ICA- Diploma in Applied Anti Money Laundering and Counter Terrorism Financing Management.
Many money remitters with links to Iraq and Syria use neighbouring countries in order to transact with customers and physically move money to these locations. Analysis of international funds transfer instructions (IFTIs) from Australia to Syria and Iraq has supported this displacement of funds – although they appear to reach recipients within Syria and/or Iraq. Australia notes that many legitimate recipients would be included in this funds flow displacement, as would those individuals who have been displaced to refugee camps – also displacing the location of beneficiaries. Analysis has discovered that some remitters have less control/ability to conduct due diligence over end recipients when their former channels of funds delivery are no longer available due to the circumstances in Syria and Iraq. This situation presents a more challenging TF risk environment when it comes to cross border remittances to Syria and Iraq.
An example was noted where the remittance business needed its new counterpart to physically move cash across borders to deliver to end recipients – while highly practicable, it does raise concerns for misuse of some or all of those funds in support of ISIL. FATF (2015), Financing of the terrorist organisation Islamic State in Iraq and the Levant (ISIL).
Both the banking and remittance sectors in Australia are regularly utilised to transfer funds internationally, sometimes to ‘high-risk’ countries. Significant research has been conducted on the funding of terrorism, including by AUSTRAC.
Terrorist financing (TF) can be difficult for a reporting entity to detect.
(a) Identify five key indicators that may suggest a reporting entity is being utilised to transfer funds, as part of a TF scheme. Examine how the indicators would assist the reporting entity to identify, manage and monitor potential TF.
Note: you are expected to refer to the following publications in your response:
FATF (2015) Financing of the terrorist organisation Islamic State in Iraq and the Levant (ISIL)
http://www.fatf-gafi.org/topics/methodsandtrends/documents/financing-of-terrorist-organisationisil.html AUSTRAC (2014)
Terrorism Financing in Australia 2014 http://www.austrac.gov.au/publications/corporate-publications-and-reports/terrorism-financingaustralia-2014
(Word limit – 875 words) (25 marks)
(b) Critically evaluate the importance of the following control factors for mitigating the risks associated with TF as part of an effective AML/CTF framework within an Australian reporting entity:
• Customer identification – including some of the different customer types and the ML/TF risk levels associated with each.
• Ongoing customer due diligence.
• Transaction monitoring.
• Record keeping.
• Reporting potentially suspicious activity.
• Staff training and awareness program.
Note: you are expected to reference the relevant obligations under the AML/CTF Act rules and regulations for each element.