Terrorism and the Financing of Terrorism
Terrorism refers to the use of violent action in order to achieve some objective(s). These objectives are usually political or religious and are generally viewed as extremist. The Financing of Terrorism is the provision of resources (financial or in kind) for the carrying out of terrorist activities. Therefore, financing is the underlying mechanism that facilitates the violent attacks by extremists.
The link between money laundering and the financing of terrorism emanates from the recognition that if the financial flows that underpin organised criminal and terrorist activities could be reduced, it would likely make it easier to tackle the problems themselves. Criminals and terrorists have no respect whatsoever for laws, regulations, decency or ultimately, for human life. They will do whatever they need to do to clean the proceeds of their crimes, or channel legitimate funds to sponsor indiscriminate and violent attacks.
While the financing of terrorism has become strongly linked with money laundering, the basics of money laundering involve “cleaning’ large amounts of criminal proceeds. On the other hand, financing of terrorism can and does occur from minimal budgets. In most instances funds intended to support terrorist activities actually emanate from legitimate sources in the form of donations from sympathizers. The money may be generated through donations, fake charities, front companies, criminal activities and other mechanisms.
All of this money has to be processed and hidden in the world’s financial system, hence the urgency to deal with money laundering. However, there is evidence that money laundering is being increasingly achieved outside the traditional banking system through such methods as informal exchange or Alternative Remittance Systems (ARS). The Financial Intelligence Act seeks to broaden the scope of dealing with these threats by providing that all entities and individuals doing any business should report all suspicious and cash transactions for analysis by the Financial Intelligence Agency.