The Financial Action Task Force (FATF) has released a new report underlining evolving terrorist financing (TF) risks, with the organisation warning regarding the gaps in countries’ ability to understand these trends and respond accordingly.
The Comprehensive Update on Terrorist Financing Risks report highlights that terrorists’ continuous ability to exploit the international financial system to assist with their activities and carry out attacks. Taking into consideration the different TF methods used, based on several factors and contexts, the report emphasises terrorists’ adaptability, underlining the need for risk-based counter-terrorist financing (CFT) measures.
Moreover, the report includes case studies spanning over 10 years to offer a comprehensive overview of the factors affecting TF risks, merging contributions from more than 80 jurisdictions across the FATF Global Network, research, and over 840 submissions from the private sector, academia, and think tanks.
FATF’s findings
Even if many jurisdictions have decided to take steps to address TF, the FATF’s report found that 69% of jurisdictions assessed by the organisation and the Global Network showcased major or structural issues in effectively investigating, prosecuting, and convicting TF cases. Additionally, the report mentions that unless both the public and private sectors increase technical compliance, those looking to finance terrorism will continue to exploit these vulnerabilities.
According to submissions from across the FATF Global network, the report underlines key trends in the development of terrorist financing over the last 10 years, including:
- A substantial increase in the mixed use of diverse methods of financing and the integration of digital technologies with conventional techniques, in turn adding more complexity to TF activities;
- Operations are more decentralised, with regional financial hubs and self-financed cells having an important role, adapting to local contexts, and leveraging a larger range of funding sources;
- An expansion in the threat posed by lone individuals, often younger, who utilise microfinancing strategies to draw from licit sources and petty crimes, as well as technology-supported methods, such as gaming and social media features;
- Difficulties in tracing financial trails to ethnically, racially, or politically motivated terrorist attacks;
- Convergences between terrorist financing schemes and organised crime.
Key recommendations from the FATF
To assist countries in responding to these issues, the report highlights key measures aimed at improving the Global Network's efforts in understanding and responding to TF, including solidifying international cooperation and developing targeted public-private relationships. Additionally, it offers a set of practical indicators to support competent authorities, the private sector, and other stakeholders to detect and mitigate TF, such as patterns in payments, travel activity, and social media activity.
