What is Terrorist Financing?
Terrorist activity financing may involve funds raised from legitimate
sources, such as personal donations and profits from businesses and
charitable organizations, as well as from criminal sources, such as the
drug trade, the smuggling of weapons and other goods, fraud, kidnapping
and extortion.
Terrorists use techniques like those of money launderers to evade
authorities' attention and to protect the identity of their sponsors and
of the ultimate beneficiaries of the funds. However, financial
transactions associated with terrorist financing tend to be in smaller
amounts than is the case with money laundering, and when terrorists raise
funds from legitimate sources, the detection and tracking of these funds
becomes more difficult.
To move their funds, terrorists use the formal banking system, informal
value-transfer systems, Hawalas and Hundis and, the oldest method of
asset-transfer, the physical transportation of cash, gold and other
valuables through smuggling routes. FINTRAC's analysts are finding that
in their disclosures to date, funds suspected of being used for terrorist activities
financing are moved out of Canada through traditional banking
centers to countries with major financial hubs, in what is likely an
effort to conceal their final destination.
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