Tracking down terrorism financing remains difficult despite efforts

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Tracking down terrorism financing remains difficult despite efforts

Banks and financial institutions are currently employing a very high number of resources to comply with their obligations in the fight against terrorism financing and money laundering. However, despite all efforts, detecting transactions which aid terrorism-financing and money laundering is still incredibly complex.

Tracking down terrorism financing remains difficult despite efforts

Banks and financial institutions are legally obliged to monitor unusual transactions which may be indicators of terrorism financing or money laundering attempts. Such institutions employ thousands of employees to screen unusual transactions and report them to the government. However, despite the efforts, terrorism financing and money laundering are still very hard to detect.

The issue

Banks scrutinize customers’ transactions daily, however the number of terrorism financing operations encountered is still low compared to the real numbers. As reported by the Dutch broadcasting organization NOS, the anti-terrorism monitoring often ends up interfering with emergency aid organizations and private individuals instead.

Resources

Banks and financial institutions have set up “armies of researchers” to monitor unusual transactions. In the Netherlands, there are approximately 8000 employees fulfilling this task, of which 4000 at ING alone. Transactions that raise a red flag are passed onto the Financial Intelligence Unit of the Netherlands. In 2020, Dutch banks reported unusual transactions over 725,000 times (for both terrorism and money laundering).

A needle in haystack

Detecting terrorism-financing transactions is extremely complex, due to the low amounts involved and the incredibly high numbers of daily transactions to check. Furthermore, the money used is not necessarily “criminal money”. As University of Amsterdam researcher Esmé Bosma pointed out, “you can also finance an attack with your student grant, salary, or benefit”.

For this reason, banks started terrorism financing task forces to conduct more targeted research. Banks are also looking to improve the detection of unusual transactions through artificial intelligence mechanisms.

Deloitte’s impact

Due to the complexity in identifying terrorism financing and money laundering transactions efficiently, knowledge of the legal framework regulating your obligations in this sector is fundamental. Deloitte can help small, medium and large banks and financial institutions to implement an efficient transactions screening system to aid your efforts in fighting terrorism financing and money laundering.

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