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Gunpowder, Treason and Terrorism Financing

At this time of year my thoughts turn to terrorism. The thwarting of the Gunpowder Plot is commemorated on 5 November each year, although the style of commemoration has changed over the centuries from special sermons and the ringing of church bells to standing ankle-deep in cold mud going ‘Oooh’ at the local authority’s fireworks display.

Had the Gunpowder Plot been successful the King and the majority of the incumbent ruling class would have been killed, and we would be living in a very different Britain. The Gunpowder Plot was discovered by way of an anonymous letter which had very likely been sent by one of the plotters themselves. This was a result of the circle of plotters being expanded to include rich individuals who could fund the Plot, but of which at least one was clearly not as committed to the cause.

Terrorism whether ancient or modern is and always has been expensive, and an effective way of combatting terrorism is to investigate and interrupt the flow of money. The following patterns of activity are generally considered as indicators of the collection and movement of funds that could be associated with terrorism financing:

  • Account transactions that are inconsistent with past deposits or withdrawals such as cash, cheques, wire transfers, etc.
  • Transactions involving a high volume of incoming or outgoing wire transfers, with no logical or apparent purpose that come from, go to, or transit through locations of concern, that is sanctioned countries, non-cooperative nations and sympathizer nations.
  • Unexplainable clearing or negotiation of third party cheques and their deposits in foreign bank accounts.
  • Structuring at multiple branches or the same branch with multiple activities.
  • Corporate layering, transfers between bank accounts of related entities or charities for no apparent reasons.
  • Wire transfers by charitable organisations to companies located in countries known to be bank or tax havens.
  • Lack of apparent fund raising activity, for example a lack of small cheques or typical donations associated with charitable bank deposits.
  • Using multiple accounts to collect funds that are then transferred to the same foreign beneficiaries
  • Transactions with no logical economic purpose, that is, no link between the activity of the organization and other parties involved in the transaction.
  • Overlapping corporate officers, bank signatories, or other identifiable similarities associated with addresses, references and financial activities.
  • Cash debiting schemes in which deposits in a separate country correlate directly with ATM withdrawals in countries of concern. Reverse transactions of this nature are also suspicious.
  • Issuing cheques, money orders or other financial instruments, often numbered sequentially, to the same person or business, or to a person or business whose name is spelled similarly.

Whilst many of these indicators can be most easily monitored by banks, all professionals with client accounts must be alert to their potential for misuse. It is important that we know our clients and know the risks associated with them, and to appreciate that the risks rise if they are politically exposed or have links with sanctioned countries.

We all have a responsibility to ensure that we have the right to continue to stand ankle-deep in mud on one evening of the year.

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