No Funds or Assets for Designated Terrorists
In a major move to combat terrorism, international authorities have issued new guidelines requiring countries to ensure that no funds or assets are made available, directly or indirectly, to or for the benefit of any person or entity designated by, or under the authority of, the United Nations Security Council under Chapter VII of the Charter of the United Nations.
Preventing Terrorist Financing
Non-Profit Organizations
Countries have been urged to identify organizations which fall within the FATF definition of non-profit organizations (NPOs) and take measures to prevent them from being used for terrorist financing. NPOs are defined as organizations that operate with the primary goal of providing humanitarian, social, or community services.
Record-Keeping Requirements
Financial institutions have been instructed to maintain records on transactions, including domestic and international transactions, for at least five years. These records must be sufficient to permit reconstruction of individual transactions and provide evidence for prosecution of criminal activity.
Politically Exposed Persons
Financial institutions have been required to take additional measures when dealing with foreign politically exposed persons (PEPs). These measures include:
- Having appropriate risk-management systems
- Obtaining senior management approval
- Taking reasonable measures to establish the source of wealth and funds
- Conducting enhanced ongoing monitoring of business relationships
Correspondent Banking
In relation to cross-border correspondent banking and other similar relationships, financial institutions have been required to:
- Gather sufficient information about respondent institutions
- Assess their AML/CF controls
- Obtain approval from senior management before establishing new correspondent relationships
- Clearly understand the respective responsibilities of each institution
- Ensure that “payable-through accounts” are properly managed
Strengthening Efforts Against Terrorism
These measures are aimed at preventing the misuse of non-profit organizations and correspondent banking relationships for terrorist financing. The international community has come together to strengthen its efforts against terrorism, and these guidelines are a significant step forward in this fight.