Financial Crime World

Terrorist Financing Risk Assessment: A Comprehensive Guide

Defining Terrorism and Terrorist Financing

What is Terrorism?

  • A terrorist act is an action intended to cause death or serious bodily injury to civilians or non-combatants with the purpose of intimidating a population or compelling a government to do or abstain from doing something.

What is Terrorist Financing (TF)?

  • TF refers to the provision or collection of funds, assets, or resources for the benefit of, at the expense of, or in support of terrorist individuals and organizations.

Criminalizing Terrorism and Terrorist Financing

International Framework

  • The International Convention for the Suppression of the Financing of Terrorism (1999) and relevant UN Security Council Resolutions (UNSCRs) provide a framework for criminalizing TF.
  • Recommendation 5 (R.5) and Recommendation 6 (R.6) set out specific requirements to implement targeted financial sanctions.

Terrorist Financing Risk Assessment

Understanding TF Risks

  • A TF risk assessment is a product or process that identifies, analyzes, and understands TF risks.
  • Assessments should cover all aspects of raising, moving, storing, and using funds or other assets for terrorist purposes.
  • This includes addressing terrorist procurement and facilitation networks, including Foreign Terrorist Fighters (FTFs).

Key Differences between TF Risk and Terrorism Risk

  • TF risk is often but not always interlinked with terrorism risk.
  • A jurisdiction may face significant TF risks even if it has a low terrorism risk.
  • The factors associated with TF risk are distinct from those associated with Money Laundering (ML) risk.

Terrorist Financing Risk vs. Money Laundering Risk

Understanding the Differences

  • While laundered funds come from the proceeds of illegal activities, funds used to finance terrorism may come from both legitimate and illegitimate sources.
  • Identification of ML risk is often enforcement-led, whereas TF risk requires more intelligence-led approaches.

Conclusion

These key points highlight the importance of understanding the complexities of terrorist financing risks and the need for effective risk assessments to address them.