FATF calls for more co-ordinated action against terrorism financing

The emergence of Islamic State, and its use of new funding techniques, calls for a renewed counter-terrorism financing effort.

The Financial Action Task Force issued an action plan on terrorist financing at its plenary meeting in Paris last week.

FATF is an inter-governmental body that develops anti-money laundering and counter-terrorism financing policies. Its recommendations are the global standard.

It said financial intelligence units (such as Australia's Austrac) needed to improve the exchange of information.

It called for a more co-ordinated approach, with all members implementing measures to freeze terrorist funds. FATF said it would review its members' activities in this area.

It highlighted the need to do more to protect the non-profit sector from abuse. Important sources of funds for terrorist groups are donors who exploit non-profit organisations, claiming to be sending money to help humanitarian efforts but having it diverted to groups supporting Islamic State.

IS also operates grassroots funding strategies that exploit modern communications, such as mimicking crowdfunding strategies using social media networks.

They also use modern payment methods, such as prepaid cards, that make the source of payments difficult to track.

Other sources of IS revenue include illicit proceeds from occupied territory, such as bank looting and extortion, control of oil fields and robbery of economic assets.

FATF said it was important for financial institutions to do what they could to block access to the international financial system by IS-controlled bank branches.