What is Terrorist Financing? Types of Financial Crime

What Is Terrorist Financing?

What is terrorist financing? Terrorist financing is one of the types of financial crime performed to support terrorists or terrorist organizations or to commit acts of terrorism. Terrorist financing is the provision or collection of funds with the intention that they should be used to carry out acts that support terrorists or terrorist organizations or to commit acts of terrorism. Terrorist financing includes the financing or aiding, abetting, and facilitating of terrorist acts and terrorists and terrorist organizations. It is a collection of funds, by any means, directly or indirectly, intending to be used, in full or in part, to carry out terrorist activities. 

What Is Terrorist Financing?

What is Terrorist Financing?

The motivation behind terrorist financing is generally ideological as opposed to profit-seeking, which is generally the motivation for most crimes associated with ML. Terrorism may be financed through illegal activity or using legitimately derived and owned funds. 

The purpose of terrorist financing is not to hide illegal money but to suppress a population or state through violence and coercion and raise funds to finance criminal acts. 

Criminals may use the financial system or channels to perform terrorist financing activities. Therefore, organizations are required to ensure that such activities are prohibited through a robust system of controls. Understanding the sources and methods of money laundering and terrorist financing in a jurisdiction is essential for competent authorities to develop and implement an effective anti-money laundering or counter-terrorist financing program, commonly known as AML/CFT.

A national money laundering or terrorist financing is known as ML/TF risk assessment should be considered the foundation for setting AML/CFT policy priorities and resource allocation.

Financing terrorism, on the other hand, refers to an illegal action in the future; the purpose of terrorism financing is not to collect, profit, or accumulate in the future. Its purpose is to finance terrorist acts, whether legal or illegal, for their terrorist activities; that is, the purpose is purely ideological. At this point, the motivation for the two crimes is entirely different.

What Is Terrorist Financing?

Terrorist financing is the provision of funds for terrorist activity. It may involve funds raised from both legitimate sources, such as personal donations and profits from businesses and charitable organizations, and criminal sources, such as drug trafficking, fraud, smuggling of weapons and other goods, kidnapping, and extortion.

Terrorists use money-laundering techniques to avoid detection by authorities and to protect the identities of their sponsors and the ultimate beneficiaries of the funds. Terrorist financing can also be linked to money laundering if criminal proceeds are used to fund terrorist activities. However, financial transactions associated with terrorist financing are typically in smaller amounts than money laundering. When terrorists raise funds from legitimate sources, it becomes more difficult to detect and track these funds.

Final Thoughts

Terrorism’s face has shifted in recent years. With the emergence of terrorist cells and the absence of essential intricate networks and command structures seen with organized terrorist groups, the nature of attacks has become simpler. Recent attacks have been carried out by lone actors or small cells, and Financial Intelligence Units can play an important role in identifying or detecting the purchase of materials that could be used in a terrorist attack. Prior to an attack, financial indicators can help detect relevant transactions.