Combating Financing Of Terrorism Research Articles

Combating terrorist financing in cryptocurrency platforms: The role of AI and machine learning

This study addresses the critical issue of terrorist financing through cryptocurrency platforms, a growing concern due to digital currencies' pseudonymous nature and global reach. The research explores the strategic role of Artificial Intelligence (AI) and Machine Learning (ML) in identifying, preventing, and disrupting the flow of illicit funds used to finance terrorism. Employing a mixed-methods approach, the study integrates qualitative case studies of documented instances of cryptocurrency-based terrorist financing with quantitative data analysis from significant cryptocurrency exchanges. Advanced AI and ML algorithms, including supervised learning models such as decision trees and neural networks, were applied to detect suspicious transactions indicative of terrorist activities. The findings reveal that AI and ML technologies significantly enhance the ability to identify patterns of terrorist financing within large and complex datasets, with models achieving precision and recall rates exceeding 90%. However, challenges remain, particularly regarding the quality and standardization of data across platforms, algorithmic biases, and the need for continuous updates to counter evolving tactics used by terrorist organizations. The study concludes that AI and ML present powerful tools for enhancing financial security. However, their successful implementation requires overcoming these challenges through collaborative efforts among stakeholders, including financial institutions, regulators, and technology providers. This research contributes to the growing field of economic crime prevention by offering a robust framework for integrating AI-driven solutions into the fight against terrorist financing on cryptocurrency platforms.

IMPROVING CRIMINAL LIABILITY FOR FINANCING TERRORISM

Terrorism is a complex and multifaceted illegal phenomenon that is actively developing in the modern world. The dynamic transformation of this phenomenon requires constant resource support. In the context of widespread informatization and digitalization, the achievements of modern science and technology, as well as the reorientation of the population to function remotely on the Internet, are actively used to attract the necessary resources for organizing terrorist activities. Despite the fact that the current Russian legislation has long defined the specifics of criminal liability for the financing of terrorism, in practice this illegal behavior is actively improving, which gives rise to problems of its qualification, taking into account the existing criminal law norms. The purpose of the presented study is to analyze the state of the institution of criminal liability for the financing of terrorism and to determine the priority areas for its improvement, taking into account modern realities. The author comes to the conclusion that the current criminal law norms in this area do not take into account the realities of financial and information legal relations, which gives rise not only to impunity of specific individuals, but also contributes to the further spread of terrorist financing. Proposals for independent criminalization of terrorist financing are formulated, qualifying features of this act are defined. Attention is focused on the fact that the improvement of criminal-legal measures to combat terrorist financing is of paramount importance, since the scope of legal consequences for the guilty persons directly depends on the criminalization of this activity, and the possibilities of preventive action are significantly expanded.

COMPLEX ANALYSIS OF CRYPTOCURRENCIES AND THEIR IMPLICATIONS IN THE CONTEXT OF MONEY LAUNDERING AND TERRORISM FINANCING

This study investigates the potential role of Bitcoin in terrorism financing by analyzing the decentralization and anonymity features of cryptocurrencies that facilitate illegal transactions. In the context of delayed regulatory capacity regarding innovations in financial technology, the study explores new opportunities for terrorism financing. International reports, such as that of the financial action task force on money laundering, highlight the growing risks of terrorism financing associated with virtual currencies like Bitcoin. While terrorist financing based on emerging technologies enables terrorist organizations to swiftly transfer funds globally, this phenomenon simultaneously increases the difficulties in combating terrorism financing at the national level. In light of this technological revolution and the expansion of terrorism, the study focuses on the interaction between Bitcoin and terrorism, exploring whether terrorist attacks significantly contribute to Bitcoin price fluctuations and to what extent the cryptocurrency may evolve into a currency used for terrorism financing.

What would be the most effective strategy to combat terrorist financing?

What would be the most effective strategy to combat terrorist financing?

Terrorist financing via the banking sector

Islamist terrorism poses a significant threat to global security. Current prevention measures focus largely on combating terrorist financing in order to hinder terrorist organizations’ ability to pay their fighters and orchestrate attacks, with the aim of weakening their structures. The banking sector in particular is subject to strict regulations that intend to increase transparency and identify suspicious transactions. However, the present study illustrates that the banking sector continues to offer opportunities for terrorist financing. Using a qualitative study of 15 presumed providers of illegal financial services and 15 compliance experts to detail how terrorist financiers abuse the financial system to fund terrorist organizations, this paper has implications for both compliance officers and regulating authorities. In particular, the perceived challenges facing those at the frontline of the banking sector in detecting and preventing terrorist financing are analyzed with the intention to establish avenues for future research and countering the financing of terrorism regulation.

