This paper aims to examine the current challenges that banking counter-terrorism financing (CTF) regulation faces in the fight against global terrorism. The paper examines the potential impact on the banking sector of the current civil cases that have been taken against several of the leading global banks by victims and their families.
The paper reviews current academic thinking on CTF regulation and analyses these in context of several legal challenges that have been made against some of the larger global banks, including, HSBC, the Arab Bank and NatWest.
The paper finds that current approaches towards CTF compliance are no longer a viable option for banks, as court cases have found that additional factors need to be included in risk assessment frameworks. The main finding is that risk-based approaches need to find ways to incorporate local intelligence into their risk systems and that banks can no longer rely on basic tick box compliance measures.
There are implications for the banking and regulatory sectors developing anti-money laundering /CTF policies. There are also legal implications for the banking sector who may be seeking to defend accusations of supporting terrorism.
The paper’s originality is that this level of analysis of CTF regulation using legal case studies has not been followed before.
Please note that this paper was composed and submitted for review to this journal in October 2015 – a time at which the author was working on his second doctorate level research project titled “Trade Based Money Laundering: Exploring the Implications for International Banks”.
This paper contributes towards a series of papers exploring the banking and regulatory implications of different forms of terrorist-related financial crime, hoping to assist banks and providing them with the much needed guidance to implement effective CTF procedures.
All the content within this paper was current at the time of submission (October 2015). The banking and regulation industries have evolved since then, with new material from academic research also emerging. These points need to be taken into consideration when reading this paper.
The author acknowledges being the recipient of a research grant awarded by Princess Ālae as part of Seven Foundation’s “2020 Banking Vision – building banks of the future”, and he thanks her for the continued support and motivation both to himself and other students who benefit through her generosity (www.sevenfoundation.ch).
The author also thanks Professor Muhammad Jumah (a leading economist of this era based in Damascus) who has continued to provide valuable input both through his teaching of the science of economics and for his continued guidance.
Naheem, M.A. (2019), "Local intelligence – the missing link in CTF regulation in the banking sector", Journal of Money Laundering Control, Vol. 22 No. 1, pp. 132-144. https://doi.org/10.1108/JMLC-10-2015-0047Download as .RIS
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