Law of Nationbuilding                                       Prof. Henry H. Perritt

Fall 2006                                                            Kent College of Law

 

 

 

 

 

 

 

Counterterrorism: Suppression of the Financing of Terrorism

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By Adrian Koller:

 

E-Mail: adikoller@gmx.ch

LLM in Financial Services Law at Kent College of Law

 


Table of Content

 

Table of Abbreviations.. 4

I)      Introduction.. 5

II)     Hypothetical.. 6

A)     Positivania: A Peaceful Nation.. 6

B)     The Beginning of the Insurgency.. 6

C)     Positivania charts a New Course¨ 6

D)     The Positivanian War against Terrorism... 7

E)     Reaction of the FMT.. 7

1)     Changing Strategy and Means and Targets. 7

2)     Changing Internal Structure. 8

F)     FMT`s Need for Money.. 8

G)     The Sources of the Funds of the FMT.. 9

1)     Dragan Drugcic’s System: Drug Trafficking. 9

2)     Rico Rich’s System: Charity Organisation MoM... 9

3)     Money collectors. 10

4)     FMT Asset Manager: Using Futures Trading. 10

5)     FMT Asset Manager: Put Options on Oiltec. 10

H)     Hiding Illicit Sources. 10

1)     Fortune Teller. 11

2)     Restaurants and Discotheques. 11

I)      Purchase of Needed Items and Moving of the Money.. 11

1)     McMiri System.. 11

2)     Money Courier. 11

3)     Jewellery Courier. 12

4)     Credit Card. 12

5)     Futures Trading Method. 12

J)      Examples of Donations and Subsequent Transfers. 12

1)     Donations. 12

2)     Transfer of Money and Purchase of Needed Items. 13

III)        Detecting and Interdicting FMT Activities.. 13

A)     The Institutional Apparatus in Switzerland.. 14

1)     The Role of the SAP.. 14

2)     The Role of the FCP.. 15

3)     The Role of MROS. 15

B)     Understanding the FMT through Human Intelligence. 15

1)     The Different Human Intelligence Gathering Techniques. 16

(a)     Confidential Informants. 16

(b)     Cooperating Witnesses. 16

(c)     Under Cover Operatives. 17

2)     Summary of Swiss Legal Constraints on Using Under Cover Operatives. 17

3)     Human Intelligence Gathering conducted on  the FMT. 18

(a)     The Confidential Informant Turi Prudentia. 18

(b)     The Cooperating Witness Jack Travol talks about MoM... 19

(c)     SAP Operative David Holm sets up a “Sting”. 20

(d)     Nino Dino works Under Cover for the FCP. 20

C)     Collecting more Specific Information and Evidence through Electronic Surveillance under the Law    21

1)     Summary of Swiss Legal Restrictions. 21

2)     Mobilizing Surveillance against FMT Consistent with the Law.. 21

(a)     Chars Charty`s Cell Phone Intercepted with a Wiretap. 22

(b)     David Holm wears Wire when Talking to Toro Tradic and Lydia Lipido. 22

(c)     Turi Prudentia wears Wire when Visiting Peter Meier 22

(d)     Jack Travol wears Wire when Meeting with Edison Dark. 23

(e)     Bug in Kate Kebabs Restaurant 23

D)     Collecting more Specific Information and Evidence through Monitoring of Financial Transactions and Requests to Banks. 24

1)     Summary of Swiss Legal Restrictions and Reporting Duties of Financial Intermediaries. 24

2)     Monitoring of FMT Transactions and Bank Requests. 24

(a)     Diners Club and SWX report Suspicious Activities at MROS. 24

(b)     McMiri Activities Detected through Bank Requests. 25

(c)     Kate Kebab`s Activities Detected through Bank Requests. 25

E)     The Result of the Investigation: The FMT Activities are shut down.. 25

IV)        The SCC and the Financing of Terrorism... 25

A)     Situation prior to 2003. 26

B)     Changes in the SCC Concerning the Financing of Terrorism... 26

C)     Criminal Liability for FMT Financiers. 28

1)     The Liability of the Donors and Money Launderer. 28

(a)     Liability of Peter Meier 28

(b)     Liability of Edison Dark. 28

(c)     Liability of Kate Kebab. 29

2)     Transfer of Money and Purchase of Needed Items. 29

(a)     Liability of Simon Schweizer 29

(b)     Liability of Lydia Lipido. 30

(c)     Liability of the MoM... 31

 


Table of Abbreviations

 

ATA                Anti Terror Act

CAAJCA        Court and Administrative Agency Judgements of the Canton Aargau

BancC             Swiss Code of Banks and Thrift Institutions     of November 8, 1934 (SR. 952)

SFLMES         Swiss Federal Law of March 21, 1997 concerning Measures for the Ensuring of the inner Security (SR 120)

CEO                Chief Executive Officer

ff.                     And the following

FFCJ               Federal Law of June 15, 1934 concerning Federal Criminal Justice (SR 312)

FCP                Federal Criminal Police

FCSC              Federal Constitution of the Swiss Confederation of April 18, 1999 (SR 101)

FDJP               Federal Department for Justice and Police

FMT                Free Minerich Troops

lit.                    Litera

MLA               Money Laundering Act of October 10, 1997 for the Suppression of Money Laundering in the Financial Sector (SR. 955)

MLO                           Ordinance on the Money Laundering Reporting Office dated August 25, 2004 (SR 955.23)

MoM               My own Minerich charity organization

MROS            Money Laundering Reporting Office Switzerland

n.                     Number

OC                  Official Collection of Swiss Laws

OMLA                        Ordinance for the Money Laundering Reporting Office for the Suppression of Money Laundering August 20, 2002 about the professional Execution of the intermediary Function in the non-banking Sector (SR 955.20)

OO-FDJP       Ordinance of Organisation November 17, 1999 of the Federal Department for Justice and Police (SR 172.213.1)

SCC                Swiss Criminal Code (SR 311)

SCO                Swiss Code of Obligations of March 30, 1911 (SR 220)

SPC                Swiss Private Law Code of December 10, 1907 (SR 210)

SWX               Swiss Stock Exchange

UN                  United Nations

ZH-RCP          Rules of Criminal Procedure of the Canton Zurich Mai 4, 1919 (321)

ZH- ACC        Act on the Constitution of the Courts of the Canton Zurich, June 13, 1976 (211.1)


I)  Introduction

If a country goes to war, the citizens have to pay for the expenses through taxes. But what if a group of independent fighters declares war? And what if this group is considered a terrorist organization by the international community? How can they afford to pay for their struggle? Most books and article about terrorism and financing terrorism are abstract and make it hard to understand the legal, intelligence, and prosecutorial challenges. To avoid that, this paper uses a fairly elaborate hypothetical which shall make it easier for the reader to see the problems and challenges that the terrorists, investigators and prosecutors face.

The first part of this paper shows how a small group of fighters, the Free Minerich Troops (FMT) wanted to separate Positivania in two parts. They started assassinating people and after the enactment of a new law against terrorism they changed strategy and acted with a guerrilla tactic. From the beginning they were seen as terrorist organization by the international community. The growing need of food, equipment and weapons compelled them to find ways to raise funds to pay these expenses. Since there existed a community of citizens of Minerich in Switzerland, FMT set up a system to raise money and to transfer it to wherever it was needed, money from illicit sources was also laundered. It was a huge advantage that Switzerland has a working system of banks and high confidentiality standards. In the second part the point of view changes to those who try to suppress these financing of terrorism activities in Switzerland. The institutional apparatus, consisting of intelligence service and police units as well as the investigation techniques they use are described. A prerequisite for successful investigations is to know the network in which terror financing occurs. To get information about the FMT and its financing system in Switzerland, human intelligence gathering was conducted by confidential informants and under cover agents. Once promising targets were identified the investigators and prosecutors tried to gather not only information but also admissible evidence for trial which will result in convictions of those who financed the FMT. The Swiss Federal Police therefore recruited a cooperating witness, conducted electronic surveillance and made requests to banks. Valuable evidence was also gathered by monitoring of financial transactions. Once enough evidence was collected, it was time to reveal the investigation and to seize the suspects for the financing of terrorism. In the third part is scrutinized, if those who financed the FMT are liable for their acts under the Swiss Criminal Code (SCC). Since the investigators had collected enough compelling evidence, all those who intended to finance terrorism were convicted for their acts at trial and the financing activities were interdicted successfully. The paper concludes that successful investigations highly rely on good intelligence techniques, including human intelligence gathering, effective use of electronic surveillance devices as well as monitoring of financial transactions and bank requests. A good coordination of the techniques is essential to penetrate the network where financing of terror occurs. Only with accurate knowledge about the financing system it is possible to gather enough evidence so that prosecution and interdiction can take place. And, of course, a legitimate approach all depends on an acceptable definition of terrorism, which does not sweep so broadly that it includes every organized opposition to despotic regimes, but not so narrowly that convictions are impossible.

 

 

 

II)                     Hypothetical

A)             Positivania: A Peaceful Nation

Positivania is an independent and sovereign nation somewhere in the world with about ten million citizens. These citizens can live freely in this democratic country, have voting rights and their government grants and respects the general rules of due process. On the other hand things are not going as well economically as they are on the political side. Positivania`s economy is relatively weak and highly dependent on one region where all its mineral resources are located. This region, which is called Minerich, with a population of approximately one million residents, has a strong economy and bright future prospects. But since Positivania is interested in having as much prosperity as possible for all of its citizens, Minerich subsidizes the poorer parts of the country with a substantial amount of money every year. This is and has never been a problem for a majority of the population of Minerich.

B)             The Beginning of the Insurgency

A small underclass minority of the population of Minerich, however, started opposing the subsidy in 1986 after the crash of the world oil price[1]. Because of the recession that followed the crash, many people in Minerich lost their jobs and money. Instead of alleviating poverty of other regions, they wanted to be more selfish and use the money to support only the poor and unemployed residents of Minerich. If the government of Positivania would not agree to this, they proposed as alternative to split the country. These disruptive forces were not allowed to operate on the political level because the Constitution of Positivania forbids the foundation of a party that has an agenda of splitting the country. Hence, the opponents of the system started an insurgency in 1995. They called themselves “Free Minerich Troops” (FMT). The FMT, having no more than a few dozen members at that time, started assassinating those politicians who opposed the FMT most. The aim of the assassinations was not only to eliminate those who were killed but also to frighten the whole community of people who were against the separation of the country. Because both its goals and means were illegal, the FMT was considered a terrorist organization by the government of Positivania as well as by the international community.

