Trade-based money laundering a ‘weak link’ in fight against IS funding

Anti-money laundering (AML) and counter-terrorism financing (CFT) measures are failing to address the complexity of the so-called Islamic State’s (IS’) financing strategy according to former US Treasury officials and others in the financial compliance sector.

Trade-based money laundering (TBML) in particular has been neglected, with one expert describing it as a “weak link in enforcement.”

Ineffective actions

Post 9/11, CFT compliance has largely been shaped by the Financial Action Task Force (FATF) guidelines, but these appear to have been less than successful according to former US Treasury special agent, John Cassara.

“The reason we have these FATF guidelines is to help countries put AML protocols in place, but the bottom line is to arrest launderers and identify them, the same with terrorism financiers. But if you look at the numbers, with a few exceptions, it’s been spectacularly unsuccessful,” he told the Middle East Eye news service.

Hawala concerns

Analysts argue that whilst AML and CFT regimes are robust in developed jurisdictions, they are weakest in the areas where they need to be most robust.

“Hawala is rampant in Iraq, Syria, and in other parts of the area. We’ve been unsuccessful in…most of the world in addressing hawala and similar types of underground systems,” said Cassara.

Weak link

Pointing out IS’ reliance on trade in oil, he singles out TBML as an issue that needs addressing.

“We’ve also been unsuccessful in trade-based money laundering, a weak link in enforcement,” he said.

The full article in Middle East Eye can be found here.

Categories: Trade Based Financial crimes News

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