Terrorism Financing (TF) and Counter-Terrorism Financing (CTF)
It was during the Cold War that terrorism financing first evolved when groups engaged in civil wars and insurgencies were funded by state-sponsored interests. In the aftermath, civil wars were funded by money from criminal activity; such as armed robbery, extortion, human trafficking, and kidnapping for ransom. However, the 9/11 terrorist incident brought to the fore the changes in terror operations that were more globally networked and funded than ever before. A question arose. How could ISIS build such a massive financial base? It was eventually learned that huge money was smuggled out of Iraq and Syria and invested in legitimate businesses – hotels, farms, and car dealerships – in the region. This enabled easier transfer of money globally, evading scrutiny of any financial regulators in other countries.
With the nature of crime and terror incidents undergoing a transformation and terror attacks emerging a common global threat, crime watchdogs concluded that checking to finance was the only way to control global terror.
– Identifying money laundering processes used to finance terror activities,
– Following the money trail of terrorist organizations /suspicious individuals, and
– Connecting terrorist attacks with money trails for countering such terror operations in future.
What is Terrorism Financing?
According to the FATF, Terrorist financing is the financing of terrorist acts, and terrorists and terrorist organisations. This involves the generation and movement of funds for the sole purpose of committing terror acts or sustaining a terrorist network or organisation.
Terrorism financing typically involves three stages:
1. Raising of funds,through donations, self-funding, microloans or criminal activity.
2. Transferring funds,to a terrorist, terror network, organisation or cell.
3. Using the funds, for instance, to purchase weapons or bombs, to make payment to terrorists or insurgents, or funding expenses of terror networks.