After the first assassinations in 1995, the police of Positivania seized some of FMT`s leaders. Under application of the national criminal law the ordinary courts sentenced most of them to life imprisonment. Even tough the FMT was momentarily weakened through these sentences against its members, the insurgency was not dead. To replace the loss of members FMT started an intensive Internet based propaganda campaign which turned out to be a very effective way to recruit new fighters. In 1998 the FMT had about one thousand fighters and two years later almost two thousand. The efforts of the police to defeat the insurgents did not show results and the situation in Minerich got more and more out of control. The police just did not have the means under the criminal law of Positivania to put down the rebellion.

C)             Positivania charts a New Course¨

As a reaction to this growth of the insurgency and the understandable fear of a civil war, the Positivanian legislature enacted an “Anti Terrorist Act” (ATA) in 2001. The ATA went considerably further than other laws that enacted in the course of the new “War against Terrorism” proclaimed by the President of the United States in 2001[2]. The statute authorizes the police and military of Positivania to “squeeze” terrorists in order to get information about planed activities or structure of the terrorist organisation using the instrument of torture. The ATA also allows torturing anyone who is under suspicion of supporting a particular terrorist personally or a terrorist organisation as a whole. Further the statute also entitles the government to use the military to fight against terrorism. Finally the ATA deprives ordinary courts of jurisdiction over persons accused of being terrorists and instead authorizes “Terrorist Tribunal” courts to try them. In those courts, defendants lack the right to counsel and may be denied access to evidence used against them.

The ATA was passed even though there were massive diplomatic protests from the EU and the US as well as opposition from Human Rights Watch and Amnesty International. These critics pointed out that Positivania was a signatory of the UN Convention against Torture and other cruel, inhuman or degrading Treatment or Punishment.[3]

D)             The Positivanian War against Terrorism

Under the enacted ATA governing the fight against terrorism, the police newly had the right to arrest suspected terrorists and even families of the FMT-fighters. During the first big strike against the FMT, carried out by the police and the military in collaboration, many families of well known terrorists were imprisoned and tortured. Afterwards they were brought before the Terrorist Tribunal which convicted some family members who never fought for the FMT to life imprisonment.

Since all the families of the fighters were now afraid of being tortured and then being incarcerated without the right to a fair process, many of them flew to Western Europe. The bulk of the refugees went to Switzerland, where a community of Minerich nationals already existed.[4] Switzerland granted most of them asylum, because the Swiss Constitution says in Art.25Abs.3 that “no person shall be removed by force to a state where he or she is threatened by torture, or another means of cruel and inhuman treatment or punishment”.

E)              Reaction of the FMT

1)               Changing Strategy and Means and Targets

In the first years the FMT assassinated politicians using car bombs and sniper rifles. Their members lived in the towns and tried to keep their insurgent activities secret. The worst thing that they had to fear was being sent to prison. After the ATA went into force in 2001 the police had such strong devices to get information that it was not possible to stay invisible anymore. Subsequent to the first police initiative against the FMT over two thousand insurgents hid in the mountains and forests of Minerich while most of their families left the country, as described in section 1(D).

As the FMT concealed itself more effectively, targets changed for both sides. The military tried to extinguish the FMT using high-tech weapons on the ground and bombers in the air. The FMT fought back and used guerrilla tactics and heavy weapons like grenade launchers and mines to attack the military forces.

Although the military tried hard to defeat the insurgency, they were not successful. That the armed forces of Positivania acted based on the ATA which is against the common core of international law and principles of due process made it even easier for the FMT to recruit new members. The number of fighters surged to more than five thousand by 2006.

2)               Changing Internal Structure

In 1995 the FMT was just a small group of loosely connected fighters with the same targets and the same motives. This was a very pragmatic solution; it allowed short term objectives to be changed easily as necessary. With the growing number of members, more communication was needed to organize the activities. This was hardly possible without any internal command structure. To defy the attempt of Positivania to extinguish the insurgency, the FMT fighters had to assume an appropriate internal structure which allowed them to react fast to threats.

Therefore they organized the insurgency hierarchically with clear responsibilities and assignments for the over two thousand fighters. After intensive internal power struggles two rebels where accepted as general commanders in 2001. Both of them started fighting for the FMT in the late nineties and decisively took part in the reorganisation of the FMT into a well structured hierarchal force.

The names of these two leaders were Dragan Drugcic and Rico Rich. While Dragan Drugcic had held a high position in the international cocaine and heroin distribution system, Rico Rich`s background was a completely different one. He had been one of the wealthiest businessmen of Minerich, often trading at the Swiss Exchange (SWX) until he lost all his money in the recession induced by the oil market crash. In his eyes, the policy of the Positivanian government was responsible for his loss of money because they distributed Minerich`s money to other parts of the country. Both leaders had one thing in common, namely excellent connections to Switzerland.

F)              FMT`s Need for Money

During the early years after the formation of the FMT, money was not about a major concern. First of all, the expenses for weapons were relatively modest. To construct a car bomb was neither technically nor monetarily a big deal. Secondly, the FMT’s very small logistic system, consisting mainly of some cell phones and computers, was also relatively cheap. All the money that was needed to conduct the bomb attacks and other assassinations was given by the families of the fighters and some other supporters in the population of Minerich. All in all, the FMT spent between $200,000 and $400,000 annually.

In the years following, the change of strategy and structure as well as the surge of members increased the financial needs. The costs to arm the larger numbers of troops and to maintain logistics jumped to more than $40million per year by 2006. It was necessary to look for new sources of money to finance all the armament, equipment and food for the thousands of fighters. This is a survey of the cost structure and the needed items:

 

  • About $5000 per fighter and year were required to provide them with the necessary weapons and ammunition. The armament included rifles and machine guns as well as grenades, rockets and other heavy arms.
  • About $1500 per fighter and year were needed to buy items like night-vision equipment, tents, blankets, basic medical instruments, pharmaceuticals, battledresses and means of transport.
  • About $1000 per year and fighter were necessary to purchase logistics like radio equipment, cell phones.
  • About $500,000 were spent on propaganda activities such as internet appearance or distribute flyers to persuade people that the FMT did the right thing.
  • About $300 per fighter and year was needed to furnish the insurgents with food.
  • About 15% of the money originally gathered was used to pay the costs of the money transfers and the money laundering process of the dirty money.

 

Total costs are close to $9000 per year per capita. To pay for all the items required, the FMT needed a highly developed system of collecting money, laundering it and spending it without being detected and debarred from financing the terrorist activities.

G)             The Sources of the Funds of the FMT

As noted in the preceding sections, the costs increased with the growth of the number of fighters and the change of tactics. Therefore, the two leaders, Dragan Drugcic and Rico Rich activated their old connections and started fundraising in Switzerland[5] in 2001. To prevent the police in Switzerland from suppressing the financing of the insurgency and in order to reduce the risk of running out of capital if one source was compromised, the FMT set up several systems to raise capital.

They created two systems related to their distinct backgrounds and earlier occupations as well as other systems using the skills of FMT supporters living in Switzerland. Overall, these efforts had the effect that FMT`s war chest was always in good shape.

1)               Dragan Drugcic’s System: Drug Trafficking

Dragan Drugcic controlled a crucial part of the narcotics trafficking in Switzerland. Even if he was physically not there, it was relatively easy to maintain control since narcotics trafficking is hierarchically organized. In 1998 Dragan Drugcic deputized three young men from Minerich to organize the drug business in Switzerland for him. His top representative in Switzerland was Heron Cokan, who had the assignment to structure the whole process for recruiting dealers and selling cocaine and heroin.

When the insurgency became more expensive, Dragan Drugcic installed a system to sell the drugs directly to the clients and to minimize the costs of intermediaries, who had taken the lion’s share of sales revenue. In 2006 his network resulted in about 50% of the needed money for the insurgency.

2)               Rico Rich’s System: Charity Organisation MoM

Rico Rich’s approach to collect money was considerably different. After he joined the FMT, he first asked his wealthy friends of the Minerich community in Switzerland if they could help him finance the insurgency. He deployed Chars Charty to set up a mechanism for the sponsors to donate. Chars Charty established a charitable trust under Swiss law[6] called “My own Minerich” (MoM) in 2001 and opened a bank account with UBS in Switzerland to receive donations. The certificate of incorporation declared that the purpose of the foundation was “to support the poor and homeless people in Minerich”. The donors from the Minerich community in Switzerland knew that the objective of MoM was in truth not only to support the needy residents of Minerich but also the FMT.

Following a marketing campaign in Switzerland in 2003, MoM attracted Swiss citizens as donors and was able to increase the amount of money collected. Unlike the Minerich community in Switzerland, the Swiss people had no idea that MoM was in fact not a charity organization but a supporter of a terrorist organization. In 2006 private contributors donated about 20% of the total amount of money spent by the FMT over the year.

3)               Money collectors

Independent from the publicly known MoM foundation the FMT leaders established a system of money collectors, who go to every village in Switzerland to ask the citizens of Minerich to give money or in-kind support the FMT. In contrast to the MoM foundation, which collected the money in a bank account and registered every donation, there was no way to figure out who had donated to the collectors Kung Krate and Krado Creaton. They reminded people where they came from and urged them to help, pointing out that the names of contributors would remain confidential. These informal contributions constituted about 20% of total amounts funnelled to the FMT.

4)               FMT Asset Manager: Using Futures Trading

Instead of donating cash, people could also appoint one of three licensed SWX dealers who were members of the FMT, Toro Tradic, Moro Mradic and Koro Kradic, as their asset managers. The supporters could then contribute by using the following system: One of the three sophisticated dealers sells futures contracts. The supporter then buys these futures for an excessive price and thus transfers money to FMT while appearing merely to have lost capital in futures trading. This method covered the about 5% of the money collected for the FMT.

5)               FMT Asset Manager: Put Options on Oiltec

Oiltec is a big oil export corporation that is drilling for oil in Minerich. The FMT knows that if it attacks these drilling stations, the stock price of Oiltec, which is traded at the Swiss stock exchange, will fall. Therefore they combined every bomb attack against Oiltec with making a previous purchase of put options on Oiltec stock. The licensed dealers named above execute these deals for the FMT. This system provided the FMT around 5% of the money the insurgency raised.

