Anti-Money Laundering (AML) and
Counter Terrorism Financing (CTF)


There have been many developments in efforts to combat Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF). One of these initiatives is the Financial Action Task Force (FATF), established in 1989, which aims to fight both AML and CTF, as well as other financial threats to the economy, by setting up laws and regulations that protect against the these illegal activities and help detect when they are taking place.

Below is more information about each one of these initiatives to fight illegal financial activity.


Anti-Money Laundering

Government guidelines surrounding money laundering are generally referred to as Anti-Money Laundering (AML). According to a study from the United Nations Office on Drugs and Crime (UNODC), in 2009, over 3% of the global gross domestic product was laundered illegally. Money laundering often occurs when a business owner sets up an actual, legitimate business, as a way to disguise the illegal activity going on behind the scenes. Many times these businesses will be cash-run so the transactions cannot be tracked or monitored as easily.

Anti-Money Laundering efforts can actually end up reducing other crimes as well. By identifying laundered funds, those funds can then be traced to other sources or persons performing illegal activities, and the funds can be returned to where they originally came from, which was often not an illegal interaction.

The International Monetary Fund (IMF), based out of Washington, D.C. and consisting of 189 countries, is another organization that monitors and dispels money laundering. The IMF was created in 1945 to help create financial stability and economic growth throughout the world, including the monitoring of international exchange rates and payments. The IMF also conducts and distributes key research in these areas.


Counter Terrorism Financing

Counter-Terrorism Financing (CTF) are laws and regulations that aim to stop the illegal financing of terrorism and terrorist-related activities. This includes the illegal funding of terrorist organizations themselves. Those who finance these organizations and activities typically try to disguise transactions by sending small amounts of money at a time, similar to money laundering tactics.

The FATF offers recommendations to prevent and monitor terrorism funding, as well as AML. These suggestions include risk assessments, customer due diligence, adequate record keeping, reporting, and requiring confidentiality, among others. The UN’s Office of Counter-Terrorism also has its own task force and detailed strategy in place, in addition to reports about how to tackle the funding of terrorist activities.

Money laundering and terrorism financing are  difficult to pin down because of the nature of  these illegal activities their long histories within the financial system worldwide. Governments have created organisations, tactics and policies that aim to protect against and track these activities. Although, they are unfortunately still taking place every day in many countries. Further education and research about these activities will open up new avenues for officials to effectively combat these illegal activities.