The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) recently published a Special Bulletin on Ideologically Motivated Violent Extremism (IMVE) profiling terrorist financing activity identified through the analysis of suspicious transaction reports and other sources including academic research and media reports.
It states that "terrorism threats posed by IMVE threat actors are on the rise around the world" and points to warnings in last years Trend Report update from the UN Security Council's Counter-Terrorism Committee Executive Directorate (CTED) "that extreme right-wing terrorists are using COVID-19-related conspiracy theories and disinformation to radicalize, recruit and fundraise, as well as seeking to inspire plots and attacks".
The FINTRAC bulletin followed the recent inclusion of 4 additional IMVE groups on Canada's list of terrorist entities but contains some financial activity indicators that all financial institutions, money services businesses and payment processors, should be aware of no matter where they are located.
The indicators covered personal and business account activity.
|Personal account activity||Business account activity|
|Absence of expected personal transactions such as normal debit and credit account activity and/or paying bills||Absence of regular salary payments and business-related activity, except insurance and loan payments|
|Sudden cessation of personal activity||Funds received from and sent to unrelated businesses that do not align with the client’s business profile|
|Numerous and frequent electronic money transfers followed by the depletion of funds through transfers to third parties||Absence of business-related purchases|
As with all red flags, these shouldn't be viewed in isolation but considered alongside other indicators and intelligence.
Further examples of relevant indicators include
- Higher than expected volumes of small cash deposits
- Multiple transactions just under reporting thresholds
- Transactions where one of the parties is subject to frequent and relevant adverse news coverage
- Multiple transactions which are inconsistent with expected patterns
For financial institutions, money services businesses and payment processors, integrating these and other red flag indicators with threat intelligence feeds, adverse media screening and the insight gained from customer due diligence into your transaction monitoring regime can help identify transactions that could be related to the financing of terrorist activities.
If you need some help to do that, please contact Neal Ysart, Lead Regulatory & Investigations Advisor at email@example.com / Tel: +971 55 138 9250 or your usual Clyde & Co point of contact.
The continued use of business accounts by IMVE-related actors could enable groups to raise larger amounts of funds under the guise of legitimate business transactions. This is because business transactions are generally larger than those involving personal accounts and can be conducted without raising much suspicion.