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SWIFT's Role in Antiterror Financing: Category 5 Hurricane or Tempest in a Teapot? |
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The payments industry has historically faced a daunting challenge in identifying and tracing illegal payments across country borders - and those used to fund terrorism are no exception. In summer 2006, the interbank messaging service, SWIFT, appeared in major news headlines in Europe and North America when it was revealed that the U.S. government had been accessing SWIFT data to support preexisting investigations of suspected international terror financing.
At the core of the news coverage were concerns about privacy rights and confusion over SWIFT's role in global payments. Do these concerns constitute a major international crisis, or much ado about nothing? New research from TowerGroup finds that as payments options continue to emerge, cooperation of regulatory authorities across multiple nations is critical to preventing the use of funds for terrorist activities. Collaboration between the Financial Action Task Force (FATF) - a global, intergovernmental group focused on preventing terror financing - and the European and US governments will be a particularly essential element in solving the global problem of illegal funds transfers. Though SWIFT is neither a payment or settlement system, the US recognized that it constitutes an extensive and vital link between banks around the world - making it an essential piece of the infrastructure underpinning global payments. TowerGroup estimates that approximately 1.7 billion payment messages will pass through SWIFT in 2007. Assuming data protection and privacy issues can be resolved, TowerGroup believes that focusing future investigations on the central channels used for payment messaging presents an effective approach to fighting terrorist financing. The TowerGroup report titled, "SWIFT's Role in Antiterror Financing: Category 5 Hurricane or Tempest in a Teapot?" by Colin Kerr, senior analyst in the global payments research service at TowerGroup, explores the nature of the government program and the role SWIFT plays in the global payments arena. It also examines the complexity of international funds transfers and the jurisdictional issues that arise as a consequence. At TowerGroup, Kerr's research covers global payments with a particular focus on international commercial payments, enterprise payment solution models, and the strategic use of technology to support the payments business. |
