Terrorist Financing

   

Follow the money

Terrorists need money to carry out their atrocities, money for weapons, for supplies to make explosives, for travel.

This money trail will provide valuable information to investigators and often allow them to identify those involved in the terrorist attacks. More importantly, by depriving terrorists and terrorist organisations of access to funding and the financial system, terrorist attacks could be prevented. 

The FATF is leading work globally to understand the risks countries face from terrorist financing and develop policy responses to all aspects of it.

FATF’s strategy on combating terrorist financing

Combatting terrorist financing has been a priority for the FATF since 2001. However, in 2015, the scope and nature of terrorist threats globally intensified considerably, with terrorist attacks in many cities across the world, and the terrorist threat posed by the so-called Islamic State of Iraq and the Levant (ISIL/Da’esh), and by Al-Qaeda and their affiliated terrorist organisations, and by other terrorist organisations also becoming more significant. In December 2015, the FATF agreed that further concerted action urgently needs to be taken to strengthen global counter-terrorist financing regimes to combat the financing of these serious terrorist threats, and contribute to strengthening the financial and economic system, and security.

Today, FATF's work focuses on the following areas, set out in detail in a FATF Consolidated Strategy on Combating Terrorist Financing .

  Improve and update the understanding of terrorist financing risks, in particular the financing of ISIL/Da'esh
  Ensure that the FATF Standards provide up-to-date and effective tools to identify and disrupt terrorist financing activity
  Ensure countries are appropriately and effectively applying the tools, including UN Targeted Financial Sanctions, to identify and disrupt terrorist financing activity.
  Identify and take measures in relation to any countries with strategic deficiencies for terrorist financing
  Promote more effective domestic coordination and international cooperation to combat the financing of terrorism

 

 

Understand terrorist financing risks

   

Terrorist constantly adapt how and where they move their funds in order to circumvent safeguards that countries have put in place.  They will use new technologies or products such as social media payments to attract and move their money.  An important aspect of FATF’s work is to identify and research the most prevalent trends as well as new terrorist financing sources and the methods that terrorist use to manage their assets, and raise awareness with countries and financial institutions.  Understanding how a terrorist organisation raises, moves and uses its funds is critical to choking of the funds and to disrupting their atrocities. Key reports include: 

see also 

A joint FATF-CIFG meeting brought together 55 states and multilateral organisations, including the United Nations, the Egmont Group of Financial Intelligence Units, the International Monetary Fund, the World Bank and other stakeholders to exchange information on current efforts to combat ISIL financing. 

FATF will continue to research ISIL financing and the impact of recent action against ISIL. This work will be done in close collaboration with the UN, the Counter-ISIL Financing Group (CIFG), the Egmont Group, Interpol and other stakeholders.

 

Up-to-date and effective FATF Standards to combat terrorist financing

   

The FATF Recommendations, interpretive notes and guidance, provide countries with comprehensive tools to detect and disrupt terrorist financing activity.  FATF strenghtened the FATF Recommendations - or FATF Standards - in October 2015 to address the threat posed by foreign terrorist fighters, following the adoption of United Nations Security Council Resolution 2178.  Recommendation 5 requires countries to criminalise financing the travel of individuals who travel to a State other than their States of residence or nationality for the purpose of the perpetration, planning, or preparation of, or participation in, terrorist acts or the providing or receiving of terrorist training. 

see also: 

 

Ensure countries are appropriately and effectively applying the tools (as set out in the Standards) to identify and disrupt terrorist financing activity

   

Through its assessment and follow-up processes, the FATF determines how well countries are using these tools and provides recommendations to the countries on how they can be more effectively used.  FATF updated its Methodology for assessing compliance with the FATF Recommendations to reflect the increased focus on terrorist financing activity.  

An FATF review of measures to cut off terrorism-related finance in the jurisdictions which take part in the FATF’s global network on anti-money laundering and countering terrorist financing and reported the findings to the G20. The review found that most countries had comprehensive legal frameworks, although many countries still did not have basic measures in place to combat terrorist financing. By February 2016, more than 50 countries had amended their legislation, or were in the process of doing so.

 

Identify countries with strategic deficiencies for terrorist financing

   

Global safeguards to combat money laundering and terrorist financing (AML/CFT) are only as strong as the country with the weakest measures.  Terrorists can circumvent weak AML/CFT controls to successfully move assets to finance terrorism through the financial system. A key objective of the FATF is to identify countries with significant weaknesses in their AML/CFT system, and to work with them to address these weaknesses. The FATF’s process helps protect the integrity of the international financial system by issuing a public warning about the risks emanating from the identified countries. These public warnings also put pressure on the countries in question to address these deficiencies in order to maintain their position in the global economy. Public identification, or the prospect of public identification, encourages countries to swiftly make significant improvements. 

 

Promote effective domestic coordination and international cooperation

   

It is often necessary to use a wide range of information to detect terrorist financing, identify the terrorists involved, and prevent a possible terrorist attack. 

This information is usually available in various locations, held by different agencies and not linked up.  Each individual fragment of this puzzle may not immediately raise concerns.

Governments need to make more effective use of financial intelligence, enable and improve better information sharing, and make more use of the powers they have to cut off terrorist financing.

The private sector, such as banks, have an important role to play in stopping terrorist financing. It is through them, that terrorists could attempt to gain access to the global financial system.  Banks’ understanding of terrorist financing, their vigilance, and their ability to take the necessary action and alert the national authorities, is essential. To assist the private sector, the FATF will develop terrorist financing indicators to help them detect possible cases of terrorist financing.

 

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