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Anti-Money Laundering & Combating the Financing of Terrorism

CRJ 351

Patrick O'Hara

on 25 April 2011

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Transcript of Anti-Money Laundering & Combating the Financing of Terrorism

Anti-Money Laundering and Combating the Financing of Terrorism By: Pat O'Hara Contents: Terrorism, just like any business, has costs associated with it. The way that many coutries are attempting to combat terrorism is to cut off the terrorist organizations source of income. Because terrorist organizations have costs just as any business, if their source of income is taken away, they will go out of business.
Some of these costs are:
Training Camps
How do Terrorist organizations pay for all these expenses? Illegal Drugs The sale of illegal drugs is the main source of income for terrorist orgainizations. Two of the most prevalent and profitable drugs produced and sold by terrorist organizations are cocaine and heroin.

1 kilo of cocaine costs about $3,000 to produce but sells for about $20,000.

1 kilo of heroin costs about $5,000 to produce but sells for about $250,000 - $300,000. Fake Charities Some terrorist organizations set up fake charities that people donate money to.

Over a 10 year period al-Qaida was able to make about $400,000,000 by setting up fake charities. Funding Funding
Money Laundering
International Monetary Fund
Money Laundering Terrorist Organizations need to be able to legitimize their money in order to use it. In this aspect terrorist organizations opperate just as all other forms of organized crime.
By laundering the money gained through the sale of illegal drugs and the fake charities, the terrorist organizations are able to create a complicated web that hides where their money is coming from. When selling illegal drugs, the terrorist organizations always get the payment in full before they ship the drugs. This way there is no chance of them losing money even if the drugs get intercepted. In 1999 the weight of the world wide suply of cocaine was about 500 metric tons. 400 out of the 500 tons were produced by the Taliban. International Monetary Fund The IMF was created in 1944 by the United Nations. The main purpose of the IMF was to take steps to ensure the stability of the international monetary system, the system of exchange rates, and international payments that enables countries and their citizens to transact with one another

The IMF now has 187 members. Each member is a country. Each country is represented by a Govenor and an Alternate Govenor. These representatives are elected by their respected countries. Since all of these countries are working together, communication among the nations is very open and effective How Does The IMF Relate To Terrorism? The IMF began to aggressively tackle the issue of money laundering and terrorist funding after the attacks of September 11th. Essentially, the IMF opperates on three levels.

Technical Assistance
Policy Development Assessment The IMF evaluates its members as to how well they follow the guidelines for preventing money laundering. This is essentially an audit. Technical Assistance The IMF provides substantial technical assistance to member countries on strengthening their legal, regulatory, institutional and financial supervisory frameworks for anti-money laundering, and combating funding of terrorist organizations. Policy Development The IMF continues to do research to determine the most effective way to combat money laundering in order to deny terrorist organizations the opportunity to legitimize their money and use it to fund more terrorist activities. This includes creating new policies
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