Methodology for assessing compliance with fatf recommendations and the effectiveness of financial monitoring systems

Rules combating money laundering and terrorism financing play a crucial role in establishing trust in the reliability and stability of the financial system, simultaneously acting as a protective mechanism against the infiltration of illicit elements. This dual function enhances the stability and reliability of the financial system, which is a crucially important element for fostering economic development and financial markets.
 The purpose of the article is a thorough analysis of the existing legal and institutional framework, as well as regulatory practices in the field of financial monitoring to determine their compliance with FATF regulations and identify opportunities for optimization and improvement.
 The research of evaluation of the effectiveness of financial monitoring systems was carried out on the examples of countries selected from different geographical regions and with different levels of development, including several countries in Africa, North and South America, Europe and Asia. Additionally, based on published consolidated assessment ratings of countries that underwent the latest round of FATF methodology assessments, we will identify those countries that received the highest ratings across 11 criteria: the United States and the United Kingdom (in 4 criteria), Israel and France (in 3 criteria).
 To incorporate the experience of foreign countries into Ukraine, the assessment of the effectiveness of the financial monitoring system is conducted by comparing it with both superior and inferior foreign practices, as well as with countries facing similar military-political situations. A profile of the effectiveness of systems countering money laundering and financing terrorism is constructed for various countries, including the United Kingdom, the United States, China, Georgia, Moldova, Pakistan, Poland, and Ukraine, following the FATF methodology.
 It has been determined that, for many foreign systems combating money laundering and terrorism financing, risks associated with the use of cash remain relevant. Additionally, inadequacies in combating terrorism financing have been identified, except for the United States and the United Kingdom. Reserves for increasing the effectiveness of national systems and systems combating the legalization of proceeds obtained through criminal means or terrorism financing have been identified.

Customer Due Diligence in the FinTech Era: A Bibliometric Analysis

This study examined the current developments in customer due diligence (CDD) in the financial technology (FinTech) era. The study of anti-money laundering (AML) and combating financing of terrorism (CFT) gained prominence after the 2007–2009 global financial crisis (GFC), in which administrative penalties were issued to financial institutions. Faced with AML regulatory compliance issues, technological solutions were or are still being developed. Thus, several technological innovation developments have shaped the future direction of the CDD aspects in the AML/CFT sphere. A bibliometric review and meta-analysis was employed for the study. The Scopus database was utilised to generate the dataset for the study, while SciVal was applied for research metric analysis. The major findings revealed that the key research themes in this area include anti-money laundering, banks and crime, and cryptocurrency, as well as blockchain and corruption. It was also established that most of the research done in this area is focused on the United Kingdom, the United States, and China. The integration of CDD with FinTech is still an emerging area that requires interdisciplinary collaborations.

“Beneficial owner” and “beneficial ownership” in South African trust law: troublesome aspects of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022

