The struggle to stop the flow of funds to terrorist organisations has clashed with the work of the Paris-based Financial Action Task Force (FATF) on money laundering, according to the British Broadcasting Corporation.

BBC News Online has reported on a dispute between the FATF and the International Monetary Fund (IMF) that may result in the end of the FATF initiative, which has dominated the international agenda for the past two years..

IMF moves to share the spotlight with the FATF, which is acknowledged as the existing international expert on money laundering and terrorist finance, are reported to be triggering tensions which the BBC says threaten to overturn some of the key techniques developed over the past decade.

Sources close to both organisations have told BBC News Online of fundamental differences between the two groups' practices and philosophies - and the fear that the result will be to delay at best, or handicap at worst, further progress in making sure countries around the world keep their defences up.

The report throws into sharp relief warnings leaked from a United Nations report due to be released today, that the fight against terror funding has run into insuperable difficulties.

That report, the BBC said, suggests that al-Qaeda continues to have no trouble raising money, with private donations of perhaps $16 million a year "continuing unabated" and investigators finding it "exceedingly difficult" to stop the flow of funds.

The US Treasury has denied the thrust of the UN report, with Deputy Assistant Secretary Rob Nichols saying that the UN had missed a great deal of relevant information.

"It's as if you're looking at a corner of a photo and trying to describe the whole picture," he said.

Nevertheless, the report is expected to reinforce the fear that the IMF's involvement could spell the end of the FATF's annual list of countries not doing enough to stop money laundering and terror finance.

Known as the Non-Cooperating Countries and Territories (NCCT) process, the current FATF list includes 15 jurisdictions, and the practice of "naming and shaming" is credited with encouraging a dozen more to clean up their acts.

Bermuda has never been on the FATF list, and is seen as a model jurisdiction for its legislative programme, active "know your customer" regulations and limited number of bank licences. The latest list of countries named by the FATF is: Burma, the Cook Islands, Dominica, Egypt, Grenada, Guatemala, Indonesia, the Marshall Islands, Nauru, Nigeria, Niue, Philippines, Russia, St. Vincent & the Grenadines, and Ukraine.

The BBC has reported that several IMF board members particularly from developing countries are strongly opposed to the NCCT process, accusing the FATF of punishing poor states while letting its richer members off the hook.

The price of the board members' acceptance of the IMF-FATF joint venture has been a one-year moratorium on the NCCT blacklist. Some fear the postponement will become permanent.

The FATF would not comment on the reported tussle with the IMF.

"As far as we're concerned, we have been working with (the IMF) to try to develop a common methodology that can be used worldwide," said Patrick Moulette, executive secretary of the FATF.

The IMF refuses to get involved with examining legal systems or law enforcement practices, the BBC reported, preferring to concentrate on financial regulation - a factor that worries experts like London lawyer Steven Philippsohn, among others.

"I do not think that sidelining the FATF and incorporating much of its work into the IMF/World Bank would be desirable or effective," he said.

The upshot, the BBC reported, is likely to be that FATF members - predominantly richer countries - will assess one another, while non-members will have their rules and practices assessed by the IMF and World Bank.

Since 1990 the FATF, with fewer than ten staff and a budget of less than $1 million, has set the international standards.

Its "Forty Recommendations", supplemented by eight Special Recommendations on terrorism published late last year, are the acknowledged rulebook on fighting money laundering and terrorist finance.

By mid-2001, co-operation between the IMF and the FATF had begun, in an attempt to draw up a single set of yardsticks based on the so-called "forty plus eight".

But after September 11, 2001, leaders of the G8 group of rich countries wanted the anti-money laundering profile raised, and the IMF and World Bank started to hold meetings on the subject last November.