TIPTON | Preventing the illicit financing of nuclear, chemical and biological weapons
Author: Scott Tipton - July 16, 2018 - Updated: July 15, 2018
Last year, all eyes turned to North Korea as the hermit kingdom launched yet another ballistic missile, this time into the Sea of Japan. Actions like this pose a huge threat to global security and are cause for immediate concern. They also raise important questions, the main being: how do we better prevent hostile nations and dangerous organizations from gaining access to nuclear, chemical, biological and other hazardous weapons?
Almost every country that seeks to obtain a weapon of mass destruction faces the same challenge: it cannot produce everything it needs for the weapon domestically. This means that if hostile nations and dangerous organizations successfully gain the resources and materials necessary to create weapons of mass destruction, they have been able to do so by accessing and exploiting the global financial system.
In North Korea’s case, it has been able to access the global financial system through front companies, joint ventures with foreign firms, and most notably, through Chinese financial institutions, all of which have enabled this antagonistic regime to successfully acquire the necessary resources and technology to build weapons.
Even though many financial institutions throughout the world are very careful not to do business with hostile nations and dangerous organizations looking to build weapons of mass destruction, some have done so accidentally. To effectively prevent the spread of dangerous weapons, otherwise known as weapons proliferation, we must close the gaps that allow bad actors to take advantage of the global financial system.
I recently introduced a bill that will help the United State close any gaps that may be found in our financial system. The bill, the Improving Strategies to Counter Weapons Proliferation Act (H.R. 6332), would help financial institutions and law enforcement identify the signs of illegal weapons financing, so they can more easily coordinate strategies that disrupt, and ultimately prevent this dangerous crime.
In the United States, we have robust protections in place to help prevent the financing of weapons proliferation. Under the Bank Secrecy Act, whenever a financial institution encounters suspicious activity, they are required to file Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network (FinCEN) at the Department of Treasury. However, while FinCEN has reported that some SARs have been helpful in individual cases, the bureau has also reported that more can be done to analyze these filings and provide financial institutions with guidance on how to better recognize and prevent types of illicit weapons financing.
At a recent Financial Services Terrorism and Illicit Finance Subcommittee hearing that was centered around combating weapons proliferation financing, we had the chance to discuss what problems financial institutions and law enforcement currently face as it relates to this issue and what the federal government can do to assist them in preventing these dangerous crimes.
The expert witnesses at this hearing each emphasized that the complexity of the financial networks makes it incredibly difficult to recognize when an experienced bad actor is financing weapons proliferation. They pointed out that many banks, especially smaller ones, may not have the staff and resources available to recognize every instance of suspicious activity that might tip them off to a weapons financier. They also noted that many banks don’t even know exactly what constitutes a weapons-related suspicious activity, and that it’s unclear to the public exactly what kinds of suspicious activity reporting law enforcement finds helpful.
If we are to truly prevent dangerous regimes and organizations from financing the spread of weapons that can do catastrophic damage, then we must first have a clear understanding of the warning signs. This is the goal of the Improving Strategies to Counter Weapons Proliferation Act. It would require the Director of FinCEN to submit a report to Congress each year on the way that SARs reports are used to combat weapons proliferation, as well as FinCEN’s efforts to collaborate with law enforcement and national intelligence agencies to maximize the use of data collected from SARs reports. Armed with the knowledge of how current suspicious activity data is being used, Congress will be able to determine if additional policies need to be created to allow for better coordination among federal agencies trying to disrupt the financing of weapons proliferation.
The financial system is critical to the success of a weapons program, so if we can prevent bad actors from transferring money and other resources into the global financial system, then we can help eliminate this problem. The spread of nuclear, chemical and biological weapons is one of the biggest threats facing not just this nation, but all of mankind, so I will continue to work with my colleagues on the Financial Services Terrorism and Illicit Finance Subcommittee, financial institutions across the nation, and our dedicated law enforcement officers to prevent misuse of the U.S. financial system.