Cutting terror's cashflow

IN THE EARLY 1990s, a group of maids were caught trying to cash fake US$100 bills at the many small banks and foreign-exchange outlets which serve the large Filipino population in Hong Kong. Local police and American law-enforcement authorities looking into the case found they were acting as agents for a money-laundering operation in the Philippines linked to the Abu Sayyaf terrorist group.

The terrorists fighting for an Islamic homeland in the southern Philippines were hungry for funds as they had just split from the Moro National Liberation Front which was the largest separatist Muslim group until it signed a peace agreement with the Philippines Government in 1996.

The counterfeit bills were a fast and simple way of raising cash and the maids, who were on the periphery of the ring, were asked to exchange them using fake names, according to a law enforcement source who was involved in an operation against the money launderers.

Although few details have emerged about this highly sensitive operation, which is thought to have involved foreign intelligence agencies, it is known that large amounts of cash continued to be raised through the scam until it was closed down in the Philippines in 1991.

Now the same group is being targeted again. The Abu Sayyaf is included in the list of 27 organisations and groups associated with Osama bin Laden - prime suspect in the terrorist attacks on the United States - that was released by US President George W. Bush on Tuesday. Calling it a 'strike on the financial foundation' of terrorists, Mr Bush issued an executive order freezing their alleged assets.

The action, which was the first public strike by Washington in its newly declared war on terrorism, has been felt around the world. In Hong Kong and other major centres, financial institutions and banks have been scrambling to check accounts and paperwork to find out whether any of the individuals or organisations have been doing business with them, according to security consultants and private investigators.