ECONOMICS

TERRORISM FINANCING AND MONEY

LAUNDERING
The financing of terrorism involves providing finance or
financial support to terrorists. Terrorism financing is the
financial support, in any form, of terrorism or of those who
encourage, plan or engage in terrorism. This is because
Terrorists need financial support to carry out terrorist
activities and to achieve their targets.
The terrorism financing process typically involves three
stages:
 raising funds (such as through donations, self-funding
or criminal activity)
 transferring funds (to a terrorist network or
organisation)
 using funds (for example, to purchase weapons or
bomb-making equipment, for payment to other
organisations).
Funds used to finance terrorism are considered an
'instruments of crime'.
Key channels used to raise funds for terrorism financing in
are -
 charities and NPOs
 self-funding from legitimate sources
 fraud, theft and drug trafficking
 ransom payments.
To move their funds, terrorists use the formal banking
system and informal value-transfer systems.
How is the problem dealt with?
Terror finanancing laws have been created to deal with
terrorism financing,also called counter terrorism
finanancing policy.(CFT)

MONEY LAUNDERING
Money laundering is the process of creating the appearance that
large amounts of money obtained from criminal activity, such as
drug trafficking or terrorist activity, originated from a legitimate
source. The money from the illicit activity is considered dirty,
and the process "launders" the money to make it look
clean.Dealing in large amounts of illegal cash is
dangerous. So,The criminals need a way to deposit the
money in financial institutions, and they can only do so if
the money appears to come from legitimate sources.
There are three steps involved in the process of
laundering money:
 placement,- refers to the act of introducing "dirty
money" (money obtained through illegitimate, criminal
means) into the financial system in some way.
 layering -The act of concealing the source of that
money by complex transactions and tricks.
 and integration- refers to the act of acquiring that
money in legitimate means.
According to a 2018 survey, global money laundering
transactions account for roughly 2% to 5% of global
GDP, or roughly $1 trillion to $2 trillion annually.
One of the most common ways to launder money is
through a legitimate cash-based business owned by a
criminal organization. Another common form of money
laundering is called smurfing (also known as
"structuring"), where a person breaks up large chunks of
cash into multiple small deposits, often spread out over
many different accounts, to avoid detection. Money can
also be laundered through online auctions and sales,
gambling websites and even virtual gaming sites
Shortly after the 9/11 terrorist attacks, The USA Patriot
Act strengthened money-laundering prevention by
allowing the use of investigative tools designed for
organized crime and drug trafficking prevention for
terrorist investigations
Even though money laundering is a white collar crime ,it
is often related to some serious crime activity.Money
laundering impacts legitimate business interests by
making it much more difficult for honest businesses to
compete in the market since money launderers often
provide products at less than market value.
In order to counter the problem of money
laundering,Anti Money Laundering laws have been
created in order to stop the practice of generating
income from illegal actions.