Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)

 
 Financing of terrorism
Terrorism activities take place in many different forms ranging from isolated acts to planned activities of organised groups. The forms of financing of terrorism therefore vary accordingly. It comprises not only the financing of the terrorist acts as such, but also any support to the criminal network. Terrorist organisations require significant funding, both for the actual undertaking of terrorist acts, but also to other issues : to maintain the functioning of the organisation, to provide for its basic technical necessities, as well as to cover costs related to spreading related ideologies.

The sources of terrorist funding vary. Firstly, they may originate from illegal activities, ranging from low-scale criminality to organised crime (e.g. trafficking in drugs, weapons or human beings.) The origin of the funds might, however, also be legitimate, being provided for example by the members of the organisation (usually the newcomers) or obtained through the abuse of non-profit organisations. New funding techniques of terrorist organisations were recently identified by the FATF in respect of Da’esh (also known as the “Islamic State”). Given the way of its functioning, Da'esh recurred to new methods of funding which could be considered more inherent for a state, such as levering taxes or exploiting natural resources (such as in this case natural gas and oil).

The funding of terrorist activities often requires funds to be moved within or across jurisdictions. This might be done through official channels of the financial market and money remittances, through unregulated channels or with the use of cash couriers. A clear similarity can be identified between terrorist financing and money laundering, as in both cases efforts are made to hide the funds from the scrutiny of state authorities. The techniques to do so are also often similar. The FATF broadened in 2001 its mandate and expanded the application of its standards also to financing of terrorism. After initial consideration of counter-terrorist financing measures together with the AML measures, the FATF more recently focuses on identifying the differences between the two phenomena, with the with the view of adapting its standards to the particularities of terrorist financing (for example, based on the fact that not all terrorist financing sources are from illicit origin, such as the emphasis set on the abuse of NPOs).

The FATF Standards are based on several aspects. Primarily, they reiterate the requirements of international instruments concluded or issued in this area, requesting countries to adopt legislative measures which would ensure criminalisation of the offence of terrorism financing as a separate offence, covering all the elements as provided for by the Terrorist Financing Convention, as well as to put in place mechanisms to transpose the requirements of the UNSC resolutions issued in this respect (for further information on the UNSCRs adopted in this respect, please see the section Targeted financial sanctions). Further requirements are related to the application of preventive measures by the private sector, mirroring the measures established for the purpose of countering money laundering. Finally, particular requirements are formulated based on the specificities of terrorist financing, concretely the measures to be taken in respect of NPOs.

Overall, the initiatives of the international network increased its focus on terrorism and related terrorist financing with the events in the past years, in particular following the establishment of Da’esh. The work of international stakeholders broadened its focus on further related aspects, in particular measures concerning foreign terrorist fighters as well as measures adopted at the national level against the payment of ransoms.

MONEYVAL participates actively in the global activities against financing of terrorism. It undertakes evaluations of its Member States and territories with regard to the compliance of their implementation of the FATF Standards in this respect, as well as horizontal studies on particular issues to increase the understanding of the measures in place at national level and to identify potential difficulties in their implementation. It closely monitors measures put in place on national level against the payment of ransoms. It also participates in the global exercise initiated by the FATF on the overall assessment of the implementation of CFT measures by individual jurisdictions. In addition, MONEYVAL experts participate regularly in international conferences and workshops concerning combatting terrorism and terrorist financing.
 
Reference documents

International conventions
UN International Convention for the Suppression of the Financing of Terrorism (1999)
Convention for the Suppression of Unlawful Seizure of Aircraft (1970)
Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971)
Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (1973)
International Convention against the Taking of Hostages (1979)
Convention on the Physical Protection of Nuclear Material (1980)
Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988)
Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (1988)
Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (1988)
International Convention for the Suppression of Terrorist Bombings (1997)
 
Council of Europe
Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (CETS No. 141) (1990)
Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (CETS No. 198)
Council of Europe Convention on the Prevention of Terrorism (CETS No. 196)
Additional Protocol to the Council of Europe Convention on the Prevention of Terrorism
Guidance and typologies FATF Report 2015 - Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL)
FATF Typologies 2014 - Financial Flows linked to the Production and Trafficking of Afghan Opiates
FATF Typologies 2014 – Risk of Terrorist Abuse in Non-Profit Organisations
FATF Typologies 2013 – The Role of Hawala and other Similar Service Providers in Money Laundering and Terrorist Financing
FATF Typologies 2013 – Money Laundering and Terrorist Financing through Trade in Diamonds
FATF Typologies 2013 – Money Laundering and Terrorist Financing related to Counterfeiting of Currency
FATF and GIABA Report 2013 - Terrorist Financing in West Africa
FATF Typologies 2012 – Illicit Tobacco Trade
FATF Typologies 2011 - Organised Maritime Piracy and Related Kidnapping for Ransom
FATF Typologies 2008 – Terrorist Financing