Terror Financing

Terror Financing Indicators:

• Terror finding activities under the cover of charitable activities and non-profit organizations
• Smuggling
• International trade
• Money-service businesses
• High-risk areas
• Diversion of interested parties/activities
• Criminal activity as a terror funding source

Concealment of funds used for terrorism is primarily designed to
hide the “purpose” for which these funds are used, rather than
their source as in the ML.

Both terrorists and money launderers use the same methods to
move their money in ways to avoid detection, such as structuring
payments to avoid reporting and underground banking, such as the
ancient system of hawala.

How to Detect Terrorist Financing ?

• Motivation: Ideological,
• Source of Funds: Externally from  benefactors and  fundraisers, internally from self-funding cells (increasingly centered on criminal activity),
• Conduits: Favors cash couriers or informal financial systems such as hawala and currency exchange firms,
• Detection Focus: Suspicious relationships, such as EFT between seemingly unrelated parties,
• Transaction Amounts: Small amounts usually below reporting thresholds,
• Financial Activity:  No workable financial profile of operational terrorists exists,
• Money Trail:  Linear-money  generated is used to  propagate terrorist  group and activities.

FATF

(1) Criminalisation of terrorist financing;
(2) Procedures to identify and freeze terrorist assets,
(3) Making legal persons subject to criminal liability in line with FATF Standards,
(4) Supervisory framework,
(5) Customer Due Diligence measures and
(6) Reporting requirements,
(7) Fully operational and effectively functioning of FIU,
(8) International co-operation.