H)             Hiding Illicit Sources

Once the money is in the sphere of control of the FMT, an additional problem arises if the origin lies in illegal activities such as drug trafficking. Before the illicit funds can be spent, they have to be placed in the legal economic circle in a way that layers the source. This is typically known as “money laundering.” If “dirty money” is just spent the authorities competent to pursue the crime where the money stems from could not only confiscate the money but also locate the offenders. The FMT particularly needed to launder money raised through Drugcic’s system.

The following ways were essentially used by the FMT in order to conceal the origin of its illicit funds:

 

 

1)               Fortune Teller

The FMT leaders set up a net of fortune tellers that covers every big city in Switzerland. Money stemming from drug trafficking or fund raising efforts can be brought to the fortune tellers in the form of “consultation fees.” The fortune tellers deposit the money into one of the FMT bank accounts. The risk of detection was very low since nobody can fix a “right” price for this kind of service.

2)               Restaurants and Discotheques

Many of the guest workers in Switzerland immigrating from Minerich were employed in restaurants and discotheques. Some of them later became owners of the restaurants. The leaders of the FMT knew that it is hard to determine how many guests were in a particular restaurant or discotheque in a certain time period and how much money they spent there. Supportive restaurant owners therefore can help the FMT launder contributions by passing them through restaurant bank accounts.

One of the restaurant owners who support the FMT is Kate Kebab who owns a famous and expensive pizzeria. Another is Mirco Miri, founder and owner of the chain restaurant McMiri. He holds the position of the chief executive officer of this chain restaurant corporation under Swiss law[7]. McMiri opened restaurants in Switzerland and Minerich.

I)                 Purchase of Needed Items and Moving of the Money

As described, the FMT found good methods to raise enough funds and to hide their origins. The monies located in Switzerland then were either brought to the FMT in Minerich or used to buy supplies elsewhere for the FMT. While it was easy to obtain most of the night-vision equipment, tents, blankets, basic medical instruments, pharmaceuticals and battledresses through the charity organization MoM, to buy food was more complicated. An elaborate system was set up using the McMiri restaurant chain to supply the troops with food in Minerich. The most difficult part of the organization of the needed things was to buy weapons. Arms had to be bought on the black market all over the world and then be smuggled to Minerich. To transfer the money to the FMT in Minerich or to pay the suppliers directly for the items, the FMT used the following methods:

1)               McMiri System

The money laundered in the restaurants in Switzerland is used to buy food in Minerich. The bulk of the food bought in Minerich is indeed not sold in the McMiri`s in Minerich but brought to the fighters of the FMT and their bases in the mountains. This system is very unlikely to raise suspicion because it is not unusual for a restaurant corporation to buy food. Neither the employees in Switzerland nor those in Minerich have any idea what is going on. The restaurants are very poorly organized and Mirco Miri only employed people who did not raise questions about the business.

2)               Money Courier

The FMT makes use of money couriers to take cash everywhere it is needed. The couriers must be female and overweight to make it as unlikely as possible that they get searched through at the border. When they do get searched the money is hidden in places where it is almost impossible to find it without acute embarrassment for the enforcement personnel. The couriers travelled by car and carried up to $200,000 per trip.

3)               Jewellery Courier

Another scheme the FMT used to transfer money was to “pay” for purchases by giving jewellery to sellers. It was very easy to buy a watch or a necklace in Zurich worth $10,000 or more. To bring the very expensive jewellery to the seller of the purchased items, the FMT prefers persons who had Swiss citizenship, because Swiss citizens are perceived around the world as being rich acting correctly with respect to the law.

4)               Credit Card

The FMT also uses a credit card system to pay sellers. FMT uses Diners Club[8]credit cards each of which has two cardholders. One of them is an FMT member in Switzerland and the other is the seller of the equipment or the weapons. As soon as the FMT has to pay money for a purchase, the seller buys luxury goods like a yacht or expensive cars or diamantes with the credit card. The FMT card holder later pays the credit card bill in Switzerland and smuggles the acquired equipment or weapons to Minerich.

5)               Futures Trading Method

Finally the FMT traded with futures as described in I(G)(4) not only to avoid the discovery of the source of the monies but also to pay invoices with sophisticated arms dealers, who could set up a futures account.

J)               Examples of Donations and Subsequent Transfers

1)               Donations

Peter Meier donated $5000 to MoM. Peter Meier, who is a wealthy Swiss citizen, decided to give $5000 to the MoM after having seen ads in the media. His objective was to alleviate the poverty in Minerich.

 

Edison Dark gave Medical Items to Collector Kung Krate. Edison Dark is CEO of “Multimed” a distributor of highly developed medical instruments and pharmaceuticals in Switzerland. He contributed bandages, aspirin and intravenous drip tools, which have a value of $100,000 and handed them over to Kung Krate in September 2005.

 

Kate Kebab puts $ 20,000 on her Restaurants Bank Account. Kate Kebab, born in Minerich, had worked in Switzerland since 1980 and succeeded the prior owner of the restaurant as owner. She agreed to put money from the drug trafficking on her restaurant’s account at CS because she was in favour of the separation of Positivania. Her family has always been poor and she was sure that it would help her family if Minerich would become independent. During January 2006 she put $20,000 given by drug dealers on her bank account and showed it on the books as revenue from customers.

 

 

2)               Transfer of Money and Purchase of Needed Items

Simon Schweizer managed Funds of Kate Kebab. Simon Schweizer is a fund manager trading at the SWX and a Swiss citizen. He agreed to be the financial manager of Kate Kebab and he controlled monies in the amount of about $800,000 over a few years which originally came from drug trafficking and were intended to support the FMT. Simon Schweizer did not investigate the origin of the money but was more interested in the profit he could create and believed Kate Kebab when she told him that the money was earned with her restaurant. When Kate Kebab told him, he made transactions to every account she wanted.

 

Lydia Lipido transported Money and Jewellery. Heron Cokan asked Lydia Lipido to bring $100,000 in cash stemming from drug trafficking and a necklace with a value of $100,000 from Zurich to an assumed arms dealer in Caucasus, which was in fact a member of the Swiss intelligence service. She agreed and got $20,000 for doing this job. She was a Swiss citizen and not an FMT supporter, not interested in the objectives the insurgents pursued but only in earning money. She weighed over three hundred pounds and could hide the money under her belly.

 

MoM organizes Trucks and Equipment for FMT. MoM supported the FMT with everything but weapons. In January 2006 MoM bought ten trucks, filled them with tents, blankets and boots as well as other equipment and drove them to Minerich. The whole operation cost about $1 Million and was disguised as a convoy of aid for needy people. The goods were paid for with money from the UBS account of MoM in Switzerland.

III)                      Detecting and Interdicting FMT Activities

As described in the preceding sections, the FMT did most of its fundraising, stewardship and moving of the monies to finance its terrorist activities in or through Switzerland. Any form of terrorism is per definitionem anti democratic, suppresses the freedom of the attacked population and hence is against the basic principles of the Swiss Constitution. Therefore Switzerland has always opposed terrorism in any form and ratified all UN Conventions against terrorism.[9]

This part of the paper identifies the responsible Swiss intelligence service and law enforcement units for the fight against the financing of terrorism and describes their specific assignments. Then it explains relevant intelligence gathering methods, explores the legal constraints on their use, and observes that acting outside these legal limits compromises the admissibility or persuasiveness of evidence.[10] Finally this part describes use of the available investigative techniques to get a complete picture of the FMT`s financing activities in Switzerland, which is necessary for subsequent interdiction through prosecution or otherwise.

A)             The Institutional Apparatus in Switzerland

Because financing of terrorism is a threat to the inner security, the Swiss Federal Government is responsible, pursuant to Art.185FCSC, to fight against it. The Federal Government body authorized to suppress the financing of terrorism is the Federal Department for Justice and Police (FDJP). FDJP created the Federal Office of Police (Fedpol) under Art.9OVFDJP. Fedpol has two main divisions, the Service for Analysis and Prevention (SAP) and the Federal Criminal Police (FCP). SAP`s is regulated in the SFLMES and its responsibilities include preventive tasks and intelligence gathering. The FCP prosecutes all criminal offences subject to federal jurisdiction according to Art.340 and Art. 340bisSCC.[11] The FCP also provides criminal investigative services for the prosecutor. To carry out its responsibilities, Fedpol has created the Money Laundering Reporting Office Switzerland (MROS) which is Switzerland’s central money laundering office and “functions as a relay and filtration point between financial intermediaries and the law enforcement agencies”.[12]

1)               The Role of the SAP

The function of the SAP is described in Art.2 SFLMES and includes the detection and identification of threats to Switzerland and to the Swiss population at an early stage.

Due to this assignment the secret service SAP is sometimes called “preventive police” or is, in a broader sense, described as responsible for “ensuring the inner security”.[13] FJPD and the Federal Council and its Federal Security Commission[14] engage in strategic planning and supervise the operations of SAP, according to Art.9SFLMES. Together these institutions determine the priorities for information collection and give intelligence gathering assignments.[15] They also keep and update a secret list of groups and organizations which the SAP must keep under observation.[16] The following subsections describe the means the SAP is allowed to use, its reporting duties and analysis tasks.

According to Art.14Sec.1SFLMES, the SAP is authorized to obtain all the intelligence which is necessary to fulfil its obligations. Information concerning individuals can be gathered even if the person is unaware that he is a subject. Sec.2 allows the SAP to analyze public sources, to request official information, to access official records, to inquire about identity, residence, travel and contacts of individuals, and to observe and record public scenes on audio and video media. Sec.3, however, prohibits SAP observation of private rooms and the utilization of wiretaps.[17]

The SAP analyzes the intelligence it collects pertinent to inner security of Switzerland and criminal offences under federal jurisdiction. SAP reports are then, under Art.2Sec3 SFLMES, provided to the FCP, which can conduct further investigations if necessary. Some reports are also made available to political authorities or the public.[18]

2)               The Role of the FCP

Under Art.2Sec1OV FCP, the Federal Criminal Police FCP conducts preliminary and criminal pre-trial and prosecutorial investigations of federal crimes which are, under Art.340 and 340bis of the SCC, within federal jurisdiction. According to Art.4Sec.1lit.bOVFCP, the SAP has the duty to provide requested information to the FCP, which functions, under Art.3Sec.1OV FCP, as a coordination center for the suppression of organized and international crime, including financing of terrorism or offences involving explosives.

