Tracking terror funds in SE Asia a tough task

Tracking terror funds in SE Asia a tough task

Associated Press, Manila

Southeast Asian governments are finding it tougher to stop terror financing than money laundering because of informal transaction systems and poor financial regulation, Asian Development Bank official said on Friday.

"Some recent incidents show that funds for terrorist financing are not necessarily very huge," said Motoo Noguchi, an ADB adviser on anti-money laundering activities. "Even US$10,000 can trigger a tragic incident. Size of the money doesn't matter."

For decades, the Manila-based bank has helped governments combat money laundering. But tracking the money of suspected terrorist groups has proven more difficult because of a lack of information exchange and extradition treaties between individual nations, Noguchi told reporters.

"We really don't know the size and magnitude of terrorist funds being laundered," he said. "We haven't got so much calls for assistance in this field ... government responses are delayed."

Southeast Asia's developing nations, the ADB's main clients, suffer from weak financial sectors and the existence of legal and illegal informal financial transaction systems - sometimes known as "underground banking" - which make the countries vulnerable to terrorists, Noguchi said.

Such systems rarely provide transaction records or the identity of the customer, he said. Trading in cash or gold makes it harder to trace the source of the money.

After the Sept. 11 terrorist attacks, the U.S. government and other nations began an aggressive program of freezing bank accounts and other assets of suspected terrorists and groups said to support terrorism around the world. So far, U.S. Treasury Department officials estimate that $112 million in assets have been frozen worldwide - $34 million in the United States and $78 million elsewhere - in more than 500 accounts.

U.S. officials say the asset freezes and arrests have weakened al-Qaeda, but a recent UN report said the global campaign to block terror financing had stalled, with only $10 million frozen in the past eight months.

The report said the campaign has pushed al-Qaeda underground but hasn't stopped the flow of money and fresh recruits.

The ADB is taking part in a regional conference next week in Bali, Indonesia, organized by Indonesia and Australia, where senior officials from 33 countries in the Asian-Pacific region will discuss strengthening efforts to fight terrorist financing.

Bali was the scene of terrorist bombings at tourist nightspots Oct. 12 that left over 190 people dead, nearly half of them Australians.