Is terrorist financing a linear or circular process?

While a money laundering scheme is usually circular and the money eventually ends up with the person who generated it, a terrorist financing process is typically linear, and the money generated is used to propagate terrorist groups and activities.

How do terrorist finance their activities?

The source of terrorist funds may be licit or illicit, and funding often takes the form of multiple small donations, rather than one large sum of money. Terrorism financing is a global phenomenon that not only threatens Member States’ security but can also undermine economic development and financial market stability.

What is the law for criminalized terrorist financing?

Following the terrorist attacks of September 11, 2001, Congress passed the USA Patriot Act. Title II of the Patriot Act — the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 — focuses almost entirely on money laundering. It criminalized the financing of terrorism.

What differentiates terrorist financing from other types of money laundering?

Money laundering and the financing of terrorism may be seen as distinct activities. The laundering of criminal funds aims at giving a legal appearance to dirty money, whereas the laundering of terrorist funds aims at obscuring assets of a legal origin (such as public funding or so-called charities).

What are the stages of money laundering process?

There are three stages of money laundering: placement, layering and integration.

What is the process of money laundering?

Money laundering is the process of making illegally-gained proceeds (i.e. “dirty money”) appear legal (i.e. “clean”). Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system.

What is meant by terrorist financing?

Terrorist financing involves the use of funds that may be licit or illicit in origin and using these funds to support terrorist activity. Though terrorist financing transactions are usually smaller in value than those associated with money laundering, terrorist financing can result in tragic losses of life.

What are examples of terrorism financing?

Sources of terrorist funding include, but are not limited to, low-level fraud, kidnapping for ransom, the misuse of non-profit organizations, the illicit trade in commodities (such as oil, charcoal, diamonds, gold and the narcotic “captagon”), and digital currencies.