Quantifying the terrorist financing (TF) risk from a geographical perspective can be challenging. What data is relevant for inclusion in the country evaluation and where can you find the appropriate data are important questions. Once you have the data though it can prove invaluable when trying to address the TF risk as part of your ongoing monitoring programme.
Key indicators for TF can involve small amounts of money, sometimes frequent transfers, and transfers to and from other jurisdictions. This presents its own challenges as these types of activities can often reflect typical banking patterns. Detailed data analysis to look at patterns and tune the monitoring rules to pick up on relevant nuances will be necessary. But enhancing the monitoring to focus on high-risk jurisdictions can be one way to refine the monitoring and potentially achieve more of a quick win for your monitoring programme.
The SQA Country Risk Index (CRI) can simplify this process by providing a comprehensive country evaluation specifically focused on TF Risk. For TF country risk evaluation, SQA recommends inclusion of the following key categories within the County Risk Index:
- AML Maturity
- Transparency, Bribery and Corruption
- Nuclear Proliferation
- Human Trafficking
- Arms trafficking
- Narcotics Proliferation
- Sanctions Sensitivity
- Terrorism Density
- Terrorism Counts
- Governance and Political Stability
- User Knowledge
The combination of these categories serves to provide a sound basis for where the TF risk may be greatest with consideration of the likes of criminal activity which can be used to fund financing of terrorism, consideration of governance and political stability within a country, where high levels of instability can be potentially linked to higher levels of conflict, the inclusion of the actual levels of terror-related sanctions, consideration of the AML controls and governance standards within a country, etc.
The User Knowledge category within the SQA Country Risk Index allows the users to incorporate internal knowledge relating to some specific or all countries as required. This may be pertinent following on from national risk assessments and consideration of the terrorist financing risks by various intelligence units, where this information may be shared formally or informally with your organisation.
These categories combined include over 35 different data sets which are aggregated up to provide a total score per country. This country evaluation provides a consistent view of the potential TF country risk which can be used to support due diligence and ongoing monitoring processes across the organisation. The country ratings can be incorporated into your automated processes as required.
For further information about managing country risk, Contact us at SQA Consulting about our Country Risk Index.