7 June 2002
The Financial Action Task Force recently issued guidance for financial institutions in detecting terrorist financing. A copy of the guidance is enclosed for your easy reference.
The document describes the general characteristics of terrorist financing with case studies illustrating the manner in which law enforcement agencies were able to establish a terrorist financing link based on information reported by financial institutions. Annex 1 of the document contains a series of characteristics of financial transactions that have been linked to terrorist activity in the past.
The list of characteristics is not meant to be exhaustive, and only serves to show the types of transaction that could be a cause for additional scrutiny if one or more of the characteristics is present. The parties involved in the transaction should also be taken into account, particularly when the individuals or entities appear on any lists of suspected terrorists that are available.
It would be useful for institutions to adopt the guideline as part of the training material for staff in the detection of suspicious transactions. You are also reminded that such transactions identified should be reported to the Joint Financial Intelligence Unit and the HKMA.
D T R Carse
Deputy Chief Executive