Defining Terrorism

The US Federal Bureau of Investigation (FBI) defines terrorism as using violence and intimidation to pursue political, social, or ideological goal.

While people often associate terrorism with violent acts, not all terrorism involves direct violence. Nonviolent terrorism, such as distributed denial of service (DDOS) attacks or disrupting public utilities like water or electricity plants, can also have devastating effects.

A few common funding methods to fund terrorism include using crowdsourcing platforms, charities and NGOs to fund their objective.

Though Money laundering (ML) and terrorist financing (TF) are both heinous crimes, they differ primarily in the ultimate beneficiaries of the crime and the sources of funds or origin. Terrorist activities are frequently funded through crowdsourcing or front businesses like charities or NGOs. Terrorists require a steady flow of funds, which involves raising, storing, moving, and using money. Without these financial resources, terrorist groups and criminal organizations cannot sustain themselves. Funding sources and requirements vary by the group’s size, mission, and infrastructure, making it crucial to identify their funding streams. Often, terrorist financing involves small amounts of money that do not fit typical customer profiles, such as funding for travel and equipment for foreign fighters.

Finance is both essential and a significant vulnerability for terrorists. Funds can be traced, and their flow disrupted, exploiting terrorists’ financial dependency. Identifying and following the money is vital to detecting and disrupting terrorist groups.

Analysing Terrorist Financing

When analysing suspected terrorism financing, consider three main factors:

1. The origin of the funds.
2. How funds move from the organization to operations.
3. How funds are transferred from operations to individuals.

Charitable and non-governmental organizations (NGOs) are under scrutiny from financial intelligence units and regulators due to their potential for misuse. Criminals can exploit these organizations’ perceived credibility to funnel funds to terrorist groups. It’s relatively easy to set up a shell company or charity with an online presence to appear legitimate, attracting funds from supporters, which can then be redirected to terrorist activities.

Identifying Red Flags and Prevention

Context is crucial in evaluating charitable organizations. Indicators of misuse include transfers to high-risk jurisdictions without a clear economic purpose, geographic activity not aligning with the customer’s expected use, and suspicious IP addresses accessing accounts.

Some red flags include:

• Use of charity transactions to hide terrorist support.
• Smaller amounts of money involved compared to money laundering.
• Funnel account patterns where multiple transfers are consolidated to a high-risk recipient.
• Unusual patterns of activity, such as routine cash deposits decreasing, or transfers labelled as “humanitarian support” being sent to obscure entities.

Terrorist financing is a serious threat and FI’s should deal with them with appropriate controls respective to their jurisdiction and take necessary and swift actions to prevent such activities.

Did I miss out on anything important, or do you have any suggestions to improve detection of TF activities, please feel free to share/comment.

Humans Against Crocs – The Battle beyond the wetlands

In the lush wetlands of Queensland, a dangerous group of crocodiles, led by the cunning Old Captain Snapper, devises a plot to occupy a significant part of the region. Their strategy? Crowdfunding and setting up fake NGOs in Croc Land to bypass regulatory bodies and finance their territorial expansion.

Old Captain Snapper and his gang launch a convincing online campaign under the guise of a charity called “Wetland Warriors.” This NGO claims to focus on preserving the wetlands and protecting wildlife. The website, filled with photos of serene landscapes and adorable baby crocs, tugs at the heartstrings of unsuspecting donors worldwide.

Donations flood in from well-meaning people across the globe, eager to support what they believe is a noble cause. Each contribution, often labelled “habitat support” or “wildlife conservation,” is carefully funnelled through a complex network of bank accounts to obscure the real purpose: funding the crocs’ militant operations to seize control of Queensland’s prime territories.

The crocs use advanced techniques to move these funds without raising suspicion. They employ tech-savvy critters like turtles to handle the digital transactions and messenger birds to deliver encrypted messages, ensuring their activities remain hidden from human regulators.

However, a sharp-eyed human banker named Emily notices something amiss. She sees large sums of money being transferred to high-risk areas, supposedly for “habitat restoration,” but with no real conservation work happening on the ground. Sensing foul play, Emily alerts the bank’s anti-financial crime team, who initiate an investigation.

The team delves into the transactions of Wetland Warriors, uncovering a sophisticated network designed to launder money. They discover IP addresses accessing the accounts from remote riverbanks, inconsistent with the NGO’s claimed urban office. Further scrutiny reveals that many funds are being sent to a newly established outpost deep in Croc Land.

As the human regulators connect the dots, they realize the crocs’ true intentions. They collaborate with local law enforcement and environmental agencies to disrupt Captain Snapper’s operations. Following the money trail, they identify key figures in the crocodile clan and cut off their financial supply lines.

The crackdown forces the crocs to retreat, their grand plans foiled by the vigilance of Emily and the rigorous financial controls in place. The authorities launch a comprehensive cleanup operation, ensuring that no fraudulent NGOs like Wetland Warriors can operate again.

Through this ordeal, the human regulators strengthen their transaction monitoring systems, making it harder for any future schemes to escape detection. The wetlands of Queensland remain under human control, safeguarded against the devious plots of the crocs.

In the end, the crocs are pushed back, but they remain a lurking threat, always seeking new ways to finance their ambitions. The humans, now more vigilant and prepared, stand ready to protect their homeland from any such schemes in the future. The battle for Queensland is far from over, but for now, the region is safe, and the financial ecosystem is more robust against such ingenious threats.

Note-: On a serious note, terrorist financing is a serious threat and FI’s should deal with them with appropriate controls respective to their jurisdiction and take necessary and swift actions to prevent such activities.

Did I miss out on anything important, or do you have any suggestions to improve detection of TF activities, please feel free to share/comment.