Terrorist Financing Risk Assessment: Understanding the Guidelines
The Financial Action Task Force (FATF) guidelines on terrorist financing risk assessment provide a framework for jurisdictions to identify and mitigate the risks associated with terrorist financing. In this article, we will summarize the key points from these guidelines.
Definition of Terrorist Financing
Terrorist financing refers to any action that provides financial or material support to individuals or groups with the intention of committing, participating in, or facilitating terrorist acts.
Key Activities Involved in Terrorist Financing
- Providing or collecting funds for terrorist purposes
- Participating as an accomplice in terrorist financing
- Organizing or directing others to commit terrorist financing
- Contributing to the commission of terrorist acts by a group of persons acting with a common purpose
Terrorist Organization
A terrorist organization refers to any group that:
- Commits, attempts to commit, or facilitates terrorist acts
- Participates as an accomplice in terrorist acts
- Organizes or directs others to commit terrorist acts
- Contributes to the commission of terrorist acts by a group of persons acting with a common purpose
Terrorist Financing Risk Assessment
A risk assessment is a product or process that identifies, analyzes, and understands TF risk and serves as a first step in addressing them.
Key Aspects of Terrorist Financing Risk Assessment
- Identify all aspects of raising, moving, storing, and using funds or other assets to meet the needs of a terrorist or terrorist organization
- Go beyond revenue-raising aspects and address terrorist procurement and facilitation networks
- Consider factors such as Foreign Terrorist Fighters (FTFs)
Distinguishing Between TF Risk and Terrorism Risk
TF risk and terrorism risk are often, but not always, interlinked. A jurisdiction with a low terrorism risk may still face significant TF risks.
Key Differences between TF Risk and Money Laundering (ML) Risk
- Funds used for TF come from both legitimate and illegitimate sources
- The end goal of TF is to support acts of terrorism, whereas ML is often aimed at transmitting funds to a legitimate enterprise
- TF risk requires more intelligence-led approaches, whereas ML risk is often enforcement-led