Crimes Typically Low-Value, Money Service Businesses Used Widely for Fund Transfers

Analysis of Suspicious Transaction Reports Reveals Trends in Terrorism Financing

A recent analysis of suspicious transaction reports (STRs) has uncovered that crimes related to terrorism and terrorism financing (TF) tend to involve low-value transactions. The study also found that money service businesses (MSBs), including pawnshops, are frequently used for these illegal activities.

Investigation Highlights

The investigation, which covered a period from 2018 to June 2022, showed that the majority of STRs were filed by MSBs and pawnshops, accounting for 61% in 2021. This trend continued in the current period, with MSBs (including pawnshops) reporting 89% of TF-related STRs.

Factors Contributing to Increased STRs

The data also indicated a significant increase in STRs from September 2020 to 2022, coinciding with the enactment of the Anti-Terrorism Act of 2020 and subsequent designations of local threat groups as domestic terrorists. Additionally, an uptick in STRs was observed during the Philippine General Election campaign period in March-June 2021.

Collaboration between Authorities Crucial

The narratives of some STRs suggest close coordination between the Anti-Money Laundering Council (AMLC) and covered persons, including MSBs, to detect possible financial transactions linked to terrorism and TF. The increasing awareness of these entities is attributed to regular updates on risk understanding through engagement with other law enforcement agencies and industry associations.

Recommendations

• Strengthen Monitoring and Reporting: Effective monitoring and reporting by MSBs and pawnshops are crucial in preventing illegal activities.
• Continue Collaboration between Authorities: Continued collaboration between authorities, including the AMLC, is necessary to combat terrorism financing and related crimes.
• Regularly Update Risk Understanding: Regular updates on risk understanding through engagement with other law enforcement agencies and industry associations are essential in staying ahead of evolving threats.

Key Findings

• Low-value transactions are common in TF-related crimes
• MSBs and pawnshops are frequently used for these illegal activities
• Anti-Terrorism Act of 2020 and designations of local threat groups contributed to increased STRs
• Election campaign period coincided with a surge in STRs