Terrorist financing (TF) differs from traditional money laundering, as funds can originate from legitimate sources (e.g., donations, charities) and often involve low-value transactions.
Option A (Correct): Non-profits with no online presence can be shell organizations used to finance terrorism.
Option C (Correct): Small-dollar payments to high-risk jurisdictions (e.g., FATF-listed countries) may indicate terrorist funding activity.
Why Other Options Are Incorrect:
Option B (Incorrect): Crowdfunding payments with transparency and project details are generally low-risk.
Option D (Incorrect): Charities helping refugees may be high-risk but not automatically suspicious.
Option E (Incorrect): Structuring below reporting thresholds is more indicative of money laundering than terrorist financing.
Red Flags for Terrorist Financing:
Frequent low-value transactions to conflict zones.
Use of charities and non-profits as fronts for terror groups.
Funds moving through unregulated crowdfunding platforms.
Best Practices for Detecting Terrorist Financing:
Identify transactions involving known terrorist financing typologies.
Enhance monitoring of non-profit organizations operating in high-risk regions.
Use negative news screening to detect links to sanctioned entities.
Reference:
FATF Recommendation 8 (Non-Profit Organizations & Terrorist Financing)
FinCEN Guidelines on Terrorist Financing Risk Indicators
EU 6th AML Directive (6AMLD) on Terrorism Financing Controls