Global Policy Forum

Carrying cash across borders might become more difficult as G7 officials attempt to crack down on couriers moving funds for extremist groups. Officials from the G7 - the US, Canada, Japan, Germany, France, Britain, and Italy - as well as a dozen other countries who have joined in the "war on terror", met in Washington last week to discuss tightening control over cross-border cash movements.

Reuters quoted officials in Europe as saying recent intelligence information had shown an increase in cash movements across borders. The officials speculated that the increase might have been linked to stricter controls on the banking system imposed since the 11 September 2001 terrorist attacks on New York and Washington.

According to the Financial Action Task Force (FATF), proposals being considered by the G7 group included making travelers file currency declarations. There is presently no currency declaration requirement for international travelers, though US passengers are required to declare any amounts over US$10'000 upon entering or leaving the country. Since 9/11, US passengers face a major smuggling charge if they fail to declare currency holdings. X-ray scanners at airports will now be looking for cash, as well as weapons. Officials also said that dogs would be trained to detect the smell of the ink and paper of banknotes.

However, the skeptics say that attempting to crack down on cross-border cash flows would do little to prevent terrorist attacks. To back up their argument, they pointed to the small amount of funds needed to pull off the Madrid train bombings that killed 191 people in February.

In July 2001, US President George Bush began a crackdown on the financing of terrorism after two financial networks were identified as funding Osama bin Laden's al-Qaida. The Bush administration has singled out the so-called Hawala system - large, global networks, essentially operating as unlicensed banks - as a special risk. Hawala networks are very difficult to crack, as they are highly informal, operate on a system of trust, and leave no paper trail.