3)               The Role of MROS

According to Art.9Sec.1MLA, all financial intermediaries must report all suspicious activities in connection with money laundering or other crimes to MROS. Under Art.23Sec 4 MLA, MROS collects all the reports and, according to Art.1Sec2 of the Money Laundering Ordinance (MLO), analyzes them, filters those out which it considers suspect and informs the FCP. Furthermore Art.1Sec1lit.c MLO requires MROS to promote vigilance by financial intermediaries against money laundering and terrorist financing. According to Art.1Sec1litdMLO, MROS also publishes an annual statistical report about the developments and changes in the fight against money laundering, organized crime and terrorist financing. MROS functions as an administrative agency and does not have police authority.[19]

B)             Understanding the FMT through Human Intelligence

A precondition for successful investigation of the financing of terrorism, the prosecution of those who engaging in it, and the eventual interdiction of these illegal activities is to know about the organization and network in which they occur.[20] It is necessary to know the formal authorities and relationships of the participants, how and when they interact with each other and with outsiders. The necessary information can be obtained by human intelligence collection, supplemented by technological means such as computerized pattern matching in data networks and electronic eavesdropping Human intelligence is defined as “information collected and provided by human sources”.[21] The individuals gathering the required intelligence to educate the investigators and prosecutors can be classified in the following three categories.

 

 

 

 

 

 

1)               The Different Human Intelligence Gathering Techniques

(a)                 Confidential Informants

Because investigators and prosecutors are outsiders to the terrorist financing networks, they need insiders to enlighten them. These insiders who educate the investigators on who is who and who does what in the financing process are called confidential informants.[22]

To start a successful investigation, it is therefore necessary to find confidential informants who have the requisite knowledge and to build relationships with them. In some cases these persons volunteer through hotlines or direct telephone, email or visits; in other cases they must be approached by members of intelligence services or law enforcement units. Some confidential informants are motivated by moral reasons because they think that terrorism is wrong, or because they support a competing organization, others must be paid for the provided information or offered immunity from imminent prosecution.[23]. Since the motivation for insiders to serve as confidential informants is not always clear, investigators try to set up a net of informants whose information can be checked against the information received from other sources. Some informants will testify in a later trial and so turn into cooperating witnesses while the cooperation of others is never disclosed.[24]

(b)                 Cooperating Witnesses

As information from confidential informants leads to promising targets for closer investigation, investigators and prosecutors must shift their focus from gathering intelligence to the development of admissible evidence against the offenders. Since confidential informants will usually not testify because this would compromise their confidential status and potentially jeopardize their safety, actual prosecution mostly relies on testimony by “cooperating witnesses.” Cooperating witnesses are normally members of the criminal network and generally are motivated by promising to lessen their punishment.[25]

Investigators usually try to spot individuals within the terrorist financing network who can provide information against those higher up in the network. These interim targets are then investigated and confronted with the evidence against them. They are promised lighter sentences if they cooperate and testify as cooperating witnesses.[26][27] Cooperating witnesses can play an important role at trial. But to increase their credibility, some form of corroboration is required. This can be achieved by having several cooperating witnesses or by supporting their testimony by other evidence, such as financial, video or audio records. Often, cooperating witnesses also assist law enforcement units in conducting electronic surveillance by wearing “wires”.[28] Because cooperating witnesses often fear revenge, they will not testify unless they believe they can be protected. This often means that they must be being willing to uproot themselves and their families to move to a distant place and foreign culture and makes it even harder to persuade possible witnesses to cooperate.[29]

(c)                  Under Cover Operatives

Like cooperating witnesses, under cover agents deliver important evidence at trial. As members if intelligence services or law enforcement units, they also have the task of managing confidential informants and cooperating witnesses and organizing electronic surveillance of the investigation targets. Usually undercover operatives are more skilled than cooperating witnesses in steering conversations with suspects in a way that produces admissible evidence on video or audio media. Under cover agents are also trained to handle and take more physical risks than cooperating witnesses usually do. Finally they also enjoy higher credibility at trial.[30]

Under cover agents can only be effective if they can avoid target mistrust and suspicion. It is therefore important to make sure that they share ethnicity and socio economic background with the members of the criminal network. In case no suitable agents are available, a well reasoned cover story must be made up to explain the interest of a certain person in dealing with the targets. If the under cover operative functions as a “sting”,[31] different ethnicity may even be necessary to make up a plausible story.[32]

2)               Summary of Swiss Legal Constraints on Using Under Cover Operatives

According to Art.106lit.(c) ZH-RCP under cover agents can be used during criminal investigations. They are not allowed to foster the criminal conduct by targets under any circumstances. In the forefront of a criminal investigation, the Federal Criminal Police supervises all under cover activities; during a criminal investigation the Federal Examining Magistrate manages the use of under cover agents.[33]

If the under cover agents need to engage in or to encourage criminal acts to make a cover story believable or if the investigation uses under cover agents who are not members of the police, the president of the chamber of indictment,[34] which is an equivalent to the grand jury in the common law system, must consent according to Art.106lit.(e) ZH-RCP. Art.106 lit.(f)ZH-RCP determines which evidence gathered by under cover operations can be used at trial. According to a decision of the Swiss Supreme Court, under cover agents are allowed to give anonymous testimony.[35]

 

 

 

 

3)               Human Intelligence Gathering conducted on  the FMT

(a)                 The Confidential Informant Turi Prudentia

When Turi Prudentia approached the FCP officer Oliver Flic in Mai 2005 saying that in the Minerich community in Switzerland some guys asked for support of the FMT the officer listened very carefully. Turi Prudentia also told him that the Minerich community was very close and that the guys who asked for support made it clear that they were ready to do whatever necessary to keep people from telling the police about the fundraising. But since Turi Prudentia`s brother was assassinated by the FMT, he was willing to betray and stop them, no matter what the risk. His parents died when he was still a child and his brother was the only family member he had left.

The FCP was already aware that the FMT was active in Switzerland. Over several weeks, rumors had been surfacing with diverse authorities all over Switzerland. Additionally David Holm, a Swiss undercover agent working for the SAP had reported in August 2005 that rumours about an ongoing terror financing effort of the FMT were around. Since the community was very close and the leaders of the FMT very careful in choosing those who are responsible for the financing, no specific intelligence could have been gathered up to October 2005, when Turi Prudentia surfaced. Any previous effort to intercept phone calls and e-mails had been fruitless because the participants were unknown to SAP.

Oliver Flic knew that Turi Prudentia was the key to learn more about the FMT`s financing activities in Switzerland and therefore asked him if he would be willing to gather more information about the financing process. Turi Prudentia came to Switzerland with his girlfriend several years ago. When she left him he decided to stay in Switzerland but he never really felt home. He was a lonely guy and had an idiosyncratic interest: he wanted to have member cards for all the most famous discotheques in Zurich. Oliver Flic said that he would get the cards for Turi Prudentia. When a policeman approaches the owners of the discos they are usually ready to help him. Turi Prudentia`s first assignment was to get involved in the financing process. Since it was an open secret in the Minerich community that the real purpose of the “charity” organization MoM was not to help the needy people but the insurgents, Oliver Flic asked Turi Prudentia to get a job there. He went to the official address of the MoM offices to make contact. Surprisingly, he could just find a mailbox but no offices inside. The next approach turned out to be more successful. While he was in the Kaufleuten, one of Zurich`s most famous discos, he talked to other young guys from Minerich. Since they were very drunk it was quite easy to pump them for information. He started talking about the insurgency and said that he would like to support it. When he asked if somebody knew how he could make contact with the leaders of MoM, the oldest guy in the group moved towards him and gave him a card with a cell phone number on it and told him to call the next day. Turi Prudentia called the number the day after and when the man on the other and asked him, where he got the number from, he told him about the Kaufleuten. The other man introduced himself as Chars Charty and told him, that he actually was the CEO of the MoM. Turi Prudentia told him that he has some relatives fighting for the FMT and therefore would like to help to finance the insurgency in any way possible. He also explained Chars Charty that he was an auditor and would work for a very low wage for the MoM. Chars Charty was slightly suspicious because the whole story seemed a bit too perfect to him. Nevertheless Turi Prudentia’s offer of was very welcome because his skills were helpful to organize MoM more efficiently and to comply with the Swiss laws governing audits. During the first weeks Chars Charty supervised Turi Prudentia closely, and told him as little as possible. Since Turi Prudentia showed a lot of enthusiasm for the MoM and had a couple of new ideas, Chars Charty trusted him more and more and finally delegated more and more tasks to him of a such a nature that Prudentia gained deeper knowledge of the structure and organization of MoM.

In December Chars Charty copied a list of the donors to MoM and turned it over to Oliver Flic. The list showed that the MoM not only received donations from within the Minerich community but also from Swiss citizens. One of the contributors was Peter Meier, who donated $5,000. He and some other donors were targeted for further investigation. What the list could not tell the FCA was how the MoM spent the collected money, which was crucial to proof that the charity organization was in reality built to support the FMT. Turi Prudentia had also heard rumors that the restaurant chain McMiri was involved in the financing of the FMT. To find out what items the MoM was buying Turi Prudentia told Chars Charty that he knew a seller of army equipment as well as all kind of weapons named David Holm, who was in truth an SAP under cover agent. Chars Charty told Turi Prudentia that the MoM was only interested in purchasing equipment for the FMT, not weapons. When Turi Prudentia asked, if he knew the responsible people for financing arms, Chars Charty gave him the number of Toro Tradic, the FMT dealer at the SWX and said that David Holm should contact him if he has weapons to offer to the FMT.

Since Chars Charty was now sure that Turi Prudentia was really interested in supporting the FMT, he let him into the inner circle. This meant that Turi Prudentia could help developing strategy for MoM Charty also introduced him to the person responsible for the purchase of equipment for the FMT for the first time in January. This person was from Minerich too, but he seemed to be more interested in having a high position and making some money rather than dedicating his life to the support of the FMT. His name was Jack Travol.

