With the end of the calendar year fast approaching, it provides an opportunity to take a step back and take stock of the year. The most common questions are often, what did we do well? Where did we do not so well and, how do we improve?
When looking back over the year from a financial crime perspective, it can be very easy take a “silo mentality”: these are our money laundering risks, those are the fraud risks and those are our terrorist financing risks. Whilst the benefits of taking a holistic approach to financial crime are often touted, is it really understood?
2015 has seen the continued spotlight on terrorist financing, and the challenges are huge. The tragic attacks of 2015 have made us realise just how vulnerable we can be. Systems and controls used to identify money laundering help when funding is from criminal activities; but difficulties remain when the funding is from legitimate activities.
I recently shared a news article in our LinkedIn Group which suggested that a bank loan was used to fund the recent terrorist gun attack in America. Whilst loan applicants can be screened against terrorist watch lists; a lender can’t screen for potentially extremists views.
The use of loans was also discussed in the FATF’s report “Emerging Terrorist Financing Risks” published in October this year. Terrorists have been known to use both personal loans and also committed loan fraud to source funding.
The report also highlighted a concerning tactic used by UK based extremists, “vishing” or voice phishing. Vishing involves phoning targets, typically vulnerable individuals, informing them that their account has been compromised. The fraudster persuades the victim to transfer their money into a criminal’s account or to physically withdraw cash and hand it over to the criminal. London based extremists have targeted vulnerable individuals in Devon, Cornwall, Dorset, Kent, Bedfordshire and London.
This type of scam is not new and is well used by fraudsters, and now it’s a tactic that has been adopted by terrorists.
To me, this highlights that it’s key that we do not limit ourselves to the silo mentality when assessing financial crime risk.
2016 will no doubt see new emerging trends and threats. By promoting greater awareness employees are in a better position to identify potential terrorist financing activities. Good quality internal suspicious activity reports allows for vital information sharing to FIUs.
So when looking back over 2015 and looking forward to 2016, keep an open mind, speak to other financial crime areas. Think of the vulnerabilities in your business that could be exploited by those looking to fund terrorism, because terrorist financers will continue to look for ways to exploit the vulnerabilities of businesses, sectors and even individuals to finance their activities.
International Compliance Association is launching a Specialist Certificate in Combating the Financing of Terrorism in 2016.
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