Threat Finance: More Licit and More Local Than You Think

April 2013
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Recent cases bring to light the reality that terror financing can come from surprising sources, including highly developed countries; and it can involve legitimate businesses and the traditional financial and banking system. Firms can write off fines and financial losses. But reputational damage is likely to endure. Allegations concerning financial ties to terrorism will tend to stick with stakeholders. A solid understanding of their third party business relationships is crucial to a firm’s ability to safeguard its operations and reputation.

This entails more than electronically screening for sanctioned counterparties; and it’s not enough to avoid informal dealings. Companies should undertake a strategic rethink of how they view threat finance risk and to approach it as a compliance priority alongside corruption and fraud detection.