(b)                 The Cooperating Witness Jack Travol talks about MoM

Turi Prudentia told the FCP about the next equipment purchase that was planed in February 2006. When Jack Travol arrived and handed over several thousand USD to the seller of the equipment the police recorded a video of the transaction, which occurred in front of the outlet store of the equipment seller. After that, they seized Jack Travol and showed him the electronic evidence gathered in front of the outlet store, a public area. The prosecutor also told him that he could get a lighter sentence if he would help the police and testify in court against Chars Charty and also tell what the MoM does with the donations.[36] When the prosecutor assured him that he could get protection and that he and he could get a new identity and live incognito on a nice island for some years, Jack Travol agreed. He always liked partying very much and was not really interested in the “whole FMT thing,” except as an opportunity to skim large amounts of cash. He told the investigator about the operation the MoM arranged in January 2006, when they loaded ten trucks with equipment and drove them to Minerich and gave them detailed information about the items they bought, from whom, as well as information on the bank account they used.

He also told the investigator about Kung Krate, who worked also for the FMT and had brought medical instruments and pharmaceuticals when they loaded the trucks with equipment for the FMT. The medical items obviously were a donation, but Jack Travol did not know from whom.

 

 

 

 

(c)                  SAP Operative David Holm sets up a “Sting”

The under cover agent of the SAP, David Holm, called the cell phone number which Turi Prudentia had turned over to Oliver Flic and introduced himself as the man who sells “everything somebody pays for”. The guy on the other side asked him, where he got the number from. David Holm explained him that he got it from Chars Charty. The man who answered the phone introduced himself as Toro Tradic and wanted to know what kind of weapons Holm would sell. David Holm explained that he would have connections to Russia and that he could fix him up with any kind of weapons and additionally smuggle them to wherever he needs them. Toro Tradic said that he will think about it and contact him if he needed weapons. In January 2006 David Holm got a call from Toro Tradic soliciting one hundred machine guns and three hundred grenade launchers. David Holm told him that he could organize it within the next three weeks and asked how he intends to pay him, since he would not be willing to receive a whole lot of cash and that the price would be $500,000. Toro Tradic said that he could pay him through one of the credit cards with two holders. He explained to David Holm that there would be no risk that he to get detected, because he could then just buy whatever he would like and the FMT would then pay the debt on the credit card. He also offered him payment through a futures contract system. David Holm told him that he needs time to speak to his weapons supplier and that he would contact him again in early January 2006.

(d)                 Nino Dino works Under Cover for the FCP

Nino Dino also provided important intelligence for understanding the financing process. He has been a drug dealer for years but then started working for the SAP as an informant because the prosecutor promised him that his behaviour would be taken into consideration at his trial[37]. Nino Dino was convicted for drug trafficking and released on parole in 2000. In view of the fact that it would be very tough to find a job with his criminal record and also because he had always liked under cover agents like James Bond and was fascinated by this kind of work, he went to the SAP and offered them to go back to the drug business and gather further intelligence.

Nino Dino knew Heron Kokan, who was the highest representative of the FMT supporters engaged in drug trafficking, since 1995 when he first started selling drugs. Heron Kokan supplied Nino Dino with drugs to sell since the beginning of their collaboration. In 2002 Heron Kokan started giving him little jobs such as bringing cash to different restaurants and fortune tellers. When Nino Dino asked Heron Kokan why he had to bring the money to these people, Kokan told him about the FMT and that he wanted to support them. Nino Dino recorded all the addresses of the people to whom he brought cash, thinking, even then, that the information might be useful someday for his own purposes.

In January 2006 Heron Kokan told Nino Dino to meet a guy named Kung Krate, who would turn him over an undetermined amount of cash on the parking space of the train station in Aarau which he is supposed to bring to the fortune tellers. When he arrived at the venue he was quite impressed by the man who was already waiting. Kung Krate was a very tall guy who seemed to do nothing but work out. Nino Dino told him, that Heron Kokan had sent him. Kung Krate, who was one of the FMT`s money collectors, was very content. He said, “Yes, Kokan called me and said he works with you,” and then said to Nino Dino: “You know, normally if I go to the villages and ask people for support for the FMT, they contribute no more than $100. But imagine, today at this wedding of a rich man from Minerich, I collected more than $10,000 for the FMT”. Nino Dino was surprised how openly Kung Krate talked to him and asked him what the biggest donation ever was. Because Kung Krate was very happy about the amount of donations he received on that day and also because he was not too intelligent and not really cautious in what he should tell somebody he has never seen before, he said: “Well the biggest donation was an in-kind one. Medical stuff, you know. It was worth about $100,000, from a guy from Minerich working for a large medical company in Switzerland. We used the MoM to bring the stuff to Minerich”. This information confirmed what Jack Travol had told about the medical items that were brought to the MoM when they loaded the trucks for Minerich. At the end of the conversation Dino asked for his cell phone number, so that Kung Krate could “rescue” him in the case he would get in trouble while he was carrying the money. Kung Krate wrote his cell phone number down on small piece of paper, gave it to Dino and left.

C)              Collecting more Specific Information and Evidence through Electronic Surveillance under the Law

To support the testimonies of the cooperating witnesses and under cover agents as well as to produce additional admissible evidence for trial, electronic devices are used by investigators. Law enforcement and intelligence service professionals make a distinction between “wiretaps,” “bugs” and “wires“.[38] A wiretap intercepts telephonic, fax, or email communication of parties who neither know about it nor gave consent to the interception, if the communication is face-to-face the device is called bug. A wire is a recording apparatus used by one of the participants to a communication.[39]

1)               Summary of Swiss Legal Restrictions

According to Art.14Sec.2 lit.(f)BWIS, the SAP is allowed to use audio and video recording in public places. If SAP agents want to gather intelligence utilizing electronic surveillance of private communication, they are, according to Art.14Sec.3BWIS, not allowed to do so without having lodged a compliant with the public prosecutor’s office. If the prosecutor opens preliminary proceedings against a suspect, he can then order electronic surveillance of suspects on request of the SAP under Art.104ZH-RCP in connection with Art.179bisff.SCC with confirmation from the president of the board of indictment. The same restrictions apply for FCA police officers. Members of SAP and FCA who use electronic surveillance of private communications without permission from the prosecutor are not only criminally liable for unauthorized recording of private communication under Art.179terSCC and the gathered evidence can not be used at trial.

2)               Mobilizing Surveillance against FMT Consistent with the Law

Based on the intelligence gathered by the confidential informant of the FCA, Turi Prudentia, the cooperating witness Jack Travol and the two SAP under cover agents David Holm and Nino Dino, the FCA referred the case to the prosecutor.

The restaurant owner Kate Kebab was accused of money laundering, the FMT trader Toro Tradic of trying to buy weapons and Chars Charty of financing equipment for the terrorists. Simon Schweizer was suspected making donations to the MoM which finances terrorists and Kung Krate was deemed to be a money collector for the FMT. Additionally the CEO of “Multimed”, Edison Dark, was suspected to be the mysterious donor of the medical items because no other member of the Minerich community held a position in the medical business, which was controlled by only about half a dozen large companies in Switzerland, that would allow him or her to donate in the magnitude it was done in January 2006. When Fedpol asked for permission to conduct electronic surveillance of the private communication of these investigation targets the president of the office of indictment granted the request

(a)                 Chars Charty`s Cell Phone Intercepted with a Wiretap

Turi Prudentia provided the Chars Charity`s cell phone number to the competent authorities. The interception of MoM chief executive’s calls resulted in new intelligence. In January 2006 Chars Charty called Rico Rich in Minerich and asked him what kind of equipment he needed most to keep the insurgency going. After that he called several suppliers in Switzerland who sold the required items to the MoM. This was the confirmation of what has been suspected before: The MoM supported the terrorists in Minerich. More surprising was what the investigators found out, when they monitored calls between Chars Charty and Mirco Miric, the CEO of McMiri. They frankly discussed how they could support the FMT better and Mirco Miric mentioned that they sometimes have problems to provide them with enough food because the McMiri`s in Switzerland could not launder enough money to buy the food the fighters in Minerich need.

(b)                 David Holm wears Wire when Talking to Toro Tradic and Lydia Lipido

David Holm contacted Toro Tradic in January 2006 and told him that he would like to meet him again. He wanted to resolve how he would receive the money and he wanted to could show Tradic an example of a machine gun Holm had access to. A few days later they met.  David Holm wore a wire to record the conversation. David Holm said that he changed his mind and wanted to receive a part of the money in cash. It should be delivered to the Caucasus. Toro Tradic was delighted when he saw the machine gun and said that Holm should not worry and that Tradic would arrange for the money to be delivered. He told Holm about the fat woman technique. David Holm said that he wants to meet the woman who will transport the money to the Caucasus to see, if he can trust in this fat women idea.

Some days later they met again, this time with Lydia Lipido present. They talked about the way she will hide the money and that she would get $20,000 for transporting the $200,000, still not telling her why they wanted her to transfer the money. The $200,000 she is supposed to bring to the arms seller is due some days before the weapons will be delivered at the end of February. They agreed that another $200,000 will be paid over a Diners club credit card and the remaining $100,000 over the futures trading system after the weapons for a total of $500,000 are smuggled to Minerich. Before he left, David Holm said that he will give him a discount because the delay. The conversation was recorded and more intelligence was gathered.

(c)                  Turi Prudentia wears Wire when Visiting Peter Meier

Turi Prudentia, the confidential informant who worked for the MoM and found the list of the contributors, had the assignment to find out how much the donors knew about the MoM`s real purpose. He called Peter Meier, who had donated $5,000 and explained him that he would like to show him some pictures about the MoM and how they helped the needy people. Peter Meier agreed and two days later they met. After having received permission to do so from the president of the office of indictment, Turi Prudentia had a wire with him and recorded the conversation. He showed Peter Meier pictures he found on the internet pages of charity organizations and Peter Meier believed that they were taken in Minerich. He obviously had no idea what the MoM in reality did with his money and believed Turi Prudentia that they use it to alleviate poverty.

(d)                 Jack Travol wears Wire when Meeting with Edison Dark

Jack Travol was willing to help the police as much as possible to get a lighter sentence. When he was asked if he could try to get information about the suspected FMT supporter Edison Dark, who bestowed medical stuff, he did not hesitate and asked what he could do. His assignment was to go to the office of Edison Dark and ask in the name of the MoM for another donation, while wearing a wire to record the conversation.

