Assessing Terrorist Financing Risk: Key Obligations

The Financial Action Task Force (FATF) has established a set of core obligations for assessing terrorist financing risk. These obligations are designed to help countries identify and address the risks associated with terrorist financing, ultimately contributing to global efforts to combat terrorism.

Risk Assessment Methodology

To effectively assess terrorist financing risk, countries must establish a methodology that identifies, analyzes, and understands the risks involved. This includes:

Key Components of a Risk Assessment Methodology

• Identifying TF Risks: All aspects of raising, moving, storing, and using funds or other assets to meet the needs of terrorists or terrorist organizations must be identified.
• Considering Consequences: The consequences of terrorist financing, including the severity of consequences domestically and internationally, must be considered.
• Considering Factors Altering Conclusions: Factors that may alter the conclusion about the severity of consequences, such as the presence of effective counter-measures, must be taken into account.

Addressing Terrorist Financing Risks

Once a risk assessment has been conducted, countries can use targeted measures to address TF risks. These measures include:

Key Measures for Addressing TF Risks

• Strengthening Laws and Regulations: Countries should strengthen their laws and regulations to prevent terrorist financing.
• Enhancing Customer Due Diligence: Financial institutions should enhance customer due diligence to identify and prevent suspicious transactions.
• Implementing Risk-Based Approach to Supervision: Regulators should implement a risk-based approach to supervision to ensure that financial institutions are effectively addressing TF risks.
• Ensuring Effective Implementation of Targeted Financial Sanctions: Countries should ensure that targeted financial sanctions are effectively implemented to prevent terrorist financing.

Sharing Information and Monitoring Effectiveness

To further combat terrorist financing, countries must share information with other countries on TF risks and vulnerabilities. This includes sharing information on individuals and entities involved in terrorist financing. Additionally, countries must continuously monitor and evaluate the effectiveness of measures implemented to address TF risks.

Key Considerations for Sharing Information and Monitoring Effectiveness

• Sharing Information: Countries should share information with other countries on TF risks and vulnerabilities.
• Monitoring Effectiveness: Countries should continuously monitor and evaluate the effectiveness of measures implemented to address TF risks.