Tanya Esdaille urges the investment community to build its defenses high to prevent terrorist funding
The global terrorist threat is expanding and evolving, as terror organizations adopt increasingly sophisticated methods to avoid detection as they carry out devastating attacks. This enhanced sophistication is also evident in efforts to secure funding, with new technologies and practices helping them circumvent even the most extensive of counter measures.
Regulatory requirements place an onus on investment companies to conduct effective checks to combat money laundering and terrorist financing. These include, but are not limited to:
• Verifying the identity of the customer, beneficial owners and underlying principals;
• Identifying and evaluating the associated geographic regions;
• Evaluating the products/services being provided and the delivery channel;
• Understanding the purpose and intended nature of the business relationship or transaction; and
• Understanding the type, volume and value of activity that can be expected within the relationship.
Strict policies and procedures provide the mainstay of any effective countering the financing of terrorism (CFT) system, and must span an extensive range of activities, such as:
• Identifying changes in customer characteristics which arise in the normal course of business;
• Identifying and assessing the money laundering and terrorist financing risks presented by particular customers, products/services, delivery channels and geographical areas of operation of financial services business;
• Reviewing ways in which different products and services may be used for money laundering/terrorist financing purposes, and how these ways may change, supported by typologies/law enforcement feedback, etc.;
• Managing and mitigating the assessed risks by the application of appropriate and effective policies, procedures and controls; and
• Documenting, as appropriate, the policies, procedures and controls to ensure accountability to the board and senior management.
However, it is vital to recognize that such a framework cannot be ‘fixed’ – just as the terrorists are evolving, so too the system must be sufficiently flexible to adapt to remain fit for purpose. Combating money laundering and terrorist financing must be a process of continuous improvement where all parties play a proactive role in eliminating such nefarious activities from the financial services industry.
At Kane LPI, we work closely with our clients to implement and maintain robust CFT measures, ensuring that such systems keep pace with changing terrorist financing tactics through regular monitoring and reporting. However, we also acknowledge that our role extends beyond our own organization and recognize the shared common interest which spans our team, our clients, other institutions and regulators, in eliminating the threat posed by money laundering and terrorist
financing. We must all be vigilante and stand united in our efforts to combat terrorist financing.
For further information contact
Compliance and Money Laundering Reporting Officer, Kane LPI
E firstname.lastname@example.org T +1 441 248 6828