What is terrorist financing?
Terrorist financing provides funds for terrorist activity. It may involve funds raised from legitimate sources, such as personal donations and profits from businesses and charitable organizations, as well as from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion.
Terrorists use techniques like those of money launderers to evade authorities' attention and to protect the identity of their sponsors and of the ultimate beneficiaries of the funds. However, financial transactions associated with terrorist financing tend to be in smaller amounts than is the case with money laundering, and when terrorists raise funds from legitimate sources, the detection and tracking of these funds becomes more difficult.
To move their funds, terrorists use the formal banking system, informal value-transfer systems, Hawalas and Hundis and, the oldest method of asset-transfer, the physical transportation of cash, gold and other valuables through smuggling routes. FINTRAC's analysts are finding that in their disclosures to date, funds suspected of being used for terrorist activities financing are moved out of Canada through traditional banking centers to countries with major financial hubs, in what is likely an effort to conceal their final destination.
FINTRAC's financial intelligence plays a critical role in helping to combat terrorist financing. This financial intelligence is used to assist money laundering and terrorist financing investigations in the context of a wider variety of criminal investigations, where the origins of the suspected criminal proceeds are linked to drug trafficking, fraud, tax evasion, corruption, and other criminal offences. With these types of crimes, there are victims, there is often violence, and there is real social harm.
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