FATF’s global efforts 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.

Since then, the terrorism threats have continued to evolve, from large terrorist organisations, to returning terrorist fighters and right-wing extremists. Funds flow cross-border to providing resources for nationally designated organisations, and many jurisdictions continue to suffer from persistent attacks from small cells and radicalised lone actors, drawing inspiration from a range of dangerous ideologies.

The FATF plays a central role in global efforts in combatting terrorist financing, through its role in setting global standards to combat terrorist financing, assisting jurisdictions in implementing financial provisions of the United Nations Security Council resolutions on terrorism, and evaluating countries’ ability to prevent, detect, investigate and prosecute the financing of terrorism. Yet many countries have not yet implemented the FATF Standards effectively. They do not understand the nature of terrorist financing risks they face, nor have effective means to combat them.

The FATF Strategy on Combating Terrorist Financing sets out the broad objectives for FATF’s work in this area. Under this strategy, the FATF, in close collaboration with the regional FATF-style regional bodies and other partners such as the UN, the FATF has completed work to support countries around the world in combatting terrorist financing.

Improve and update the understanding of terrorist financing risks

Terrorist financing risks are continuously changing in different regions around the world. Understanding these risk is a key part of a county's counter-terrorist financing regime, as this allows them to allocate resources to detect or disrupt terrorist financing.

Ethnically or Racially Motivated Terrorism Financing

This report aims to increase the understanding of terrorist financing risks related to extreme right wing actors. It encourages countries to continue to develop their understanding of this increasingly transnational criminal activity, including by considering ethnically or racially motivated terrorism financing in their national risk assessments.

Other relevant reports:

Terrorist Financing Risk Assessment Guidance This guidance aims to assist practitioners, and particularly those in lower capacity countries, in assessing terrorist financing risk, by providing good approaches, relevant information sources and practical examples based on country experience.
Financing of Recruitment for Terrorist Purposes Recruiting members and supporters is crucial to a terrorist organisation's survival. This report increases understanding of different recruitment approaches and their funding needs and will help authorities detect and disrupt recruitment activities for terrorist purposes.
Terrorist Financing in West and Central Africa This joint FATF-GIABA-GABAC report reveals a number of terrorist financing threats and vulnerabilities that are specific to the West and Central Africa region, and highlights the role of cash, including foreign currency. The report looks at the contextual factors and the challenges that the region faces to regulate financial products and sectors. The report highlights the need for countries in the region to work closer together as well as with the broader international community to identify and disrupt terrorist financing.
Risk of terrorist abuse in non-profit organisations Terrorist organisations need funds, material, personnel and public influence to carry out their illegal activities. Non-profit organisations NPO rely on the same capabilities to further their legitimate and good causes. This typologies report examines in detail, how and where NPOs are at risk of terrorist abuse and provides a number of red flag indicators to help all stakeholders identify and investigate possible cases of abuse.

Ensure that FATF Standards provide the framework for countries to tackle terrorist financing

Revisions to the Standards have included the explicit inclusion of the need to criminalise the financing of travel for the purpose of the perpetration, planning, preparation of or participation in, terrorist acts, or providing or receiving terrorist training.

Improve and update the understanding of terrorist financing risks

The FATF Recommendations The FATF Recommendations are the basis on which all countries should meet the shared objective of tackling money laundering, terrorist financing and the financing of proliferation. The FATF calls upon all countries to effectively implement these measures in their national systems.

Ensure countries are appropriately and effectively implementing the FATF Standards

To effectively identify and disrupt terrorist financing activity, public and private sectors need to take the necessary action. FATF issues guidance (both public and confidential) to help public and private sectors effectively implement its requirements. FATF publishes mutual evaluation reports that set out the extent to which this has been done in the assessed country. The sections on Recommendations 5-9 and Immediate Outcomes 9-10 are of particular relevance to terrorist financing.

FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems The FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems sets out the evaluation process.
Guidance on Criminalising Terrorist Financing This Guidance paper on the criminalisation of terrorist financing will help countries implement each of the requirements of Recommendation 5, and explains the various aspects that the terrorist financing offence must cover in national legal systems.
Best Practices on Combating the Abuse of Non-Profit Organisations The NPO community provides vitally important services around the world. However, this sector is also abused by terrorists and terrorist organisations, from the creation of fake charities to funnel money to terrorists, to the abuse of legitimate NPOs without the knowledge of its donors, management, or staff. With input from governments and the private sector, including NPOs, the FATF has revised its best practices, aimed at preventing misuse of NPOs for the financing of terrorism while, at the same time, respecting legitimate actions of NPOs.
Mutual Evaluations The FATF conducts peer reviews of each member on an ongoing basis to assess levels of implementation of the FATF Recommendations, providing an in-depth description and analysis of each country’s system for preventing criminal abuse of the financial system

Identify countries with strategic deficiencies for terrorist financing.

Global safeguards to combat terrorist financing are only as strong as the jurisdiction with the weakest measures, with terrorist financiers able to circumvent weak AML/CFT controls to successfully move assets to finance terrorism through the financial system. A key objective of the FATF is to continually identify jurisdictions with significant weaknesses in their AML/CFT regimes, and to work with them to address those weaknesses.

High-risk and other monitored jurisdictions The FATF identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) in two FATF public documents that are issued three times a year. The FATF’s process to publicly list countries with weak AML/CFT regimes has proved effective.

Promote effective domestic coordination and international cooperation to combat the financing of terrorism.

This includes the FATF working closely with the FATF Regional bodies, and other key partners such as the UN.

FATF Guidance - Private Sector Information Sharing This FATF guidance clarifies key FATF Standards on information sharing and provides examples to overcome information sharing, both group-wide withing financial groups, and between financial institutions which are not part of the same group.
FATF President's Paper: Anti-money laundering and counter terrorist financing for judges and prosecutors This paper presents the findings of the FATF's global outreach programme to the criminal justice systems, initiated by FATF President Santiago Otamendi. It identifies the challenges, useful elements and best practices in the investigation and prosecution of money laundering and terrorist financing, and in the recovery of the proceeds of crime.