Financial Institutions Provide Critical Infrastructure For Terrorist Organizations
“ Banks don ’ t openly bankroll terrorists . They ’ re not approving small business loans to Al-Qaeda ,” Paulos said . “ Banks provide the system and the services that facilitate necessary financial transactions amongst accounts which those benefit those . Or provide critical institutional roles for trade service transactions which are how terrorists obtain equipment need to do their work , that they would and should not otherwise have access to . Without banks or access to the banking system criminals cannot make illicit money appear legitimately earned , or access legitimate funds to use it for illicit purposes .”
Financial institutions have a duty to prevent money laundering . In fact , according to Paulos , banks are in the best position to prevent money laundering and to prevent money being used for crime or for evil purposes or for the wrong things .
“ The role that banks have assumed within society , and the standards that govern them , puts on the front lines of preventing terrorism , drug and human trafficking , you name it ,” Paulos explained . “ And they ’ ve assumed a duty to know what their banks are being used for , to report suspicious activities , and share information about transactions flowing through their banks that indicate a mere hint of a being for the wrong purpose or person .”
Despite this obligation , some banks have turned a blind eye or even actively participated in creating a financial channel through which criminal entities like terrorist organizations funds can shield their financial activity . For example , the banking industry itself identifies specific regions , industries , countries and business as posing a “ high risk ” for criminal activities . Knowing this , banks may still be willing to operate in those areas or do business with in these high-risk areas and costumers because the allure of growth , emerging markets or lack of competition is too great . Of those financial institutions that venture down this path , some chose not to implement proper safeguards to prevent high-risk customers from using banking services for criminal activity . In some cases , banks have purposefully created methods to circumvent the safeguards that supposedly exist , for a fee of course .
By design , terrorist organizations operate in cells . To do so requires specific communications and financial needs ( made possible by financial institutions and technological companies that fail to implement adequate safeguards ).
“ Banks are not doling money out to terrorist organizations and explicitly telling them to commit asking terrorism ,” Paulos underscored . “ Rather , they ’ re providing the critical operational infrastructure that terrorism needs to exist and proliferate . Unfortunately , banks have allowed , and some instances taught terrorists how to use their systems in a way that they ’ re not supposed to be allowed to do .
National Terrorist Financing Assessment Highlights Banks
The 2022 National Terrorist Financing Risk Assessment ( NTFRA ) — published by the U . S . Department of the Treasury ) — explores the unique advantages banks present as vehicles for funding terrorism both domestically and abroad .
The most popular way to move funds
According to this report , even as advancements in financial technology and shifts in consumer behavior introduce fresh avenues for Americans to transfer money domestically and abroad , banks remain the predominant conduits for individuals and businesses in the United States seeking to move funds .
Nearly 95 percent of U . S . households , approximately 124 million , held a bank or credit union account in 2021 , according to the report . Additionally , automated clearing house payments constituted 66.1 percent of the total value of noncash payments in 2018 .
In addition to their strong presence within the country , U . S . banks handle trillions of dollars in global transactions daily , catering to both domestic and international clientele . The sheer magnitude of these daily global fund transfers can make it challenging to distinguish terrorist-related transactions from legitimate ones .
Transaction monitoring and reporting
Consequently , many U . S . banks have implemented advanced transaction monitoring systems and other strategies to detect and report financial activities associated with both known and previously unidentified terrorist actors . Despite being a primary target for terrorist groups seeking to move funds into or through the United States , the vigilance enabled by these monitoring efforts and subsequent suspicious activity reports aids law enforcement in thwarting and uncovering terrorism financing .
According to the 2022 NFTRA , between 2017 and 2020 , banks and Money Services Businesses ( MSBs ) collectively submitted around 90 percent of suspicious activity reports ( SARs ) linked to terrorism financing . Of these SARs , banks filed roughly 25 %, while MSBs filed the remainder . Notably , the majority of flagged transactions for suspected terrorism funding involve outbound transfers initiated by U . S . individuals aiming to provide funds to terrorist groups operating beyond U . S . borders . These transactions typically involve relatively low amounts , with one analysis revealing that most SARs pertained to suspicious transactions under $ 800 .
Experts of hide and seek
The vast scale and complexity of financial activities within the U . S . financial system afford terrorist organizations and their backers the opportunity to camouflage their activities amid regular financial transactions .
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