Die Wysigingswet op Algemene Wette (Teengeldwassery en Bekamping van Terrorismefinansiering) 22 van 2022 is op 29 Desember 2022 bekragtig. Dié wet wysig, met 1 April 2023 as die inwerkingtredingsdatum van al hierdie wysigings, die Wet op die Beheer oor Trustgoed 57 van 1988 in verskeie opsigte. In hierdie bydrae neem ons twee wysigings onder die loep, naamlik die invoeging van ’n definisie van “uiteindelik geregtigde” (“beneficial owner”) in artikel 1 van Wet 57 van 1988 asook die vaslegging van die idee van “uiteindelike geregtigheid” (“beneficial ownership”) in artikel 11A van daardie wet. Ons voer aan dat beide toevoegings onvanpas is in die Suid-Afrikaanse trustreg aangesien dit nie strook met meerdere van die grondbeginsels van die Suid-Afrikaanse trustreg nie. Ons wys in die besonder daarop dat die wetgewer se gebruik van “uiteindelik geregtigde” en “uiteindelike geregtigheid”: (i) onder inhoudelike onsekerheid gebuk gaan; (ii) nie strook met sommige van Wet 57 van 1988 se bepalings nie, by uitstek die definisie van “trust” in artikel 1 en ’n trustee se sorgplig ingevolge artikel 9; (iii) oënskynlik berus op ’n mistasting oor die regsaard van ’n trust asook die aanvaarde regsbeginsels rakende die misbruik van die trustvorm en skyntrusts en (iv) die gevaar inhou van die voortydige verkryging van regte deur trustbegunstigdes. Ons argumenteer derhalwe dat die wetgewer se gebruik van “uiteindelik geregtigde” en “uiteindelike geregtigheid” in die wysigingswet en Wet 57 van 1988 teoretiese en praktiese onsekerhede skep wat nie alleen die begripsmatige onderbou en samehang van die Suid-Afrikaanse trustreg skaad nie, maar ook dermate uit pas is met sommige van die bestaande wet se bepalings dat hierdie wysigings bykans onmoontlike verpligtinge ten opsigte van die insameling, vaslegging en verslagdoening van inligting (ter nakoming van die – weliswaar prysenswaardige – oogmerke van die wysigingswet) op trustees plaas. Ten einde hierdie kwessies aan te spreek, doen ons ’n alternatiewe – en onses insiens werkbare – wetsbepaling aan die hand wat, alhoewel dit grootliks op die bestaande bewoording van die tersake bepalings van die wysigingswet gegrond is, wegdoen met “uiteindelik geregtigde” en “uiteindelike geregtigheid” terwyl dit steeds uitvoering aan die oogmerke van die wysigingswet gee. Die voorgestelde wetsbepaling spreek in die besonder die problematiek aan met betrekking tot die besit van of doelmatige beheer oor trustbates – wat sentraal tot die idee van ’n “uiteindelik geregtigde” staan. Dit beperk die voorskrifte oor die besit van of doelmatige beheer oor trustbates tot gevalle waarin trustees sinvolle uitvoering aan die tersake wetsbepaling kan gee.

Combating terrorist financing in Switzerland in the light of current changes in Afghanistan

PurposeThis paper aims to examine the current situation in Afghanistan after the rapid withdrawal of US troops and the Taliban takeover of the country, and how this has shed new light on the financing of terrorism.Design/methodology/approachInformal interviews were conducted with alleged perpetrators as well as formal interviews with compliance experts to further investigate the subject of terrorist financing in the wake of the latest changes in Afghanistan and terrorist financing through hawala banking. The interviewees were analysed through a qualitative analysis.FindingsBased on the interviews, it was concluded that both illegal and legal sources of income could be used by terrorist financiers. This study also shows why hawala represents a significant challenge for counter-terrorist financing policies.Originality/valueWhile existing literature sufficiently links parallel banking systems, such as hawala, to terrorist financing, this study shows the implications for Switzerland’s perceived commitment against financial crime in light of current changes in Afghanistan, and in addition, certain dogmatic weaknesses of Article 260quinquies of the Swiss Penal Code are critically analysed.

Combating Terrorism Financing in the Cyber Environment A Study in Light of the Egyptian and Emirati Experiences

Combating Terrorism Financing in the Cyber Environment A Study in Light of the Egyptian and Emirati Experiences

Current trends in terrorist financing

PurposeThe purpose of this paper is to illustrate how intelligent terrorist financiers avoid detection when acquiring and subsequently transferring financial assets to finance terrorism. Particular emphasis is placed on cryptocurrency.Design/methodology/approachA qualitative content analysis of 30 semi-standardised expert interviews with both criminals and prevention experts led to the identification of means for the circumvention of current combat the financing of terrorism (CFT) measures with a focus on cryptocurrency.FindingsThe findings illustrate, for the benefit of law enforcement agencies, investigators, regulating authorities and legislators, the specific low-risk methods that terrorist financiers use to generate and transfer assets. These findings help to develop more effective prevention methods.Research limitations/implicationsQualitative findings from the analysis of semi-standardised interviews are limited to the 30 interviewees’ perspectives.Practical implicationsIdentification of gaps in existing CFT mechanisms provides compliance officers, law enforcement agencies and legislators with valuable insights into how criminals operate.Originality/valueThe existing literature focuses on organisations that combat terrorist financing and the improvement of CFT measures. This article outlines how terrorist financiers avoid detection. Both preventative and criminal perspectives are considered.

