The Development of Tunisia's Domestic Counter-Terrorism Finance Capability.

Author:Zelin, Aaron Y.
 
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Following Tunisia's 2011 revolution, the rise of jihadi groups put a major strain on the country. First, there was Ansar al-Sharia in Tunisia's (AST) dawa campaign, which marshalled auxiliary charities and associations to deliver social services, alongside other activities. Then Katibat 'Uqbah Bin Nafi (KUBN) and the Islamic State launched insurgencies in mountainous areas along the Algerian border, with the latter group carrying out a terror campaign planned from across the border in Libya. In the aftermath of the Islamic State's largescale attacks at the Bardo Museum in March 2015, Sousse Beach in June 2015, and attempted takeover of Ben Gardane in March 2016, Tunisia's government and security sector began a more concerted effort to combat jihadism in the country, a task given extra urgency in the past five years by the return of Tunisian jihadis from foreign conflicts. (1)

Much attention has been given to its military and law enforcement efforts, but Tunisia has gone beyond this to begin building a more robust plan that tackles the challenge posed by jihadism from a number of angles. On November 7, 2016, Tunisia's national security council adopted a strategy to fight terrorism and extremism, saying in a statement that the "national strategy to fight against extremism and terrorism" is built around four points: prevention, protection, judicial proceedings, and retaliation. (2) One aspect of this strategy is worth exploring: Tunisia's domestic counter-terrorism finance plan. This article will examine the development of Tunisia's anti-money laundering and combating the financing of terrorism system, including the implementation of a domestic terrorism sanctions list, as well as examine the information released as part of that list and what it provides analysts in terms of insight into trends in jihadi activity in Tunisia and the government's official response.

In November 2018, Tunisia rolled out its first set of domestic counterterrorism sanctions, freezing the funds of 23 individuals and entities based on their ties to terrorist organizations. (3) While a number of Middle Eastern and North African (MENA) countries have adopted such lists in recent years, Tunisia's stands out for the level of detail published about sanctioned entities, as well as the robust framework in which the sanctions are deployed. The establishment of a legal framework to deploy such domestic sanctions falls within Tunisia's efforts to get off the Financial Action Task Force's (FATF) so-called "grey list" of countries found to have strategic deficiencies in combating money laundering and terrorist financing. Tunisia was added to the list in November 2017 (4) after an assessment by FATF--the global standard setter for anti-money laundering and combating the financing of terrorism (AML/CFT) (a)--which was conducted in 2015 and published in 2016. (5) In the intervening years, and as part of an action plan agreed upon with the FATF, (b) Tunisian authorities have focused on assessing AML/CFT risk, improving oversight of the association sector, and establishing the aforementioned targeted financial sanctions regime. Through their efforts, Tunisia is slated to be removed from the grey list in October 2019. (6c)

Background

Prior to the 2011 revolution, Tunisia's AML/CFT system had limited capacity. Officials considered the risk of money laundering and terrorist financing to be low in Tunisia--in part, because exchange controls made it an unattractive destination for ill-gotten gains. (7) Despite having a relatively well-developed banking sector, Tunisia was not a regional financial center. A 2003 law to facilitate compliance with international standards on AML/CFT criminalized money laundering and terrorist financing, (d) and established a financial intelligence unit, called the Tunisian Commission of Financial Analysis (CTAF), which is hosted by the Central Bank of Tunisia. (8)

The country's first mutual evaluation against FATF standards was conducted by the World Bank in March 2006 and published in 2007. The assessment found that Tunisia's legal framework provided some liability for illicit financial activities, such as money laundering and terrorist financing, but that authorities had yet to promulgate regulations that would support prevention and detection of such activity. (9) For example, regulators had not provided guidance or procedures for reporting suspicious or unusual financial activity, although such reporting was required by law. As a result, only five suspicious transaction reports (STRs) were filed with the Tunisian Financial Analysis Committee (CTAF) between 2003 and 2006, none of which were forwarded on to prosecutors. (10)

