Definition of Terrorist Financing:
Terrorist financing involves the solicitation, collection or provision of funds with the intention that they may be used to support terrorist acts or organisations. Funds may stem from both legal and illicit sources.
A common feature of terrorist financing and money laundering is the disguising of the ultimate destination of the funds.
FATF (The Financial Action Task Force) defines the risks as a function of three factors:
Threat: criminals, terrorist groups and their facilitators, their funds, as well as the past, present and future money laundering or terrorist financing activities.
Vulnerability: factors that represent weaknesses in systems or controls or certain features of a country.
Consequence: refers to the impact or harm that money laundering or terrorist financing may cause and includes the effect of the underlying criminal and terrorist activity on financial systems and institutions, as well as the economy and society more generally. The consequences of money laundering or terrorist financing may be short or long term in nature and also relate to populations, specific communities, the business environment, or national or international interests, as well as the reputation and attractiveness of a country's financial sector.
A more detailed analysis of financial crime, together with specific examples, can be found within the Financial Crime module at www.tradefinance.training