iraq and Sham and its Central and South Asian affiliates.

ISIS collage dedicated to rocket attack on Uzbek Termez

The new strategy of the Islamic Caliphate not only gave a new impetus to its Khorasan offshoot waging a holy jihad in post-American Afghanistan against the Taliban but also opened a new front line against the post-Soviet Central Asian regimes. Indeed, the analysis of ISKP activities revealed that the proclamation of Abu al-Hassan al-Quraishi as the new Caliph and the launch of a new campaign “Revenge Incursion for the Two Sheikhs” increased the combat capability of IS Uzbek and Tajik fighters, as well as strengthened the coordination of local language and IS-Central propaganda machines.

Notoriously, on April 17, ISIS launched the new campaign “Revenge Incursion for the Two Sheikhs” to avenge the deaths of the former ISIS leader, Abu Ibrahim al-Qurayshi, and his official spokesperson, Abu Hamza al-Qurashi, who were killed in a US raid in February in the northwest Syrian town of Atmeh. In his recent audio address, Islamic State’s new spokesman Abu-Omar al-Muhajir called on the Caliphate warriors to avenge the deaths of the former ISIS leaders by “painfully striking” the enemies of “al-mujahideen” and saying that if they kill, they should “kill by many.” This call was made to the group’s followers worldwide and asked them to remain patient, but also be ready when the “war” begins. Al-Muhajir called to expand the campaign “Revenge Incursion for the Two Sheikhs” to the territory of US, Europe and Central Asia, urging Muslims living there to follow the lead of past “lone wolves” who conducted operations that “filled with horror.” He asked them to repeat “lone wolf” operations by stabbing, attacking, and ramming, and drawing inspiration from recent attacks in Israel.

ISKP Threat to Central Asia

Among the first to support the Islamic State’s new ‘global offensive’ campaign were ISKP Uzbek and Tajik jihadists challenging the new Taliban government and dreaming of overthrowing the ‘Taghut (idolaters) regimes’ in Central Asia. Thus, inspired by the new Caliph’s new strategy, for the first time in the history of the Islamic State, they managed to conduct a transnational jihadi operation from Afghanistan to the territory of Uzbekistan and Tajikistan.

Initially, on April 18, 2022, the ISKP fired ten rocket salvos into the territory of Uzbekistan, which was successfully exploited by the Uzbek-speaking regional jihadi media and IS-Central’s propaganda resources as evidence of the opening of a “second front” in the Central Asian direction. Expert assessments clearly observed the good coordination between the IS-Central’s media and ISKP’s local jihadi mouthpieces, both in terms of Islamic ideological content and hierarchical sequences.

ISKP Uzbek nasheed performer Asadulloh Urganchiy

The Islamic State-Central’s Amaq News Agency reported that “Mujahedeen of the Caliphate have fired 10 Katyusha rockets at a murtad (apostasy) Uzbekistan’s military base in the border town of Termez.” The ISIS central media wing also released a photo and video of the projectiles to back its claims. Another IS-Central’s weekly al-Naba newsletter also widely covered the topic of rocket attacks by detailing how the projectiles were fired from Afghan territory on the Central Asian nation.

Following IS-Central official news agencies reports, IS-Khurasan Willayah’s local media outlets, such as Al-Azaim Foundation and Khurasan Radio, the Uzbek-language Xuroson Ovozi (Voice of Khurasan), Tavhid Habar (Tawhid News), Tajik-language Telegram channels Mujahideen of the Caliphate and The Army of the Victorious Nation published a series of audio, video and text messages in Uzbek and Tajik detailing the goals, causes, and consequences of the rocket attack. In particular, Al-Azaim Foundation glorified the rocket attack as “the heroism of the brave lions of Allah Almighty punishing the corrupt army of the murtad Uzbek government.”

The ISKP media outlets were extremely outraged by the Uzbek government’s denial of the rocket attack, claiming that nothing had landed on their territory. In response, pro-ISKP Uzbek, Tajik and Russian Language Telegram channels re-posted IS-Central’s statement, photos, videos of the attacker and a map marked with the possible rocket impact location in Termez.

Central Asian Salafi-Jihadi experts’ attention was drawn to a 24-minute audio address of Khuroson Mujahid, the leader of ISKP Uzbek group, whose speech style and ideological views strongly resembled the late ISIS chief strategist Abu Mohammed al-Adnani. His speech revealed that the ideological vision of ISKP Central Asian jihadists, staunch followers of Takfiri Salafism, is in line with the Islamic State’s global agenda. He considers democracy to be the religion of “murtad states” of Central Asia, the Taliban government and Pakistan. He believes that due to committing shirk (idolatry), deviating Allah and doubting Tawheed (God’s Oneness), the leaders of taghut countries should be killed.

Considering Khuroson’s oratorical skills, Takfiri persuasion and ideological savvy, it is quite possible that the ISKP recruitment and incitement campaign will intensify in Central Asia in the near future. Obviously, the engagement between IS-Central and ISKP in the military, media and ideological directions reached a new level in the more permissive operating environment of post-American Afghanistan.

On May 7, the ISKP carried out a second rocket attack, this time into Tajikistan. According to the Central Media Office (Diwan al-I’lam al-Markazi) of ISIS, “Caliphate’s fighters fired seven rockets from the Khawaja Ghar district of Afghanistan’s Takhar Province towards the Tajik military base near the city of Kulob.” The rocket attacks on the territories of Uzbekistan and Tajikistan for three weeks nevertheless mark a clear escalation by ISKP Central Asian foreign fighters from just hostile anti-five post-Soviet “murtad governments” rhetoric to direct militant action.

