How preventive terrorism mechanisms are conceived in financial industries
Flows of illicit money can damage the integrity, stability and reputation of the financial sector, and threaten the internal market of the European Union as well as international development. Money laundering, terrorist financing and organised crime remain significant problems. Targeted and proportionate prevention of the use of the financial system for money laundering and terrorist financing is indispensable. The soundness, integrity and stability of credit and financial institutions could be seriously jeopardised by the efforts of criminals to put illegal money in the market.
The last years we have witnessed an unprecedented increase in terrorist activities in Europe and outside. The cost of attacks might not be high, but the maintenance of a terrorism organisation requires high flows of money. Cutting the finance of these organisations means to fight terrorism.
The European Union has taken measures against money laundering (hereafter "AML") and counter-terrorism financing by entering into force relevant legislation. In June 2018 the fifth AML Directive was published, amending the fourth AML Directive (2015). The EU regulation update gives a sense of the pressure on the European institutions to face the late cases of international money laundering schemes revealed to the public by the consortium of international journalists but also the urgency to consider the technological evolution among financial services.
Belgium, as most of the EU member states, is a member of Financial Action Task Force (hereafter "FATF"), which is an inter-governmental body that sets standards (i.e. which countries are high risk) for the fight against money laundering and terrorist financing. The need for international level cooperation becomes more emerge as the system of financing terrorism has become cross-border and more sophisticated in terms of methods used (i.e. IT tools). In 2018 FATF adopted an amended counter-terrorist financing operational plan. The adoption of an updated policy underlines how terrorism evolves and how important it is for countries to ensure that the financial system is not used to fund terrorist activities.
Every business has to be in line with the requirements of the law regarding the financing of terrorism. In the EU, non-compliance has severe criminal sanctions, financial impact and substantial reputational damage for the business.
The understanding and management of the risk by financial institutions, banks, and entities, has improved over the years. Today, stakeholders are more involved, and they demand greater transparency regarding the risks of the company and how this company reacts and plans...Read more Author What else ?