Threat of Blacklist Motivates States in the Fight Against Terror Financing
26 Feb 2016

According to David Lewis, senior executive at Financial Action Task Force (FATF), the threat of being added to a public blacklist is compelling states into taking action against terrorism financing.

Since the Paris attacks last November, 50 countries have initiated or implemented legislative changes in response to FATF’s calls for tangible steps to combat the problem.

On the other hand, Lewis also emphasised the poor global track record in prosecuting financiers of terrorism, with only 36 countries convicting someone for the crime and just 40 using targeted financial sanctions.

Other methods he recommended include enabling swifter ways to freeze assets, which currently takes up to a month, and implementing better information sharing between FATF members’ intelligence services, after evidence came to light that some of the perpetrators of the Paris attacks were known to various intelligence agencies.

The comments come in the build up to the G20 meeting today in Shanghai, which will focus on the fight against terrorism financing.

More can undoubtedly be done at state level to frustrate terrorist financing flows but there is a genuine concern within the financial services sector that given how much carnage can be inflicted for such modest sums of money – the 9/11 attacks are estimated to have cost Al Qaeda a mere few hundred thousand dollars – the chances of identifying terrorist financing activity are in reality, very slim.

There are red flags that the industry is looking out for, but the smaller the sums involved, the more easily disguised the illicit funds destined for an atrocity become. The challenge for the industry is further magnified when perpetrators are embedded within target communities and display no signs of unusual activity. Any FATF standard or domestic legislative developments need to take the practical compliance challenges for the finance industry into account.

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