The OSCE in the Context of International Efforts to Combat Terrorist Financing

The OSCE in the Context of International Efforts to Combat Terrorist Financing

The OSCE in the Context of International Efforts to Combat Terrorist Financing

The OSCE in the Context of International Efforts to Combat Terrorist Financing

EU measures to combat terrorist financing since 9/11: efficient, but not very effective

ABSTRACT Efforts to disrupt, deter and dismantle terrorist financing networks have become the key elements of the EU's post-9/11 counterterrorism policy. This reflects the prevailing wisdom which suggests that successfully executed counterterrorist financing (CTF) measures mitigate the first-mover advantage terrorists otherwise hold. Using EU’s own goals from its action plans and counterterrorism strategies as the baseline criteria, this article examines how successful the EU has been in implementing the relevant aspects of various UN Security Council resolutions, the special recommendations of the Financial Action Task Force, and its own CTF measures since 9/11. Reflecting the constant evolution of sources and methods of terrorist financing, the importance of cooperation with private financial institutions, and using publicly available data, the article also examines the impact of the EU CTF measures on terrorist financing in and beyond Europe.

ВЗАИМОДЕЙСТВИЕ ОРГАНА НАЦИОНАЛЬНОЙ БЕЗОПАСНОСТИ КЫРГЫЗСКОЙ РЕСПУБЛИКИ С ГОСУДАРСТВЕННОЙ СЛУЖБОЙ ФИНАНСОВОЙ РАЗВЕДКИ В РАМКАХ ПРОТИВОДЕЙСТВИЯ ФИНАНСИРОВАНИЮ ТЕРРОРИСТИЧЕСКОЙ ДЕЯТЕЛЬНОСТИ И ЛЕГАЛИЗАЦИИ (ОТМЫВАНИЮ) ПРЕСТУПНЫХ ДОХОДОВ

The article deals with the problems of administrative legal organization of public administration in the Kyrgyz Republic in the sphere of combating money laundering and money laundering, as well as the history of the formation of the main stages of formation and development of the national system of combating terrorist financing and legalization (laundering) of criminal proceeds in the Kyrgyz Republic. High-tech crimes, requiring professionals involved in the investigation of such crimes of knowledge in the field of law, Economics and Informatics, that is, the effectiveness of the fight against money laundering is directly proportional to the speed of response of law enforcement agencies, which have special powers, and information analysis of information on the movement of funds provided by the financial intelligence units of the country.

Re-branding remittance fee reduction policy goals: from combating terrorist financing to poverty alleviation

ABSTRACT After the 2001 9/11 terrorist attacks in New York, attention to informal migrant remittance flows were increasingly seen as a tool for terrorism financing due to their lack of oversight. After increased regulation was deemed to have the adverse impact of reducing the appeal of formal alternatives, security scholars and practitioners resorted to formalisation policies through transfer fee reductions that make formal options more accessible. In international development circles, similar policies gained traction. International commitments, such as the Sustainable Development Goals (SDG 10c) and objective 20 of the 2018 Global Compact for Safe, Orderly and Regular Migration, aim to lower transfer fees to promote remittance growth and alleviate poverty. This article scrutinises the shift in remittance policy framing, primarily driven by security concerns, to promote development. Findings suggest the 9/11 terrorist attacks provided the punctuation that gave institutions the policy tractability to act upon pre-existing privatisation motives within Bretton-Woods institutions. The findings contribute to the understanding of policy creation and the cross-pollination of policies in the security-development space.

Reconciliation of anti-money laundering instruments and European data protection requirements in permissionless blockchain spaces