When he entered the office and introduced himself, Edison Dark immediately knew what he was talking about. It was clear that he was the man the investigators were looking for. Jack Travol explained him that they were organizing another load of equipment and that Chars Charty had sent him to ask for support. Edison Dark answered: “You know, the last time I sent stuff that doctors in Switzerland did not need anymore. It will not be easy to give you as much medical stuff again, even if I would like to”. Jack Travol said that they would also be happy to get smaller batches of instruments. Edison Dark said that he would contact the MoM as soon as he could organize some stuff. Jack Travol left the office and had gathered important electronic intelligence that could also be used as evidence in court.

(e)                 Bug in Kate Kebabs Restaurant

In January 2006 Nino Dino, the ex-dealer who works for the FCP, got another assignment from Heron Kokan. Heron Kokan gave him $10,000 earned from drug trafficking and told him to meet Kung Krate, who would give him another $10,000. After that he should bring the money to Kate Kebab`s restaurant.

Nino Dino did so and when he told Kate Kebab that he had $20,000 for her she told him to follow her to a private room. He did so and while she was getting some beer for him, he placed a bug under the table. He handed over the cash and some minutes later he left the restaurant. Only a few days after that Heron Kokan went to see Kate Kebab. They discussed what she should do with the money. She explained to Heron Kokan that she cannot put too really excessive amounts of money in the bank account of her restaurant to launder it, because it would raise suspicion at the bank. She then went on and told him that she then separates the laundered money from the revenue of the restaurant. “The laundered money goes to my fund manager. He is very valuable because he never asks questions about the source of these huge sums of money”, she added. Heron Kokan answered: “He is a good businessman” and both laughed. The whole dialogue was bugged and viable intelligence for use at trial was produced.

 

 

 

 

 

 

D)             Collecting more Specific Information and Evidence through Monitoring of Financial Transactions and Requests to Banks

Financial investigations can be important aids to early identification of investigative targets[40]. Through routine and ad hoc monitoring the financial transactions can be screened that match a pattern which indicates possible money laundering or financing of terrorism. Investigators look for patterns such international transactions without adequate motive or done by corporations or individuals that are not involved in international business. They look for stock or futures trades opposed to the general directions of the market, which might be based on knowledge that nobody else had or so grossly unreasonable as to be obviously motivated by an intent to lose money. Such patters might be violations of securities laws or indicators of possible terror financing. A trader who buys big volumes of put options and makes immense gains because the stock drops in the wake of a terrorist attack only days later or a buyer who buys commodity contracts from a seller for un unreasonably high price and always loses are natural targets for further investigation.

When the suspects already identified through human intelligence collection and some electronic surveillance, bank accounts and financial transactions of corporations and individuals now can be fertile sources for new, specific criminal evidence. A valuable method to gather financial intelligence is requests banks to disclose transactions by and account information of targeted corporations and individuals.[41]

1)               Summary of Swiss Legal Restrictions and Reporting Duties of Financial Intermediaries

According to Art.9 of the Money Laundering Act (MLA), all financial intermediaries have not only the privilege breach their professional relationship with a depositor but also a duty to report all transactions of which they have a reasonable suspicion that the money is involved in illegal activities. To gather all the information about suspicious financial transactions Fedpol created MROS which has the assignment to analyse the reported transactions. If MROS considers further investigations to be useful it transmits information to the FCP, pursuant to Art.29Sec1MLA the documents.

Banks are only permitted to answer requests during proceedings in a criminal case, since Art.47BancC generally prohibits them generally from revealing information about accounts and transactions. However, once criminal proceedings are opened, bank secrecy is not allowed as reason for holding back information.[42]

2)               Monitoring of FMT Transactions and Bank Requests

(a)                 Diners Club and SWX report Suspicious Activities at MROS

Diners Club and the Swiss Stock Exchange, the SWX, had reported suspicious transactions by Toro Tradic to MROS already in September 2005. After MROS had flagged these reported transactions as worth further investigation, they sent the information to the FCP. When the payment for the weapons in March 2006 was due and Toro Tradic paid $200,000 on the Diners Club account of the card issued on his name and that of David Holms and bought the futures at unreasonable high prices, Diners Club and SWX saved all the data, as requested by the FCP, and important financial evidence was gathered.

(b)                 McMiri Activities Detected through Bank Requests

Because Mirco Miric and his McMiri restaurant chain were also targets of investigation after the telephone conversation between him and the MoM CEO Chars Charty was recorded, the banks were obligated, upon FCP request, to monitor their transactions and accounts. The FCP found astonishing information: McMiri`s revenue and margins were three times higher than McDonalds and, interestingly, most of expenditures were made through restaurants in Minerich. McMiri had unreasonably high profits and showed that almost all the profit was sent to Minerich. Additional evidence for use at trial was gathered.

(c)                  Kate Kebab`s Activities Detected through Bank Requests

The FCP also made bank requests for Kate Kebab`s restaurant account. The revenue statistics were unbelievable. While she had earned about $8,000 a month till the year 2000, the revenue went up to $20,000 between the year 2001 and 2006. This fact was valuable evidence that she had laundered money for the FMT.

E)              The Result of the Investigation: The FMT Activities are shut down

In March 2006, the “sting” David Holm had promised to deliver the weapons. Since he never had the intent to do so, it was time to reveal the investigation and to seize the suspects for the financing of terrorism. Lydia Lipido was arrested when she came back from Caucasus, where she gave the cash to an SAP agent who told her he was weapons dealer. The other suspects were seized in the middle of the night when they were sleeping at home. After having investigated over several months the investigators had enough admissible evidence for trial that would result in convictions of the participants of the terrorist financing. The cooperating witness Jack Travol should play a key role in the process. Supported by the electronically recorded data and the transactions done by credit card and at the SWX as well as the bank account information, the financiers of the FMT will hardly have a chance to deny their wrongdoings.

IV)                The SCC and the Financing of Terrorism

After having described what techniques the investigators used to gather information and evidence, the objective of this section is to evaluate whether the efforts were worthwhile and would result in convictions of the wrongdoers. On one hand it describes what provisions in the SCC are useful to convict those who are responsible for the financing. On the other hand it is also shows which participants did not incur criminal liability for their participation in the financing process. That the FMT qualifies as a terrorist organization has been established under section I(B).

A)             Situation prior to 2003

The SCC did not include a specific provision prohibiting the financing of terrorist activities before 2003. Instead the courts could apply various rules of a more general nature to punish those who finance terrorism.

The most important provision against financing terrorism is Art.260terSCC which prohibits membership in a criminal organisation and also includes membership in terrorist organizations.[43] Persons who finance terrorist organizations are liable as participants either under Art.24SCC as suborners or under Art.25SCC as assistants.[44] This statute only applies if there is an organization established. Organization is defined as “factual entity with a compact and permanent structure which is in general independent from the withdrawal of single members”.[45] Also effective against the financing of terrorism is Art.260bisSCC, which imposes liability on those who commit acts preparatory to the commission of offences like first degree murder or hijacking. This provision is especially relevant because it applies to the conduct of planners during periods in which the financing of a terrorist act is done,[46] which is likely to precede actual terrorist operations. Other valuable statutes against the financing of terrorism are offences against life and limb, under Art.111ff.SCC, deprivation of liberty, hijacking and hostage-taking, under Art.183ff. SCC, as well as offences against public safety like offences with incendiary devices and explosives, under Art.221ff.SCC and others[47] in connection with the participation and assistance related to those crimes.

Finally, Art.305bisSCC against money laundering Art.305terSCC concerning the stewardship of money without identification of the beneficial owner provided a suitable basis to prosecute the financing of terrorism. This is especially true in cases where most of the money used by the terrorists stems from drug, human trafficking or other illicit activities.

B)             Changes in the SCC Concerning the Financing of Terrorism

After the attack on the United States on September 11th 2001 anti-terror measures were intensified all over the world including in Switzerland. Having previously ratified ten out of twelve UN conventions on terrorism,[48] the Swiss parliament decided after recommendation by the Swiss Federal Council and by the UN Security Council[49] to join the International Convention for the Suppression of the Financing of Terrorism,[50] which was drafted by the UN in 1999.[51] The convention was ratified on September 23rd, 2003 and it went into effect on October 23rd, 2003.[52] The ratification did not itself establish any jurisdiction for the Swiss courts to enforce the provisions of the convention because treaties are not self-enforcing under Swiss law.[53] The Swiss Legislature therefore revised the SCC on March 23rd 2003. The revision became effective on October 1st 2003. Since most of the requirements of the convention were already implemented in the SCC only a few changes had to be made.

The centerpiece of the amendments was enactment Art.260quinquiesSCC, a specific statute concerning the financing of terrorism[54] with the objective to “deprive terrorism of its basis”[55] and also to make sure that the financial centres of Switzerland would not be abused for the financing of terrorist activities.[56] The provision is a complement element for all financing activities that can not be subsumed under Art.260terSCC, when, for example, there is no identifiable organization. If an organization in the sense of Art.260terSCC as described under preceding section II(A) is present all persons liable under Art.260quinquies SCC would also be liable under Art.260terSCC. The only difference on the objective side between these two provisions is that Art.260quinquies SCC does not require the wrongdoers to act in a group.

Art.260quinquies SCC holds those liable who “with the intent to finance a criminal offence made to intimidate the population or to prevent a state or an international organization to carry out their duties, collects assets[57] or places them at the disposal of others”. “Collect” includes also all kinds of stewardship and intermediary transactions.[58] The key feature of the provision is that the objective part of the offence is fulfilled with financing activity and no causation is required between the financing and a terror act.[59] This lack of a causation element was necessitated by Art.2Sec.3 and 5(a) of the UN convention against financing of terrorism. On the subjective side, Art.260quinquiesSCC requires the will and knowledge to collect money or set it at the disposal of others to finance terrorism. Section 2 says that it is not enough to know of the possibility that the funds could be used to finance a terrorist act; there must be intent to do so.[60]

Excluded from liability after Art.260quinquiesSec.(3)and(4) SCC is the financing of acts with the objective to regain “constitutional circumstances” in states.[61] No liability is imposed for acts that are allowed under international law applicable to armed conflicts.[62]

Under Art.340bisSCC, federal authorities have the responsibility to pursue the financing of terrorism under Art.260quinquiesSCC since the structure and the complexity of these crimes often is of an international character.[63] The courts also are authorized, under amended Art.27bisSCC, to compel journalists to testify if the offender of Art.260quinquiesSCC can not be held liable without the information the journalist has.[64]

Modifications were also made in the responsibility of corporations to fulfil the requirements of the convention. New Art.100quaterSec.1 SCC makes any business[65] liable for offences in the scope of its object. A precondition to liability is that no individual can be held responsible for the wrongdoing of the business because of a deficient organizational structure. For offences like financing of terrorism, money laundering and membership in a criminal organization, legal entities are liable after Art.100quaterSec.2independent from any liability of individuals. The artificial entity can only exculpate itself if it can show that it has taken “every necessary and reasonable organisational precaution” to suppress the criminal offence that has been committed. This liability for legal entities was demanded by Art.5 Sec. 2 of the International Convention for the Suppression of the Financing of Terrorism.

