Wha🌜t Is Combating the Financing of Terrorism (CFT)?

Combating the Financing of Terrorism (CFT) is a set of government laws, regulations, and other practices that are intended to restrict access to fundin🍸g and financial services for those whom the government designates as terrorists. By tracking down the source of the funds that support terrorist activities, law enforcement may be able to prevent some of those activities from occurring.

CFT is also known as Counterfinancing of Terrorism or Countering the Financing of Terr🎐orism.

How Combating the Financing of Terrorism (CFT) Work👍s

Terrorists use different methods to finance their activities and conceal the sources of their funds, so financial regulators and law enforcement must💞 use vario꧑us techniques to catch these criminals.

The funds may come from legal sources, such as legitimate businesses, government funding, religious or cultural organizations, or illegal sources, such as drug trafficking, kidnapping, and government corruption. The funds may also come from an illegal source but appear to come from a legal source, through 澳洲幸运5官方开奖结果体彩网:money laundering. 

Money laundering and terrorism financing are often linked. When law enforcement can detect and prevent money laundering activ🦄ities, it may also prevent those funds from being used to finance acts of terror. Comba🎀ting money laundering is key to CFT.

Instead of trying tඣo catch🍷 a criminal plotting or committing an act of terrorism through other means, law enforcement officials may address the problem from the money side by pursuing the flow of funding that supports the activities.

CFT policies involve investigating and analyzing suspicious financial flows and the routine surveillance and collection of vast amounts of data regarding transactions across the economy. CFT efforts may focus on charities, informal banking activities (such as hawala), and registered money service businesses, among other entities.

However, most CFT policies and regulations by necessity apply broadly to entire populations and financial markets.

National and International CFT Initiatives

CFT policies largely originate and are modeled upon the report Forty Recommendations, which was published by the Financial Action Task Force (FATF).

The FATF, which is composed of 40 countries, nine associate member organizations, and numerous observers, woꦚrks to coඣmbat money laundering and the financing of terrorism by creating standardized processes to stop threats to the international financial system.

Following the FATF, world organizations, international financial institutions, and many national governments have pursued CFT initiatives and policies.

At the level of international institutions and 澳洲幸运5官方开奖结果体彩网:🍌non🔴-governmental organizations (NGOs), CFT includes teaching financial investigative techniques to law enforcement, teaching prosecutors how to win money laundering cases, and training financial regulatory authorities to identify suspicious activity.

The FATF also collects and shares information about trends in money laundering and terrorism financing and works closely with the International Monetary Fund (IMF), the World Bank, and the United Nations.

At the national level, CFT efforts are essentially anti-money laundering policies. The primary mechanism of anti-money laundering laws and regulations is to compel individuals and businesses to disclose information about financial transactions, organizational and ownership structures, a𒁏nd the identities of individuals and entities involved to government authorities.

Once identified, suspicious financial activities can be referre🐽d to law enforcement for pr🌌osecution, and the assets may be seized or frozen.

Financial institutions play an important role in combating the financing of terrorism because terrorists often rely on them, especially banks, to transfer money. Laws that require banks to perform 澳洲幸运5官方开奖结果体彩网:due diligence on their customers and to report suspicious transactions can help prevent terrorism.

When there are differences in 澳洲幸运5官方开奖结果体彩网:anti-money laundering and CFT laws among countries, especially when some countries offer greater financial freedom and privacy than others, proponents of CFT will pressure those countries to increase financial restrictions and surveillance because they may otherwise a𒀰llow terrorists to secre𝓀tly move money.

By creatin🐟g standardized procedures for the financial sector, the criminal justice system, and certain businesses and professions, terrorism financing becomes harder to hide.

Benefits and Costs of CFT

The main intended benefit of CFT is to disrupt and prevent the incidence of terrorist activity. An additional reason for CFT is that the use of the 澳洲幸运5官方开奖结果体彩网:financial system by crim🃏inals engaged in money laundering and terrorist financing may threaten the stability 🌸of the financial system. The public may not trust the integrity of the financial system if it cannot detect illicit activities.

CFT also imposes major costs on society. The most significant of these is thဣat CFT policies often reduce or eliminate privacy and anonymity in financial and other transactions for all people in society.

Whether or not they are engaged in financing terrorism, CFT policies require everyone to compromise their financial privacy. Information about all major🅺 transactions has to be collected in order to detect money laundering. Because people value their own privacy, this represents an enormous loss to society, in addition to the administrative burden of the disclosures themselves.

As it is carried out through law enforcement, CFT is implicitly (or explicitly) achieved through violence and the threat of violence🔯 or other coercion against civilians and private businesses. This raises a moral issue because the threat of one type of potential violence, terrorist attacks, is simply replaced by a threat of violence by the government against everyone who does business.

Finally, flowing from the other costs, CFT raises a distinct risk that widespread financial surveillance could be abused by the authorities. Once in place, CFT policies can be used against any individuals or groups that a government chooses to go after, simply by labeling them "terrorists."

These powers could be used to target and persecute political dissidents, legitimate protest movem🍃ents, or specific segments of the population that a government wants to discriminate 🐼against.

The Bottom Line

Co🏅mbating the Financing of Terrorism seeks to prevent terrorism from being financed. It can focus on almost any type of entity, such as banks, charities, and businesses, to ensure tha♎t terrorist organizations do not receive funding.

Through regulation, supervision, and reporting, CF༺T policies aim to prevent the movement and laundering of funds, often at the expense of the privacy of regular citizens.