Abstract: Anti-Money Laundering and Countering the Financing of Terrorism

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Date: 
March 12, 2019

In Untangling a Marriage of Convenience: Anti-Money Laundering and Countering the Financing of Terrorism, authors Tracey Durner and Danielle Cotter argue that, although anti-money laundering (AML) and countering the financing of terrorism (CFT) efforts have much in common, this melding places “undue burden on the private sector to understand the intent of criminals behind the actual transactions.” Some even contend that “misguided” CFT policies are leading to ineffective, and perhaps even harmful results.

The United States, United Nations, and other entities established AML laws and regulations before 9/11, but immediately afterwards, thanks in large part to the PATRIOT Act, AML policies became a much higher priority both in the US and among its allies. Durner and Cotter address this history, as well as how modern terrorist networks fit into AML policies, before breaking down the four CFT core objectives (prevent, detect, freeze, trace) and how AML frameworks do or don’t work in each. Finally, they conclude with a call to create a regulatory structure specifically for the informal sector, which is where most terrorist-related banking interactions happen. This would rely most heavily on CFT, with occasional supplementations via AML.

Read the full report here.