Terror Financing

What is terrorist financing and how does it work?

Terror financing - what is it and how does it work? Learn more about it in this Visma Creditro article.


Terrorist financing can be anything from salary payments to donations, and black money quickly goes hand in hand with terrorist financing – which is why the solution is often the same. Read more and learn about the concept, the requirements, and the solution.

Terrorist financing is collecting, transferring, or passing on money as a form of support for terrorist activities. Therefore, terrorist financing can be money obtained by, for example, salary payments. It can also be through a loan transferred to support a person, group, or association that commits or has a clear intent to commit terrorist acts.

The companies can acquire the means of supporting a terrorist group financially in both a lawful and illegal manner.

Money laundering and terrorist financing are two concepts within the phenomenon of financial crime. Financial institutions and industries subject to the Money Laundering Act must try to combat this by creating a safety net so that people with criminal intentions fail in financing terrorist groups. In practice, terrorist groups are also supported with money laundered money.

The focus seen on the macro level in money laundering stems largely from the thesis that if terrorist organizations are supported by laundered money, one can significantly limit the movement of terrorist organizations by "severinge" their livelihoods, namely the financing with laundered funds, which makes the fight against money laundering as important a mission as the fight against terrorism

 

Activities related to terrorist financing

Activities related to terrorist financing divides into four parts:

  • Raising funds through, for example, collections or criminal acts.
  • Storage of the funds.
  • Transfer of the funds to recipients located abroad.
  • The concrete use of the funds for terrorism-related activities.

Each of these four links is punishable regardless of whether one exercises only one of the joints or several. In Denmark, terrorist financing is criminalized in section 114b of the Danish Criminal Code. The penalty for complicity in terrorist financing can in the worst case end up with imprisonment for up to 10 years.

 

How to fight terrorist financing

In the fight against terrorist financing, it is, among other things, the banks that play the important role. The role is in the form of a kind of gatekeeper for the financial system. The banks are assigned a great deal of responsibility with the authorities in preventing and combating this. They strive to combat generally all financial crime in Denmark and the EU.

Three points help financial institutions fight this terrorist financing:

Risk assessment

For banks to effectively combat terrorist financing, they must, on the basis of their knowledge of their business and experience, prepare a risk assessment. In this risk assessment, financial institutions must identify the risks that may be misused for money laundering or terrorist financing.

You need to know your customers

The individual financial institution must know their customers and who is shopping with them, also called customer knowledge or KYC. They simply need to know the identity of their customers and if the customer is a company, the bank must also know the company's real owner - KYB.

To combat terrorist financing, part of the customer knowledge is that the banks must know what the individual customer needs the bank for. 

Notification

If a financial institution learns that one of the customers is making some transactions or other action that arouses suspicion, the customer must have a good explanation for this. If this is not the case, the bank must inform the Money Laundering Secretariat at SØIK.

 

What can Creditro do to prevent terrorist financing?

At Creditro, we work hard to provide criminals with tough money laundering and terrorist financing conditions. Our dream is to create a society where money laundering and fraud are a thing of the past. With our platform, we have developed a system that ensures that our customers can easily get through the requirements of the Anti-Money Laundering Act, among other things, we prepare a recommended risk score on your clients concerning money laundering and terrorist financing.

 

In the system, we ask the right questions to your clients and make sure that the right checks are made and documented. In doing so, we give you greater security not to be involved in money laundering or terrorist financing.

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