Transaction monitoring and indicators of terrorism financing

News
Datum 30 mei 2016

Financial institutions are still doing too little to manage the risk of becoming involved in terrorist financing.

Transactiemonitoring

Dutch financial institutions are vulnerable to involvement in the financing of terrorism. Given their key role as gatekeepers, it is fundamental that they mitigate that risk.

Transaction monitoring
In late March, we launched our cross-sectoral thematic examination into transaction monitoring, looking at the ways in which financial institutions monitor their transactions to detect risks of terrorist financing. Our initial findings suggest that they are doing too little to manage the risks of becoming involved in terrorist financing. Also, the process used to monitor transactions is often inadequate for detecting those risks.

We believe this is disturbing. We are continuing our examination and will report our findings in the fourth quarter of 2016.

Indicators
Institutions are expected to monitor specific indicators to recognise potential terrorist financing. These indicators are highlighted by the organisations teaming up in the Financial Expertise Centre (FEC):

  • flows of funds into specific regions: are transactions destined for high-risk countries?
  • type of transaction: is a transaction atypical of the customer's usual transaction profile?
  • type of customer: is the customer a charity foundation with activities in high-risk countries?

Financial institutions must monitor transactions, detect atypical or potentially high-risk behaviour and report unusual transactions to the Financial Intelligence Unit (FIU-Netherlands).

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