C)             Criminal Liability for FMT Financiers

All the examples of transactions described above took place in 2005 or 2006, after the amendment of the SCC in 2003. Since the objective of this section is to ascertain if persons responsible for the financing of terrorism can be held criminally liable in Switzerland, liability is scrutinized in respect the provisions of the SCC. It will be determined if the gathered evidence leads to convictions and which provisions that apply for the different participants of the financing process.

1)               The Liability of the Donors and Money Launderer

(a)                  Liability of Peter Meier

By donating $5,000 to the MoM Peter Meier could have incurred liability for financing of terrorism under Art.260quinquiesSCC. The objective element of the statute requires that accused collects money or sets it at the disposal of others, who then use it to finance terrorism. According to the list of donors which was copied by the confidential informant Turi Prudentia, Peter Meier donated $5,000 to the MoM. According to the testimony of the cooperating witness, Jack Travol, and some conversations between Chars Charty and Rico Rich that were recorded, MoM did in fact support the FMT by providing the fighters with military and logistics equipment. Peter Meier hence supported the insurgency and helped to finance terror acts, satisfying the objective elements. The subjective element of the statute, however, requires not only the knowledge and will to put assets at the disposal of others who actually use them for terrorism, but also the intent to finance terrorism. When Turi Prudentia wore a bug when talking to Peter Meier about the MoM, the recording showed that Peter Meier had no idea for what purposes his donations were used. Since Peter Meier thought the Mom to be a charity organization and did not want to support terrorism at all, he is not liable under Art.260quinquiesSCC. Liability also can not be imposed under Art.260terSec.2SCC in connection with Art.25SCC for being an assistant of a terrorist organization since this offence requires at least dolus eventualis[66] on the subjective to impose liability. Since Peter Meier was not aware that terrorism would be financed with his money, the subjective element needed to be liable as an assistant of a terrorist organization is also not present.

(b)                 Liability of Edison Dark

By contributing bandages, aspirin and intravenous drip tools, which have a value of $100,000 and handing them over to Krado Creaton, Edison Dark could incur liability for financing of terrorism under Art.260quinquiesSCC.

The first evidence comes from the testimony of Nino Dino, who was told that there was a donation of medical items to Kung Krate, the money collector, which was then brought to Minerich by the MoM. But really probative evidence was gathered by means of electronic surveillance, when Jack Travol, the cooperating witness and MoM equipment purchaser recorded a conversation with Edison Dark. During the conversation Edison Dark said: “It will not be easy to give you again as much medical stuff as I bestowed in January 2006, even if I would like to”. This was the compelling evidence that Edison Dark did not only donate in the past but was also willing to donate again for the insurgents in Minerich.

By setting the assets at the disposal of the money collectors and finally the FMT, the objective elements are present. Since Edison Dark also had the intent to support and finance the FMT, which can be concluded from the recorded words and his expressed intent to do it again, the subjective elements can also be proofed and Edison Dark is liable under Art.260quinquiesSCC.[67]

(c)                Liability of Kate Kebab

By putting $10,000 stemming from drug trafficking on her restaurants CS bank account in January 2006 and showing it on the books as revenue from customers, Kate Kebab could incur liability for financing of terrorism according to Art.260quinquiesSCC and for money laundering under Art.305bisSCC.

Compelling evidence is given at trial be Nino Dino, who testifies that he actually brought her the $10,000 as well as by the bug that was installed in her restaurant and recorded when she talked to Heron Cokan about putting the money on the bank account. Finally the bank requests shows, that she actually deposited $10,000 in her bank account in January 2006. The objective elements of both provisions are present, since the allocating of the restaurants bank account can be regarded as “collecting money” which includes any intermediary function and additionally as “hiding the source of dirty money” what she does since she shows some of the “revenue” was dirty money. She also had both the intent to help finance the FMT and the intent to make it impossible for the police to figure out where the funds originally came from, which can be concluded from her conversation with Heron Kokan. Kate Kebab is therefore liable under Art.260quinquiesSCC as well as under Art.305bisSCC.[68]

2)               Transfer of Money and Purchase of Needed Items

(a)                 Liability of Simon Schweizer

By managing $100,000 of Kate Kebab, Simon Schweizer could have incurred liability for financing of terrorism under Art.260quinquiesSCC. The objective element of the statute requires that the person collect money or set it at the disposal of others, who use it to finance terrorism. The definition of “collect” or “set at the disposal of others” includes any kind of intermediary function.[69]

During a discussion between Kate Kebab and Heron Kokan, which was bugged, Kate Kebab talked about Simon Schweizer and said that he would manage the funds which she had laundered for the FMT. This evidence stemming from electronic surveillance was later confirmed by bank records which showed Kate Kebab’s transactions that put the money in Simon Schweizer`s account. The money he administered and then transmitted to the accounts specified by Kate Kebab was used to support the FMT and its terrorist activities. The objective elements are therefore present. The subjective element of the statute requires not only the knowledge of funds but also the intent to help financing terrorism. Since Simon Schweizer did not ask Kate Kebab, if the money belonged to her and where it came from, he had no idea, that it would be used to finance terrorism and is not liable under Art.260quinquiesSCC. Liability also cannot be imposed under Art.260terSec.2SCC since it requires at least dolus eventualis to finance a terrorist group. By not clarifying where Kate Kebab’s funds came from and who they belonged to, Simon Schweizer could also have incurred liability for lack of diligence at financial transactions under Art.305terSCC. The objective element of the statute requires that the offender be a professional financial intermediary who agrees to manage funds of an individual or a company. It is further necessary that the offender not determine the beneficial owner of the monies even if he had an obligation to do so[70]. According to Art.3MLA, it is mandatory to determine the beneficial owner in any case, if more than $20,000 is involved. Simon Schweizer agreed to manage several hundred-thousand dollars without identifying the FMT as beneficial owner and did therefore not fulfil the due diligence obligations that he had as a professional financial intermediary. Hence the objective element is present.

The subjective element requires that the offender have intent to fulfil the objective elements. This means, that there must be intent to disregard the duty to determine the beneficial owner. If the offender was just negligent he is not liable under Art.305terSCC. Simon Schweizer wanted to manage the monies and knew that he was a professional financial intermediary. Since there is no evidence that he wanted to disregard his duty of determining the beneficial owner but was just negligent by not finding out about the real beneficial owner, the subjective element is not fulfilled and he is not liable under Art.305terSCC.[71][72]

(b)                 Liability of Lydia Lipido

By bringing $100,000 in cash stemming from drug trafficking and a necklace with a value of another $100,000 from Zurich to the arms dealer in Caucasus Lydia Lipido could be liable for financing of terrorism under Art.260quinquiesSCC as well as for money laundering under Art.305bisSCC.

The objective element of both provisions is fulfilled since she set “money at the disposal of others”, facilitated the FMT to buy weapons which they subsequently used to commit terror acts and also made it nearly impossible to determine where the drug money came from. The compelling evidence was the recorded conversation between Lydia Lipido and the SAP agent, who wore a wire while talking to her. When she brought the money to the Caucasus in February 2006, she gave the money to another SAP agent, who also testified, that she transported the money.

The subjective element requires intent in reference to all the objective elements under Art.260quinquiesSCC but not under Art.305bisSCC where dolus eventualis is enough. Lydia Lipido did not incur liability under Art.260quinquiesSCC because she had no idea why she transported the money and the necklace to Russia and could therefore not have intent to support terrorism. But since she must have known that there was a reasonable chance that it was “dirty” money and that she made it nearly impossible to determine the origin of the money by transferring cash to a foreign country but still did it, she is liable under Art.305bisSCC.

Additionally Lydia Lipido could also incur liability for lack of diligence in financial transactions under Art.305terSCC by not determining the beneficial owner of the money. The objective requires that the offender be a professional financial intermediary who agrees to manage funds of an individual or a company. It is further necessary that the offender not determine the beneficial owner of the monies even if he had an obligation to do so[73]. According to Art.3MLA it is mandatory to identify the beneficial owner in any case, if more than $20,000 is involved. Lydia Lipido transported $200,000 and did not determine the beneficial owner and the origin of the money. The electronic surveillance proofs that she did not ask why she had to transport the money when Toro Tradic gave her the assignment. Hence Lydia Lipido fulfilled two of three required elements on the objective side. The question remains if she is a professional financial intermediary. The term “professional financial intermediary” is defined in the regulation about the Execution of financial Intermediary Functions in the non-banking Sector (OMLA) enacted by the board of control against money laundering. Under Art.4Sec.1OMLA a financial intermediary is a professional if he or she earns more than $15,000 by managing funds that are subject to the duty to figure out the origin and beneficial owner under Art.305terSCC. Lydia Lipido earned $20,000 by transporting assets with a value of $200,000 which were subject to Art.305terSCC. She therefore acted as a professional financial intermediary and the objective element is satisfied. The subjective element requires that the offender have intent to fulfil the objective elements. This means, that there must be intent to disregard the duty to determine the beneficial owner. Lydia Lipido was not interested in knowing where the money came from and assumed that Heron Cokan was the beneficial owner. Because of this lack of intent to fulfil the objective side, the subjective part is not present and Lydia Lipido is not liable under Art.305terSCC.[74]

(c)                  Liability of the MoM

By purchasing trucks and equipment to support the FMT in Minerich in January 2006, MoM could incur liability for financing of terrorism under Art.260quinquiesSCC in connection with Art.100quaterSec2SCC. While lists of donors were given to the investigators by the confidential informant Turi Prudentia, the compelling evidence for the support of the FMT comes from the testimony of the cooperating witness Jack Travol. He testified at trial how he obtained the equipment for the FMT, which Chars Charty told him to buy. Since the MoM collected money to finance the FMT and also bought equipment, the objective elements are present. The subjective elements of the statute require intent. When the CEO of MoM, Chars Charty, talked to Rico Rich in Minerich, he asked him what kind of equipment the FMT needs most. The conversation was recorded, because Chars Charty`s phone was intercepted. MoM`s purpose was to help the FMT and intent to finance the terrorists in Minerich is present and the MoM is liable under Art.260quinquiesSCC, if it can not show exculpatory evidence after Art.100quaterSec.2. Exculpatory evidence is present if the business organization did everything reasonable to prevent this criminal offence. Since the founders set the association up with the intent to support the terrorists in Minerich the MoM can not prove that they tried to avoid its employees to buy equipment for the FMT.

