What Is Terrorist Financing?

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PC(ML)TF) is a relatively long one, with over one hundred sections, but its essence can be found in Part 1, which identifies the persons and entities governed by the Act and outlines what they must do. Specific persons and entities are listed and there is reference to others described in Regulations. The Suspicious Transactions Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations describe these additional parties and set out additional requirements with which they must comply.

Terrorist financing (proceeds for crime) is the process by which funds are provided for terrorist activity. A terrorist, or terrorist group, is one that has a purpose or activity to facilitate or carry out any terrorist action, and can involve:

• individuals

• groups

• trusts

• partnerships

• organizations

Suspected or known terrorists or terrorist groups:

In Canada , known or suspected terrorists or terrorist groups are monitored by the Office of the Superintendent of Financial Institutions (OSFI). Lists of these offenders or suspects are posted on both the OSFI and the United Nations websites and should be consulted regularly by reporting entities.

There are three common sources of terrorist financing:

1. State-Sponsored Terrorism: This occurs when a terrorist or terrorist group in another country that is experiencing political and/or cultural unrest is sponsored by another country and/or a legally wealthy dissonant individual.

2. Criminal Revenue Generated Support: It is not uncommon for organized crime groups to sponsor terrorists or terrorist groups in their homeland or neighbouring jurisdictions. In these cases a portion of the money generated from the organized crime group's traditional illegal activities are laundered into the accounts of the terrorists. Traditional criminal activities include:

• selling illegal drugs

• smuggling

• prostitution

• gambling

• kidnapping

3. Legal Sources: Many terrorist groups are culturally based. As such, they are able to develop strong foundations of financial support across communities, countries, and in some cases the world.

On the community level, immigrants generally set up and give donations or pay membership fees to local associations and religious groups, which replicate those of their homeland and assist in protecting their heritage. Through the legal acquisition of the funds, and the legal financial transactions of the association or religious group (such as sending wire transfers home and setting up accounts at home), the capacity to place terrorist-destined funds into another country's economy often comes with relative ease.