The Financial Action Taskforce (FATF) has released a typology report looking at the crimes of organised maritime piracy and related kidnapping for ransom.
The report considers the financial implications of these crimes, how the proceeds of these crimes are then used and whether existing anti-money laundering and counter terrorist financing measures are being used effectively in bringing the perpetrators of these crimes to justice.
With lawyers often called in to assist with negotiating for the release of property and hostages, this study provides a useful insight into a range of logistical and legal considerations to be taken into account.
The payment of a ransom, from legitimate funds, is not money laundering. However, there is increasing evidence that kidnap ransoms are being used to fund terrorist activities. In the UK, the payment of funds to terrorist groups may require consent from the authorities. There will also be cash disclosure requirements to be complied with for funds crossing international boarders.
The report illustrates how ship owners and other companies, banks, insurers and law enforcement agencies often work together to secure the release of hostages and property, at times requiring the payment of a ransom.
While steps may be taken to ensure that the serial numbers on the bank notes used are recorded, such information tends not to be passed to the national financial intelligence unit and cash disclosures are not made when the money is passing through countries while still within the control of those paying the ransom. As a result it is almost impossible to trace the funds once the hostages have been released and they are reinvested into further criminal conduct.
FATF are encouraging further study into the financial flows relating to these two crimes, and are also encouraging greater information sharing between law enforcement agencies and intermediaries to help stop the ransom payments being used to fund further piracy and kidnaps.
Read the full typology