Furthermore the MoM could be dissolved by court order under Art.78 of the Swiss Private Law Code (SPC) because its purpose is unlawful and contra bonas mores.[75][76]



[1] http://www.oilnergy.com/1onymex.htm#since20.

[2] Speech of President Bush in a joint session of Congress on Thursday night, September 20,2001 (http://archives.cnn.com/2001/US/09/20/gen.bush.transcript/)

[3] Entry into force June 26, 1987.

[4] A lot of Positivanian men had been seasonal alien workers in Switzerland since the late seventies and some of them stayed and started families.

[5] Smaller amounts of money were also donated in other countries like Germany or the United States, but since all of this money made the way to the FMT through Switzerland, the paper provides no detailed description of these sources.

[6] See Art.80 ff. of the Swiss Private Law Code (SPC).

[7] After Art.620 ff. of the Swiss Code of Obligations (SCO).

[8] Credit Cards were also used to finance a movie. (http://www.imdb.com/title/tt0093200/trivia).

[9] Abkommen vom 14. September 1963 über strafbare und bestimmte andere an Bord von Luftfahrzeugen begangene Handlungen (SR 0.748.710.1);

– Übereinkommen vom 16. Dezember 1970 zur Bekämpfung der widerrechtlichen Inbesitznahme von Luftfahrzeugen

(SR 0.748.710.2);

– Übereinkommen vom 23. September 1971 zur Bekämpfung widerrechtlicher Handlungen gegen die Sicherheit der Zivilluftfahrt (SR 0.748.710.3);

– Übereinkommen vom 14. Dezember 1973 über die Verhütung, Verfolgung und Bestrafung von Straftaten gegen völkerrechtlich geschützte Personen, einschliesslich Diplomaten (SR 0.351.5);

– Internationales Übereinkommen vom 17. Dezember 1979 gegen Geiselnahme (SR 0.351.4);

– Übereinkommen vom 3. März 1980 über den physischen Schutz von Kernmaterial (SR 0.732.031);

– Protokoll vom 24. Februar 1988 zur Bekämpfung widerrechtlicher gewalttätiger Handlungen auf Flughäfen, die der internationalen Zivilluftfahrt dienen (SR 0.748.710.31);

– Übereinkommen vom 10. März 1988 zur Bekämpfung widerrechtlicher Handlungen gegen die Sicherheit der Seeschiffahrt (SR 0.747.71);

– Protokoll vom 10. März 1988 zur Bekämpfung widerrechtlicher Handlungen gegen die Sicherheit fester Plattformen, die sich auf dem Festlandsockel befinden (SR 0.747.711);

– Übereinkommen vom 1. März 1991 über die Markierung von Plastiksprengstoffen zum Zweck des Aufspürens

 (BBl 1993 IV 372);

– Übereinkommen vom 15. Dezember 1997 zur Bekämpfung terroristischer Bombenanschläge.

[10]Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(2).

[11] http://www.ejpd.admin.ch/ejpd/en/home/themen/sicherheit/ref_polizeistruktur/ref_polizeiarbeit.html.

[12] http://www.ejpd.admin.ch/fedpol/en/home/themen/kriminalitaet/geldwaescherei.html.

[13] Prospectus of the Swiss Secret Services edited by the FDJP 1st ed. 2003, p. 23.

[14] Prospectus of the Swiss Secret Services edited by the FDJP 1st ed. 2003, p. 28.

[15] Prospectus of the Swiss Secret Services edited by the FDJP 1st ed. 2003, p. 17.

[16] Prospectus of the Swiss Secret Services edited by the FDJP 1st ed. 2003, p. 28.

[17] Prospectus of the Swiss Secret Services edited by the FDJP 1st ed. 2003, p. 28.

[18] Prospectus of the Swiss Secret Services edited by the FDJP 1st ed. 2003, p. 27.

[19] http://www.fedpol.admin.ch/fedpol/de/home/themen/kriminalitaet/geldwaescherei.html.

[20] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(1).

[21] AAP-6 2005 p. 96.( http://www.nato.int/docu/stanag/aap006/AAP-6-2006.pdf).

[22]Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(1)(a).

[23] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(1)(a).

[24]Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(1)(a).

[25] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(2)(a).

[26] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(2)(a).

[27] According to Art. 66°SCC the judge can take into consideration all facts to determine the fair judgement.

[28] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(2)(a).

[29] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(2)(b).

[30] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(4).

[31] A „sting“ is a phony ring used to lure targets into providing incriminating information.

[32] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(4).

[33] As described in Art. 108 ff. FFCJ the Federal Examining Magistrate manages investigations and has the authority to decide about the means that can be used.

[34] The Chamber of Indictment consists according to Art. 46 ZH-ACC of 5 members and decides if somebody is indicted.

[35] See Swiss Supreme Court Decision of December 2, 1998, 125 I 127.

[36] According to Art. 66 SCC the judge can take into consideration all facts to determine the fair judgement.

 

[37] See footnote 36.

[38]  Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(3).

[39]  Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(3).

[40] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(1)(b).

[41] Operation Kosovo, Chicago-Kent College of Law, Combating Corruption in Kosovo, http://operationkosovo.kentlaw.edu (Oct. 23, 2006) at § III(C)(1)(b).

[42] CAAJCA 1995 Nr. 27.

[43] Message of the Federal Council of June 30, 1993.

[44] Donatsch Andreas/ Wohlers Wolfgang, Strafrecht IV, Delikte gegen die Allgemeinheit, 3rd ed.., Zurich 2004, § 46, p. 192.

[45]Stratenwerth Günter, Schweizerisches Strafrecht, Besonderer Teil II: Straftaten gegen Gemeininteressen, 5th ed., Bern 2000, § 40 N. 21.

[46] Donatsch Andreas/ Wohlers Wolfgang, Strafrecht IV, Delikte gegen die Allgemeinheit, 3rd ed, Zurich 2004 § 45, p. 187.

[47] Federal Prospectus 2002, p. 5432.

[48] See footnote n. 9.

[49] See Resolution (1373) 2001 of the U.N. Security Council (http://www.state.gov/s/ct/index.cfm?docid=5108).

[50]International Convention for the Suppression of the Financing of Terrorism of December 9, 1999.

[51] At the same time the Swiss government decided to ratify also the last outstanding convention, the International Convention for the Suppression of Terrorist Bombings, adopted by the General Assembly of the United Nations on 15 December 1997, Official Collection of Swiss Laws 2002, p. 2521.

[52] Official Collection of Swiss Laws, 2004, p. 2535.

[53] Message of the Federal Council 2002, p. 5391.

[54] Official Gazette 2002, p. 5391.

[55] Message of the Federal Council 2002, p. 5402.

[56] Message of the Federal Council 2002, p. 5391.

[57] “ Assets “ means every kind of property, compare SFSC 117 IV 238, also every gains of assets or any lowering of liabilities, Federal Prospectus 1993, III p. 307. p. 5432.

[58] Message of the Federal Council 2002, p. 5402.

[59] Message of the Federal Council, 2002, p. 5441.

[60] Rehberg, Jörg/ Flachsmann Stefan/ Kaiser Rolf, Tafeln zum Strafrecht, Allgemeiner Teil, 4th ed.., Zürich 2001, p.55.

[61] If a certain act is freedom fighting or terrorism will be decided in every case under discretion of the judge. Message of the Federal Council 2002, p. 5436.

[62] Message of the Federal Council 2002, 5436.

[63] Message of the Federal Council 2002, 5443.

[65] According to Art.°100quater°Section°4°SCC an entity is defined as private and public juristic persons as well as societies and sole proprietorships.

[66] An offender acts with “Dolus eventualis”, if he or she knows that there is a reasonable chance to commit a crime by acting in a certain way but still does it.

[67] Also liable under Art.260quinquies°SCC are all donors of the FMT which have intent to support and finance the insurgency.

[68] Also liable under Art.°260quinquies and Art.°305ter°SCC are the fortune tellers in ordinary of the FMT.

[69] Message of the Federal Council 2002, p 5442.

[70] Donatsch Andreas/ Wohlers Wolfgang, Strafrecht IV, Delikte gegen die Allgemeinheit, 3rd ed., Zurich 2004, IV, § 100, p. 409.

[71] Also not liable under Art.260quinquies and Art.305terSCC are all the Diners Club as the issuer of the used credit cards, the UBS as the issuer of the bank account for the MoM and the SWX, which was the trading platform for put options on Oiltec as well as for the commodity futures.

[72] Simon Schweizer could also get an administrative fine under Art.9MLA which imposes a duty for any financial intermediary to report, if he has suspicion that money could be in the sphere of control of a criminal organization or that it originally stems from a crime.

[73] Donatsch Andreas/ Wohlers Wolfgang, Strafrecht IV, Delikte gegen die Allgemeinheit, 3rd ed., Zurich 2004, §100, p.409.

[74] According to Art.14 Sec.1MLA no person can act as a financial intermediary without a license. Lydia Lipido would therefore be an administrative fine up to $150,000 after Art.36MLA.

[75] Also liable under Art.260quinquies in connection with Art.100quaterSec.2SCC is the McMiri Corporation. McMiri can not be dissolved by court order but they can be punished with high fines so that the corporation is likely to go bankrupt.

[76] „Contra bonas mores“ means against good morality.