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4 J. Int'l Banking Reg. 7 (2002-2003)

handle is hein.journals/jlbkrg4 and id is 1 raw text is: Editorial Terrorism and international finance: Recent developments from the perspective of international law Just 13 days after the USA was attacked by terrorists, President Bush signed an Execu- tive Order freezing the assets of 27 organi- sations and persons known to be linked to Al-Q'aeda and suspected of funding terror- ism. Significantly, he called on foreign banks to follow his example, or have their US assets frozen. He said that this war was to be a conflict 'without battlefields and beach- heads'. In a real sense, it was launched not on the battlefield, but in the financial field. Since then, the USA has made it a policy objective to deny terrorist groups access to the international financial system, to impair the ability of terrorists to fund raise, and to expose, isolate and incapacitate the financial networks of terrorists. Many more names followed. The objective has been pursued across the financial community without regard to frontiers, and a new reality is rapidly emerging on the financial scene. Inevitably, the background lies in the development of modern finance and the rise in global capital. One result of globalisation and technology is that it is much easier to move money around. The figures are very large. In April 2000, the Bank of England estimated the average daily turnover in the London foreign exchange market alone at $637bn.2 At the consumer level, credit and debit cards provide ready access to funds internationally. As the financial system grew, policy makers began to appreciate its potential as a means of exerting pressure. Conversely, the need to prevent abuse also became apparent. I will take as a starting point December 1985, when terrorist attacks took place against Rome and Vienna air- ports. President Reagan cited these attacks to justify the imposition of sanctions on Libya, and by an executive order made on 8th January, 1986, blocked Libyan assets held in the USA and US dollar deposits in US banks' overseas branches. The order fol- lowed the same pattern as the freeze that had been imposed on Iranian assets after the hos- tage crisis of 1979-81. That long running matter remains unresolved, probably to Iran's disadvantage. The US-Iran claims tri- bunal continues its work to this day. But these were unilateral sanctions. Particularly in the case of Libya, their effectiveness was undermined by the refusal of foreign courts to recognise their extraterritorial effect, even with regard to US dollar deposits held in local branches of US incorporated banks.3 Compare the position at the interna- tional level. On 21st December, 1988, Pan Am flight 103 was brought down by a bomb over Lockerbie in Scotland. The finger of suspicion again pointed to Libya. This time, there was sufficient consensus for international sanctions. The process was not speedy. Financial sanctions were not imposed until 11th November, 1993.4 But once imposed, UN sanctions did not suffer from the inherent weakness of unilateral sanctions. They were applied, at least in principle, so as to freeze assets internation- ally, depending upon the effectiveness of Journal of International Banking Regulation, Vol. 4, No. 1, 2002, pp. 7-12 © Henry Stewart Publications, 1465-4830

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