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Feb. 23, 2007

A group of experts on terror finance argue that the GSMA (GSM Association) initiative to ease migrant workers’ ability to send payments back home via their mobile phones could become a potential goldmine for terrorists looking to bypass the regulated banking industry.

Rachel Ehrenfeld, founder of the Terror Finance Blog pointed out that the GSMA’s plan is a “terrorist dream”.

Ehrenfeld added that the various international regulators who are responsible for keeping a watchful eye on potential sources of income for terrorists have been “asleep at the switch.”

To be sure, the GSMA initiative will allow a terrorist to put cash onto his or her mobile phone and send it to another mobile phone number in a different country.

The recipient will get a text message saying that money has arrived and then will be granted access to the cash! The plan could double the number of recipients of international remittances to more than 1.5 billion.

Overall, the GSMA’s goal is to help migrant workers to send money to their families, but according to Ehrenfeld it “would undoubtedly defeat most efforts to identify the users and follow the money trail.”

The FATF (Financial Action Task Force) is a Paris-based international regulator, and national regulators worldwide have asked that banks and other financial institutions identify their customers and refuse to do business with people on international terrorist and criminal blacklists.

Ehrenfeld went on to say that the regulators haven't addressed emerging international payment systems using phone networks and the Internet as a way to circumvent the conventional banking and money transfer system.

David Nordell, another finance terror blogger, says, “Person-to-person transfers via mobile phones will be almost anonymous, and completely uncontrollable unless the regulators intervene and block these new services until ways are devised to track the flow of funds.”

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Source: Wireless Week