The terrorist financing involves the provision of funds to individuals and groups for the purposes of committing terrorist acts. Terrorism financing resembles money laundering in the sense that it often requires criminals to conceal the transfer of funds within the legitimate financial system.
Terrorists may use high-profile people of the country, to support them in the terrorist activities and for private gain. Terrorists may use public officials, who may abuse the authority of their public office for personal gain, which interferes with democracy and the rule of law. Corruption also may be committed by private individuals who abuse their positions for personal gain, which can hinder fair market operations and distort competition.
There is a song called “Money makes the world go around” and this is true also for terrorists and terror organizations. Money is the lifeblood of terrorism. Terrorist organizations require significant funding, both for the actual undertaking of terrorist acts, but also for other issues. In particular to maintain the functioning of the organization, provide for its basic technical necessities, as well as to cover costs related to the spreading of their ideologies.
Terrorist Financing Definition
Terrorist financing can be described quite simply as the financing of terrorist acts, terrorists, and terrorist organizations. But terrorist financing is more than just providing the money to them. Terrorist financing can also involve the facilitation of terrorist acts using other assets or stores of value such as oil and natural resources, property, legal documents, financial instruments, and others. But terrorist financing does not stop there. Terrorists also make more and more use of modern technologies, including the blockchain and cryptocurrencies. They use channels to help fund attacks more easily than they could ever do with fiat currencies.
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 of 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.
The Motivation Behind 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 the use of 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 the terrorist financing activities, therefore, organizations are required to ensure that such activities are prohibited, through 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/counter-terrorist financing (AML/CFT) programme. A national money laundering/terrorist financing (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 between the two crimes is completely different.
Terrorist financing refers to the provision of funds or financial assistance to individual terrorists or non-state actors. Most countries have implemented counter-terrorism financing measures, often as part of their anti-money laundering legislation.