Transparency and Financial Regulation in the Age of Terror

After 9/11 there was a major shift in the rhetoric surrounding counter-terrorism. At the behest of the United States, national leaders wanted to set up a global preventative system that stopped the flow of money utilized by terrorist organizations to fund their various operations. This strategy favored an intelligence-led approach that emphasized information sharing within and between governments and the financial sector. This intelligence-led approach to combat terrorism financing can be characterized as a preventative form of policing through the collection and analysis or large quantities of personal information with the help of smart technologies and in cooperation with private authorities (de Goede 2012).  In contrast to the aggressive dirty war on terror illustrated by thousands of deaths in the militarily and politically disastrous invasion and occupation of Iraq, the war on terrorism financing is "a war that no one saw...this war is fought with bank accounts and financial transactions" (Washington Post 2011).

All of a sudden a new language of risk and prevention was being utilized to justify a new set of global financial regulations headed up by international organizations such as the United Nations, The Financial Action Task Force, the IMF/World Bank, and the Egmont Group. However, while western officials and international organizations were using the language and discourse of risk and security to justify the implementation of these new global regulatory regimes, an underlying conversation about the morality, transparency and 'legitimacy' of certain types of financial systems and economies started to emerge.

This paper utilizes both in-depth interviews with experts from the transnational regulatory bodies previously mentioned, as well as a content analysis of official publicly available policy reports, and classified documents released by Wikileaks. By focusing on hawala systems, and the attempts by western governments to regulate them, due to supposed concerns that these informal economies were conduits for terrorist financing, this paper argues that while the post 9/11 narrative promoted by western officials and international organizations was about risk and security, the underlying objectives focused more on questions of illegitimacy and transparency surrounding these informal economies. And by using the language of security and risk, Western governments and organizations were finally able to impose desired regulations in order to formalize the previously illegible systems of finance that were deemed to be illegitimate.