FATF acts to deny terrorists access to funds

The Financial Action Task Force (FATF) is recommending a minimum threshold for cross-border and domestic wire transfers in an attempt to ferret out the movement of terrorist and criminal funds.

After issuing recommendations for the monitoring and regulation of non-traditional money transfer operations, the FATF said there is a need to prevent terrorists and criminals from having unfettered access to wire transfers for moving their funds.

"Specifically, [these recommendations] aim to ensure that basic information on the originator of wire transfers is immediately available to appropriate law enforcement and/or prosecutorial authorities," the FATF said.

According to the task force, this would assist the Anti- Money Laundering Council (AMLC) in detecting and investigating, prosecuting terrorists or other criminals as well as in tracing their assets.

FATF said financial intelligence units should be allowed to analyze suspicious or unusual activity for eventual dissemination while also allowing beneficiary financial institutions to facilitate the identification and reporting of suspicious transactions.

"But it is not the intention of the FATF to impose rigid standards or to mandate a single operating process that would negatively affect the payment system," the FATF said.

The FATF has defined wire transfers as any transaction carried out on behalf of an originator person (both natural and legal) through a financial institution by electronic means with a view to making an amount of money available to a beneficiary person at another financial institution.

Cross-border transfer means any wire transfer where the originator and beneficiary are located in different jurisdictions, while domestic transfer means any wire transfer where the originator and beneficiary institutions are located in the same jurisdiction.

"This term, therefore, refers to any chain of wire transfers that takes place entirely within the borders of a single jurisdiction, even though the system used to effect the wire transfer may be located in another jurisdiction," the FATF said.

The only exemption, according to the FATF, were transfers using a credit or debit card so long as the credit or debit card number accompanies all transfers flowing from the transaction.

However, the FATF said its recommendations covered the use of credit or debit cards when used as a payment system to effect a money transfer.

The FATF said financial authorities should require financial institutions to secure basic information on the originator of the wire transfer, including such personal detail as name, location of the account, the account number or whatever unique reference number.

Financial institutions were also required to acquire the address of the originator or a national identity number, customer identification number, or date and place of birth.

The FATF said financial institutions should also ensure that non-routine transactions were not batched where this would increase the risk of money laundering or terrorist financing.

These information, according to the FATF, should be made available by the ordering financial institutions within three business days of receiving the request either from the beneficiary financial institution or from appropriate authorities.

"Law enforcement authorities should be able to compel immediate production of such information," the FATF said.