Combating the Financing of Terrorism (CFT) refers to measures and regulations aimed at preventing funds from reaching terrorist organizations or being used for terrorist activities.
CFT Is Paired with AML
CFT is typically combined with AML as "AML/CFT" because detection methods overlap:
Unique CFT Challenges
While money laundering typically involves large sums, terrorist financing often involves:
- Small amounts: Below typical monitoring thresholds
- Legitimate sources: Funds may originate from legal activities
- Rapid movement: Quick transfer to avoid detection
- Charitable fronts: Abuse of legitimate organizations
Regulatory Framework
- FATF Recommendations: International standards for CFT
- UN Security Council Resolutions: Require countries to criminalize terrorist financing
- OFAC: Administers terrorism-related sanctions programs
- USA PATRIOT Act: Enhanced CFT requirements for US financial institutions
CFT in KYB
For KYB, CFT means:
- Screening businesses and beneficial owners against terrorism-related lists
- Identifying high-risk jurisdictions or sectors
- Monitoring for unusual transaction patterns
Related: AML | FATF | Sanctions Screening
