18 November 2022, New Delhi, India
Speech by T. Raja Kumar
Distinguished Chairperson, Ministers, Excellencies, and fellow delegates. I am delighted to attend this 3rd No Money for Terror event.
Ladies and gentlemen, terrorism remains a clear and present danger, a most serious threat to safety and security.
Combatting terrorist financing is an essential element of counter-terrorism, and is central to the mandate of the Financial Action Task Force, the FATF.
Part of the FATF’s work is setting global standards to prevent terrorist financing, detailing measures that all countries should implement.
Through its work, the FATF is playing a key role in the fight against terrorism.
I will be focusing my intervention on three aspects:
- One: the evolving terrorism financing threat, specifically what it is and how it is changing geographically and ideologically;
- Two: the impact of new tools and technologies, and
- Finally: FATF’s work to strengthen national responses to terrorist financing.
First: Emerging risks and trends in TF
As part of the FATF’s strategic focus on countering terrorist financing, we continue to actively monitor evolving terrorist financing risks.
In addition to these regular updates, the FATF is scanning for new trends and methods relating to terrorist financing.
This includes analysing new methods of generating and moving funds, such as online crowdfunding, and studying the risks of terrorist financing associated with ethnically or racially motivated terrorism.
This focus on both traditional and emerging risks enables the FATF to better help countries in tackling terrorist financing.
I will now speak specifically on the evolving terrorist threats emanating from two distinct categories of actors.
- ISIL, AQ and their affiliates, and
- ethnically or racially motivated terrorist individuals and groups.
First on ISIL, AQ and their affiliates. While both networks have suffered operational setbacks in the past few years, they continue to capitalise on conflicts and instability to exert influence over large geographic areas in the Middle-East and in Eastern, Central and Western Africa, attracting recruits and resources from all over.
These groups are engaged in a broad range of criminal activities to raise funds, including through the illegal contraband trade, extortion, looting, kidnapping for ransom and abuse of non-profit organisations.
We also see them smuggling cash and relying heavily on money value transfer services, in particular hawalas.
However, we have recently been observing changes in the mode of financing of ISIL and AQ with the use of crypto assets.
These groups have been increasingly exploiting crypto assets to raise and move funds both within the terrorist organisation itself, and more widely at regional levels - between the core group and its affiliates.
We can deduce that this is most likely the result of increased familiarity of these avenues among members, including its senior leadership.
Next on Ethnically-or-racially-motivated-terrorism-financing.pdf
They frequently have used digital platforms to request donations, such as through crowdfunding, and to collect membership fees.
They have specifically asked for payment in the form of crypto assets. These individuals and groups have also engaged in overt commercial activities to raise funds.
These include organising concerts, selling merchandise, whether online or through front companies, and purchasing real estate.
More broadly, as terrorist groups are increasingly denied access to traditional financial services, including to financial institutions and mainstream money value transfer service platforms, they are shifting to more covert means of transferring and managing funds.
This includes using crypto assets for fundraising and money transfers - even creating their own stablecoins - and turning to alternative tailored crowdfunding platforms when they are banned from mainstream ones for violating their terms of service.
Use of technology by countries to combat CFT
While it is of concern that these terrorist groups are leveraging new technologies, we – law enforcement, regulators, supervisors – must be ambitious in considering how experts in counter-terrorism and countering the financing of terrorism can use them too.
Indeed at the recently concluded Special Meeting in New Delhi last month, the Counter Terrorism Committee unanimously adopted the Delhi Declaration on countering the use of new and emerging technologies for terrorist purposes.
The FATF on its part has been assessing the impact of new technologies for operational agencies.
Some agencies have developed or sourced digital solutions to transform their workflows relating to anti-money laundering and counter terrorist financing, and to understand emerging risks.
Yet the progress of adapting to new technologies, especially by law enforcement agencies, is still slow.
This must improve, and improve quickly.
We need to fully exploit the capabilities that technology bring.
Two important ways to enhance our efforts are:
- First, countries need to embrace the use of advanced analytics and data pooling to better sense-make, derive insights into what is going on, and have the benefit of evidence to drive policy and operational actions; and
- Second, countries need to collaborate with the private sector. Public-Private Partnerships - enabled by tools such as encryption and privacy-enhancing technologies can help build trust, make for greater understanding and alignment of purpose and objectives, and overcome obstacles to collaboration.
Better data sharing between jurisdictions and between financial institutions and consequently better quality STRs enable counter-terrorism investigators to see more pieces of the puzzle, and enhances their ability to uncover terrorist networks.
FATF’s work to strengthen countries’ responses to TF
At the core of the FATF’s work to help countries tackle terrorist financing is an effective risk assessment process.
The FATF Recommendations require each country to identify, assess and understand the terrorist financing risks it faces, and to take appropriate action to mitigate them.
The ultimate aim of this process is to dismantle and disrupt terrorist networks.
To help countries achieve this, the FATF developed terrorist financing risk assessment guidance in 2019, recognising that countries were experiencing challenges in this area.
This guidance assists practitioners, particularly in lower capacity countries, in assessing terrorist financing risks at the national level by providing examples of good practices, relevant training courses and practical examples.
With a stronger understanding of the risks, countries can better adapt their responses to the terrorism and terrorist financing threats they face.
All but two FATF members have by now carried out a national risk assessment on terrorist financing.
Investigation and prosecution of terrorist financing is also key.
Assessments conducted by the FATF, and its Global Network have highlighted that many countries have major or fundamental weaknesses in investigating and prosecuting those who finance terrorism.
In response to this finding, the FATF developed tailored guidance in 2021 to help investigative and prosecutorial authorities by sharing real life cases. This builds upon the other guidance that FATF has issued:
To successfully tackle the threat of terrorism and their devastating impact, we must be fully invested in combating terrorist financing as a key pillar of this fight.
As many of us here today are well aware, terrorism remains a clear and present danger.
The FATF will continue to monitor the evolving and emerging risk areas, as well as supporting countries in strengthening their response to terrorist financing risks.
We will do our part.
But collectively, we must do more.
Countries must invest in new tools and capabilities to track evolving threats and respond to them.
We need national authorities to remain fully committed to working together and with industry on detecting, tracking and disrupting the financial flows that support terrorism.
We need a strong global network to tackle the terrorism threat.
No single country can achieve success alone.
This must be a highly collaborative effort: nationally, regionally and internationally.
It is only through our concerted - and collaborative – efforts, that we can be successful in this fight against terrorist financing & terrorism and prevail. Let there be No Money for Terror!