World-Check: The Dangers of Privatizing Terrorist Lists

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February 11, 2016

The last ten years has seen rapid growth of private companies that sell lists of people and organizations that are either on a government terrorist list or have been mentioned in news stories, blogs and unverified online sources as having suspected ties to terrorists. With the size and scope of these organizations, concerns have been raised over the lack of accountability and redress for innocent people who find themselves on such lists. This is particularly problematic in the context of charitable giving and program operation, including financial access for charities in the age of bank de-risking.

A prime example of this trend is Thomson Reuters' World-Check, one of the largest databases of “individuals and entities deemed worthy of enhanced scrutiny." As of early 2016, World-Check alone contained an estimated 2.7 million names and organizations, with 93,000 of those designated as "terrorist." [1] This list is used by more than 4,500 institutions, 49 out of 50 of the largest banks in the world and 300 enforcement and regulatory agencies.[2]

World-Check sells access to its databases for the purposes of protection against money laundering, terrorist financing, and partner vetting for banks, governments, companies, and the civil society sector. Intelligence for the database is gathered from “hundreds of thousands of public sources including government, sanction and police sites as well as the national and international media.”[3] This could be problematic, as in the past some “news” sites, such as Jihad Watch, have published false or misleading information about persons accused of having ties to terrorism.[4] In early 2016, an investigative piece revealed that many of its terrorist designations were sources to Islamophobic blogs and other unrelieable sources. 
While World-Check is primarily geared toward financial institutions, they also market their services to charitable organizations. An August 2011 World-Check press release warned that, “In order to defend against the risk of financial crime and to maintain a good public reputation it is vitally important that charities are absolutely clear about who is donating money to them and who they are donating money to.”[5] One service offered by World-Check, “Know Your Customer,” is specifically designed to “establish whether a prospective customer is listed on any sanctions lists in connection with suspected terrorist activities, money laundering, fraud or other crimes.”[6]
Because World-Check actively links relationships such as family members and associates,[7] services such as “Know Your Customer” ignore the humanitarian imperative that charitable organizations have for beneficiaries. Individuals can be flagged without any evidence of wrongdoing. This could make some humanitarian organizations hesitant to provide aid to certain people, even when no real threat is present. This amounts to guilt by association.
Critics cite lack of accuracy, accountability
World-Check boasts that it is often ahead of OFAC and other sanctions lists in determining the suspect status of a person or organization. In 2010, “World-Check's Risk Screening database identified over 200 entities before they appeared on the US Government’s OFAC list.”[8] This kind of proactive approach has garnered criticism for the potential mistakes that could be made. Erich Ferrari, an attorney who specializes in OFAC litigation, said that “World Check’s proactive approach sends the wrong signals, in that it prematurely condemns individuals and entities to sanction-like consequences before those parties actually have sanctions imposed against them by a government organization with the authority to do so.” The CEO of World-Check, David Leppan, has admitted that they do use lower standards than the government to add entities to their database.[9]
Some fear that these lower standards will cause incorrect information to be unfairly applied to individuals and charities. Mary Culnan, a professor at Bently College, warns that there could be serious impacts on a person who has a similar name to another on the database. This could be particularly damaging because World-Check is used by so many financial institutions; “If all the banks are using the same system and they reach the same conclusion incorrectly, that is wrong” said Culnan.[10]
A report commissioned by the Canadian government to investigate the possible effect of private sector terrorist and money laundering databases shared many of the same concerns. The report noted that “individuals could be flagged ‘persons of special interest’ due to their economic activities” and that, “such determinations would be made behind closed doors…and would impose very real economic consequences upon an individual who had not been convicted in a court of law for any predicate offense to money laundering or terrorist financing.”Leppan does not dispute this fact, admitting that once a person is on the World-Check database, “the likelihood of them opening up a bank account or applying for a passport in their own name is very slim…”[11]
No delisting process
It would be difficult for a person or organization labeled as "terrorist" in the World-Check database to discover that was the source of its bank account closure or other difficulty, because banks are not obligated by law to inform customers of the reason for an account closure, and World-Check binds its users to secrecy.
If a listed entity does discover that it's part of the World-Check database, it's unclear how it can be de-listed. The Canadian report found that, “there do not appear to be any appeals processes nor privacy policies regarding individuals on these databases, nor any indication that an individual has any legal recourse except to sue for removal from such a database.” The “About” section of the World-Check website states that, “We realize that not all public information is accurate. We welcome requests under the Data Protection Act [a 1998 law passed by the U.K. Parliament for “the regulation of the processing of information relating to individuals, including the obtaining, holding, use or disclosure of such information] [12] to review data correlated so as our policy of being fair and just is adhered to.”[13]
Along with World-Check, the Canadian report found that Dow Jones, Oracle Mantas, Detican NetReveal, Verafin, and Lexis Nexis also had their own databases for identifying possible terrorists and money launderers.