Keynote speech by FATF President Je-Yoon Shin at the Joint UN/FATF open briefing on depriving terrorist groups of sources of funding

Joint open briefing of the Counter-Terrorism Committee and the 1267/1989/2253 ISIL and Al-Qaeda Sanctions Committee with Member states, the FATF and other regional organisations.

Key Note Speech by Je-Yoon Shin
FATF President
14 April 2016, New York, United Nations

[as prepared for delivery]

Ambassador Amr Aboulatta, Chair of the Counter Terrorism Committee,

Ambassador Gerard van Bohemen, chair of the 1267/1989/2253 Sanctions Committee,

Your Excellencies, dear colleagues,

I thank you for inviting me. This meeting today is an opportunity to update member states, and follows my address to the Security Council in December.

Without money ISIL and its affiliates cannot operate.  The group needs funds to support their military operations, to attract new recruits and to maintain control over territories in which they operate. The importance of combatting terrorist financing is greater than ever, as highlighted by the continuing terrorist attacks across the world. Financial intelligence can reveal the structure of terrorist groups, the activities and travel patterns of individual terrorists, and their logistics network.

Effective and timely information sharing is critical. As we continue to see, intelligence agencies and law enforcement often hold information on the individuals involved in terrorist attacks before those events. Better and timelier sharing of this information, including with Financial Intelligence Units, could help detect and disrupt attacks before they happen.  The reliance on foreign terrorist fighters further highlights the importance of effective sharing of financial intelligence.

It is also important that all our measures respect the rule of law, universal human rights and civil liberties, as these are the values that terrorists are attacking in the first place.

FATF values our partnership with the UN. The FATF standards complement the Security Council resolutions by providing best practice on financial aspects.  And FATF offers technical guidance on how to implement targeted financial sanctions. Following the adoption of UNSCR 2178 in 2014, the FATF revised its standard to include the financing of individuals who travel for the purpose of terrorist training.  All our member states will be assessed against this standard.

The FATF also relies on the support of our Global Network of 9 regional bodies and 198 jurisdictions, to implement the standards and to share their knowledge of emerging terrorist financing threats.

What further steps is FATF taking to combat terrorist financing?

Since December, the FATF launched a new information gathering exercise from members on terrorist financing risks, challenges to information sharing and national approaches to addressing these risks and challenges. In February the FATF adopted a consolidated terrorist financing strategy.  This builds on existing efforts and sets out key policy objectives to guide the work of the FATF and its global network to combat terrorist financing. Two policy objectives are of particular importance.

Firstly, effective domestic coordination and international cooperation. The FATF held a private sector consultation in December to identify TF risk indicators, and areas of improvement for information sharing.  Next week the FATF will be holding its private sector consultative forum at the UN in Vienna. The focus of this meeting will be on barriers to information sharing from a private sector perspective, as well as practical solutions to these challenges. The EGMONT Group of FIUs has also established a working group to enable information sharing between FIUs. This includes both spontaneous and multilateral sharing of information.

Secondly, we need to continually improve and update our collective understanding of terrorist financing risks, and in particular the risks posed by ISIL. Early last year the FATF published a report on ISIL Financing, which highlighted the importance of centralized funding for the group.  This report remains the most authoritative source of information on ISIL financing. In recognition of the evolving threat, we also held a joint session in February with the Coalition Counter ISIL Finance Group to exchange information on current efforts to combat ISIL financing. Meeting participants from over 55 countries and international organisations discussed engagement strategies for countries where ISIL branches operate.

The FATF is also monitoring the negative impact of wholesale de-risking and financial exclusion of business sectors and business lines.  This includes money remitters and non-profit organisations, but also innovative Fintech start-ups. De-risking can drive financial transactions underground which reduces transparency and increases reliance on cash. Although new technologies can pose new risks, one should not underestimate the existing risks of cash and the use of high denomination notes. De-risking in turn impacts terrorist financing risks as the use of cash makes terrorist financing more difficult to detect.

There has also been rapid progress by many jurisdictions since November to fix the shortcomings in their terrorist financing framework that FATF identified last year. This work builds on a presentation that FATF made in December 2014 to the Counter-Terrorism Committee, which showed low levels of compliance among many states. As a result of our quick scan, thirty-seven jurisdictions have passed new laws or regulations. 21 jurisdictions are revising their laws. That leaves only 15 out of 194 states or jurisdictions that do not have a legal basis for applying the basic measures to counter terrorist financing.

The FATF will continue to work in close coordination with the UN. The recently adopted UNSCR 2253 ensures that counter terrorist financing measures apply to all forms of economic resources exploited by ISIL.  The FATF is currently analysing whether revisions to the FATF standards are necessary to integrate these new provisions. We will provide technical guidance to our members accordingly.

It is not enough to pass laws and regulations. Effective implementation of these measures is critical to successfully combating terrorist financing. Countries need to ensure that they use these tools effectively and that their authorities are properly trained and resourced. This includes law enforcement agencies, financial intelligence units and regulatory bodies. Countries also need to make sure that mechanisms are in place to facilitate the exchange of information between domestic authorities, the private sector and international counterparts.  The FATF must continue its work with the UN to promote and ensure effective implementation, including through overcoming barriers to information sharing.  

Thank you very much for your attention. 

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