AbstractThis article is an attempt to reconcile the requirements of the EU General Data Protection Regulation (GDPR) and anti-money laundering and combat terrorist financing (AML/CFT) instruments used in permissionless ecosystems based on distributed ledger technology (DLT). Usually, analysis is focused only on one of these regulations. Covering by this research the interplay between both regulations reveals their incoherencies in relation to permissionless DLT. The GDPR requirements force permissionless blockchain communities to use anonymization or, at the very least, strong pseudonymization technologies to ensure compliance of data processing with the GDPR. At the same time, instruments of global AML/CFT policy that are presently being implemented in many countries following the recommendations of the Financial Action Task Force, counteract the anonymity-enhanced technologies built into blockchain protocols. Solutions suggested in this article aim to induce the shaping of permissionless DLT-based networks in ways that at the same time would secure the protection of personal data according to the GDPR rules, while also addressing the money laundering and terrorist financing risks created by transactions in anonymous blockchain spaces or those with strong pseudonyms. Searching for new policy instruments is necessary to ensure that governments do not combat the development of all privacy-blockchains so as to enable a high level of privacy protection and GDPR-compliant data processing. This article indicates two AML/CFT tools which may be helpful for shaping privacy-blockchains that can enable the feasibility of such tools. The first tool is exceptional government access to transactional data written on non-transparent ledgers, obfuscated by advanced anonymization cryptography. The tool should be optional for networks as long as another effective AML/CFT measures are accessible for the intermediaries or for the government in relation to a given network. If these other measures are not available and the network does not grant exceptional access, the regulations should allow governments to combat the development of those networks. Effective tools in that scope should target the value of privacy-cryptocurrency, not its users. Such tools could include, as a tool of last resort, state attacks which would undermine the trust of the community in a specific network.

FATF’s Concerns and Pakistan's Measures for Compliance

Since August 2018, Pakistan has been dealing with the Financial Action Task Force (FATF) to avoid its harsh conditions. The aim of the study was to examine the current position of Pakistan vis-à-vis the conditions laid down by the FATF. A literature review was conducted to assess the situation over 20 months and a comparative analysis was done. Findings of the study showed that the ministry took nine actions. First, it banned two main and eleven affiliated organizations. Second, it froze 976 moveable and immovable assets of the banned organizations. Third, it intervened in the social welfare activities conducted by the banned organization and seized relevant institutes. Fourth, it ministry convicted more than 200 individuals concerned. Fifth, it appropriated funds amounting to Rs 2,400 million. Sixth, it introduced the mutual legal assistance law and contacted about 84 countries to glean information from them. Seventh, it formulated asset-freezing regulations. Eight, it introduced the charity law across the country. Ninth, it tri-furcated the 4th schedule of the Anti-Terrorism Act of 1997 and established procedures for watching the prospective offenders. The result was that, in 20 months, Pakistan formulated policies meant for curbing money laundering and combating terrorism financing.

Legal Aspects of Combating Terrorism Financing and Money Laundering using Informal Money Transfer Systems in the European Union

Currently, in the European Union, in addition to traditional money transfer systems (bank transfers, Western Union, etc.), informal (alternative) systems have spread. The most famous and widespread is hawala, which originated in South Asia many centuries ago, long before the banking system, and is still the most familiar and convenient mechanism for transferring funds in several regions of North Africa and the Middle East. Hawala operates outside the regulated banking and financial sector primarily through a complex settlement system: there is no actual transfer of funds within this system. In most countries, hawala is not regulated by law and is not subject to government supervision. All these factors contribute to the increased risk of money laundering and terrorist financing (ML/TF risk). The paper examines the key characteristics of hawala, its types, circumstances that caused its spread, the features of the system’s functioning, and overviews the main measures of the European Union aimed at reducing the risk of ML / TF, which are a characteristic of hawala.

Involving cross-border organized crime networks from ex-Soviet sources in support of terrorism and their influence on regional economic development

Abstract This paper indicates how the actions of organized crime networks (especially the former the former Soviet Union) can affect, from an economic point of view, the elaboration of policies to combat transnational terrorism. Transnational organized crime poses a significant and growing threat to national and international security, with dire implications for public safety, public health, democratic institutions, and economic stability across the globe. Not only are criminal networks expanding, but they also are diversifying their activities, resulting in the convergence of threats that were once distinct and today have explosive and destabilizing effects. Ex-soviet organized crime networks represent a significant threat to economic growth and democratic institutions. Nuclear material trafficking is an especially prominent concern in the former Soviet Union. Because some terrorist-extremist organizations are criminal groups that have a specific organization, logistics, specific training and education systems that cannot work without having material and financial resources. As a result, one of the most effective ways to fight the threat of terrorist organizations is to combat terrorism financing. Within the European Union, the primary responsibility for combating terrorist financing lies with the Member States. However, the EU can and should play a supporting role in helping to respond to the transnational nature of the threat.