AMLD4: Fighting Terrorism and Your Business

Financing terrorism is a global critical concern as it provokes the deviation of financial resources, which can in turn have a negative effect on numerous market sectors in turn causing socioeconomic instability.

Terrorism: Knowing Your Customer and Your Business

AMDL4 aims to harmonize CFT regulations to improve intranational trade whilst fortifying existing preventative measures. In the current global threat landscape, with attacks happening in France, Brussels, Germany, the U.K. and Sweden, among others; the question as to how these groups are being funded is an issue that has provoked intense debate and the introduction of stricter laws and more severe penalties for those who do not comply; to aid in the effort to combat against the financing of such groups or individuals.

Numerous attacks are believed, at least in part, to have been financed through multiple European businesses channels, such as blockchain/cryptocurrencies and pre-paid cards. The reasons for this are simple:

  • It is/was less prone to external government monitoring and generally overseen by internal protocol and in some cases, light external auditing
  • Easily accessible with multiple providers
  • Decentralization
  • Near to or immediate settlement of funds

Whilst it is recognized by EU regulatory bodies that the above are worthwhile convenient payment options for the general public, it was recognized that the due diligence process for non- face-to-face transactions of this manner (and now deemed as high risk under the 4th EU AML Directive) should be revisited.

It is essential to have a process that does not only tick the boxes for the sake of being in line for audit trails, but also ensures that the due diligence process is serving the reasoning behind it–detecting terrorist financing to highlight risk and aid in preventing attacks. In light of the numerous terrorist attacks and also the “Panama Papers” revelation, the EU pushed for more stringent regulations in its revisions for the AMLD4 and included measures to ensure cryptocurrency and blockchain providers and users are monitored effectively.

Whilst the convenience and need is recognized for the general public, it is essential that the ease by which money is transferred and can change hands is administered by effective tools to ensure that the ultimate beneficial recipient of the funds can be identified and proven to not be a PEP or on any sanction or watch list.

The penalties for individuals and businesses being proven to have been a vehicle for terrorist financing are severe and critical, including hefty fines and incarceration for the obliged entities for its oversight.

With the introduction and implementation of AMLD4, businesses need to ensure that systems and processes are in place to protect them against becoming a vehicle for terrorist financing. Automated systems have been approved as an appropriate and effective tool that can strengthen and add value to a business’s AML/CFT framework. These automated tools facilitate your day-to-day risk operations, including checking PEP, sanction and watch lists, reducing the operational impact and overheads of a business to operate whilst remaining compliant.

Using a globally trusted provider such as Integrity from Aristotle, allows obliged entities to focus on the granular detail of potentially genuine risk, rather than sift through unnecessary data (at a cost to the business).

 

Ben Jordan
Director                                                                                                                     ben.jordan@aristotle.com


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