When it came to Tunisia's ability to implement U.N. sanctions, assessors found that while Tunisian authorities informally flagged new U.N. sanctions listings for Tunisian financial institutions and requested that they check for any account holders, there was not an adequate legal basis for banks to freeze such assets should they find a match nor any procedures to notify potential holders of assets outside of the financial systems. The 2007 mutual assessment reports that such a situation had yet to be tested since, to date, no Tunisian bank had identified a UN-designated client. (11)

Although less concerned about money laundering, authorities were "highly mobilized concerning terrorist matters," according to the 2007 FATF report. (12) Still, they considered these activities "purely local" despite the 2002 al-Qa'ida-directed and -funded Djerba attack that was planned in Afghanistan, a then-recent reminder of the threat of terrorism against Tunisia. (13) Similarly, Tunisian security services projected confidence when, in late 2006, an al-Qaida in the Islamic Maghreb (AQIM) front group called Jund Asad Bin Furat (JABF) led a multi-week, low-level insurgency in the mountains of eastern Tunisia. (14) However, the reality was different. According to a former senior-level Tunisian minister close to then President Ben Ali, there was a major panic about the cell. There was a fundamental lack of understanding about jihadism, the number of people involved in Tunisia, and the identities of those actually plotting attacks. (15) This gap was exacerbated by government officials' view that it was a homegrown threat rather than a regional or international issue since the JABF cell contained individuals that had trained in Algeria and was financed from Italy. (16)

By the subsequent 2016 FATF assessment of Tunisia's AML/CFT system, terrorism and its financing had emerged as a significant concern for local officials. The collapse of the Qaddafi regime in Libya and the porousness of the border allowed for the movement of drugs and arms, as well as fighters traveling to join the Islamic State in Libya or onward to other foreign conflicts, and back. Some of this activity was funded by and through money transfer systems, according to the 2016 assessment. (17) Use of charitable associations receiving foreign funds to finance such activity was also "a major concern" according to Tunisian authorities. (18)

The 2016 assessment also found that law enforcement continued to struggle with limited human and physical resources, as well as expertise in financial crimes in particular. As of 2015, authorities had yet to effectively prosecute a terrorism financing case, in part because judicial specialization in financial crimes was only very recent. (19e) The Tunisian judiciary also struggled to prosecute terrorism-related charges more broadly. According to the United Nations, as of early 2017, the process was extremely slow and the judicial apparatus was overwhelmed. (20) Evidencing this, in January 2017, according to Tunisia's Minister of Justice at the time Ghazi Jeribi, 1,647 prisoners were involved in terrorism and money laundering cases, with only 183 having been tried while the rest remained custody. (21) Such delays threatened to undermine the post-revolution government, giving the appearance of detention without trial. (f)

Post-revolution efforts to recover stolen assets also underscored the inefficiencies of Tunisia's AML regime at the time, according to a 2012 IMF report. (22) International Financial Institutions (IFIs) working with Tunisia under the umbrella of the Deauville Initiative--aimed at providing support to post-Arab Spring economies in transition--therefore encouraged Tunisian officials to schedule their FATF assessment as early as the end of 2012. The methodology for assessments under FATF standards updated in 2012 was not released until the end of 2013, however. (23)

When Tunisia's evaluation finally took place in early 2015, several initiatives to address gaps in the country's AML/CFT system were already in progress. Tunisia's Basic Law Number 26 of August 2015, for example, established the National Counterterrorism Commission (NCC) within the cabinet to monitor and implement U.N. resolutions related to combating terrorism. (24) Notably, this includes UNSC Resolution 1267 (and successor resolutions) that underpin the United Nations' al-Qa'ida/Taliban/Islamic State sanctions regime, as well as UNSC Resolution 1373, which calls on countries to establish a domestic designation capability to respond to requests--beyond the 1267 regime--to freeze terrorism-related funds. However, it was not until January 2018 that regulations were promulgated establishing the procedures by which Tunisia's NCC would implement these requirements, including the process for designation, proposal of names to the 1267 list, and freezing procedures. (25) Although Tunisia was initially found noncompliant with related FATF requirements for international obligations, a follow-up assessment published in December 2018 found that the deficiencies had been largely rectified. (26)

Likewise, just prior to FATF's 2015 assessment, Tunisia undertook its first National Risk Assessment (NRA) of Money Laundering and Terrorist Financing, which was...

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