How Will Anti-Money Laundering Combat the Financing of Terrorism?

What is Anti-Money Laundering?

Anti-Money Laundering (AML) refers to the procedures, laws, and regulations designed to stop the practice of generating income from and for criminal practices. It does so by making it hard to disguise the origins and the destination of money, rendering it useless to criminals and, indeed, terrorists who rely on secrecy and discretion to avoid attention.

AML regulations require institutions to complete due-diligence checks on their customers to make sure they are who they say they are and that they aren’t aiding money laundering activities. The responsibility falls on the organisation to carry out the required protocol and works by increasing vigilance and making it impossible to fly beneath the radar.

Global recognition around AML rules and regulations rose when the Financial Action Task Force (FATF) was formed in 1989 because it set international standards for fighting money laundering. Groups like the FATF help to maintain and promote the ethical and economic advantages of a legally credible and stable financial market.

The UK’s AML regime has stepped up recently, as 2018 saw the launch of the new watchdog to strengthen the defences against laundering and terrorist financing. The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) is a group within the Financial Conduct Authority (FCA). They will work with AML supervisors to help improve general standards as well as working with law enforcements to prompt for improved cooperation.

Combating Terrorist Financing

Terrorist financing describes the activities that are carried out in order to provide financial support for acts of terror. It often works by using legally obtained assets to carry out illegal and violent activities. Financing can come from innocent sources, such as charitable organisations as well as legitimate businesses – but it can facilitate unthinkable things to happen. That’s why terrorists often don’t need to launder money in the first instance, but often need to reverse the laundering and disguise its destination instead.

The need for training facilities, equipment, and travel for terrorists means that they look to legal sources to fund their illegal plans. They may often find funding from states, private individuals, and organisations, because, sadly, there will always be people with the same opinions somewhere in the world that are willing to donate money towards the cause.

Terrorists can then either tap into the financial system to move the funds or move physical cash around (hidden, for example, in international packages). This is why the financial services within the regulated sector have features and measures in place to monitor suspicious trends. The AML regimes therefore serve as a way to fight against terrorism financing through tightening the rules and regulations that businesses have to follow, reducing their chances of raising funds for terrorism, whether they realise they’re doing it or not!

How are you managing your GDPR compliance requirements?

GDPR added a significant compliance burden on DPOs and data processors. Data breaches must be reported to the authorities within 72 hours, each new data processing activity needs to be documented and Data Protection Impact Assessments (DPIA) must be carried out for processing that is likely to result in a high risk to individuals. Penalties for breaching GDPR can reach into the tens of millions of Euros.

“In a world older and more complete than ours they move finished and complete, gifted with extensions of the senses we have lost or never attained, living by voices we shall never hear.”