Notably, the methods of media coverage of both attacks and the engagement between IS-Central and ISKP’s local media resources were clearly similar. The algorithm of their actions was in line with the new ISIS strategy. Thus, IS-Central posted a brief information about the rocket attacks with video and photos, then the Tajik, Uzbek and Pashto-language local media resources of ISKP glorified the “warriors of Allah”. The Uzbek-language pro-Islamic State Telegram channels Islomiy Maruza Davat Guruh, Khuroson Ovozi, Tawheed news, the Tajik-language Telegram channel of Ulamoi Rabboni (إنَّ اللّٰهَ مَعَنَا) actively propagated ISKR rocket attacks, undermining the image and credibility of the military potential of Tajikistan and the Taliban.

These Central Asian pro-IS media resources, supported by IS-Central propaganda bodies and comprised of a constellation of official branch outlets, regional pro-ISKP groups, and grassroots supporters have become a prominent voice aggressively impugning the Taliban’s reputation in the global jihadi world. Such method makes it possible to preserve the hierarchical structure and maintain a uniform media strategy of the global jihadi group. This reflects that after the fall of the Caliphate and a series of dramatic losses of its leaders, ISIS has learned a bitter lesson and is now moving from centralizing power to strengthening its wilayahs.

Apparently, the ISKP seeks to broaden its appeal in Central Asia both through increasing cross-border attacks against Afghanistan’s neighbors and ramping up the production, translation, and dissemination of propaganda directed at Uzbek, Tajik, and Kyrgyz communities in the region. These rocket attacks and ISKP’s propaganda campaigns targeting Central Asians for recruitment are any indicators, the group has become a serious jihadi power challenging not only the Taliban government, but also the post-Soviet authoritarian regimes. Through its Uzbek, Tajik and Pashto-language Telegram channels, the ISKP is conducted an unprecedented activity to recruit Central Asian jihadi groups affiliated with al Qaeda and the Taliban, as well as new radical Islamists from the Fergana Valley.

Future of ISKP Central Asian Jihadists

Obviously, the ISKP is exploiting the US military withdrawal from the region and the Afghan Taliban’s deviation from the hardline jihadi concept by successfully portraying their government as a Pashtun ethno-nationalist organization rather than a bona fide Islamic movement.

In conclusion, it is to be expected that the ISKP will actively capitalize external operations to undermine the legitimacy of the Taliban government, which assured the US and Central Asian neighbors not to allow Afghan soil to be used to attack Afghanistan’s neighbors. Strengthening cross-border rocket attacks has already raised the morale of ISKP fighters and consolidated its support base.

Thus, the new Islamic State’s strategy to strengthen its offshoots in its provinces is quite capable to reestablish its positioning in the broader global jihadi movement, which we see in the example of IS-Khorasan Province.

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How Memes Can Spread Dangerous Ideas

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Internet memes are an excellent way to send powerful messages to millions of people. But what happens when they are used for malicious purposes?

Memes have been a means of transmitting messages for centuries, proliferating immensely in recent decades due to their mass proliferation through the internet and their ability to broadcast messages to a massive audience. They have quite a bit of cultural significance and can be based on almost anything, provided they achieve viral status. However, memes have been subject to abuse by malicious groups and actors.

From the Blue Whale Challenge, an internet challenge that resulted in multiple suicides worldwide, to terrorist organizations like ISIS, which use internet memes to recruit young people, memes can be used for malicious purposes. Even toxic subcultures like MGTOW serve as a pipeline towards the incel movement. Indeed, such male supremacist organizations are not strangers to using memes and viral media to propagate their ideas and recruit young men and boys to their cause. In fact, one influencer, who goes by Sandman MGTOW, often posts such misogynistic memes and videos on his Twitter and YouTube channel.

These kinds of memes are easily identifiable by their bias towards a specific issue and their often-political message. One great example of a meme that has been subject to abuse by malicious actors is Pepe the frog. Based on a character by Matt Furie, this meme was abused by the alt right, being depicted as controversial figures such as Adolf Hitler and Donald Trump. The meme was so badly abused by these far-right actors that it was listed as a hate symbol by the ADL.

Memes have also influenced major world events like the 2016 election in the United States and the Arab Spring revolutions in the early 2010’s, which garnered immense media attention through the use of internet memes and viral media. This shows that memes can have the power to influence elections (albeit slightly) and topple oppressive regimes. Being a powerful tool for spreading information, there is also the use of memes for spreading misinformation.

The COVID-19 pandemic mediated a sizeable but modest anti-vaccine movement in countries like the United States, Canada, and Germany. These anti-vaxx groups used social media like Facebook and Reddit to spread memes full of misinformation and pseudo-science It can also be argued that memes were effective tools in spreading misinformation around the elections of 2016 and 2020 in the United States. Memes, while powerful, can be used by malicious actors such as far-right groups and anti-vaxx groups to peddle false information. This has contributed to the US having a COVID death toll of over one million, higher than most other countries worldwide.

The world has progressed quite a bit in the information age. People are able to communicate ideas with millions of people worldwide in seconds. The proliferation if information has never been more efficient in history. That is why the threats that arise from the mass proliferation of memes and viral media are so dire. As was seen during the 2016 and 2020 US elections, COVID, and Arab Spring, memes can be spread to convey messages that can change nations, affect millions (perhaps even billions) of people, and topple dictators. It has become possible for people to change the course of history with a single tweet or a single meme on Reddit or Instagram going viral.

What can we do to stem the massive proliferation of memes that serve to recruit people into dangerous organizations and fill their minds with misinformation? The answer lies in how we confront our biases and how we detect misinformation. People need to be informed about how they can detect bias and propaganda, in addition to using independent fact-checking services. By identifying propaganda from malicious actors and misinformation from online groups, we can stop the spread of dangerous memes before they proliferate.

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