Issue link: https://maltatoday.uberflip.com/i/1272935
6 maltatoday | SUNDAY • 26 JULY 2020 NEWS Banks told to watch out for patterns in terror funding MATTHEW VELLA TERRORISM is historically an uncommon factor inside Mal- ta, but terror financing is a dis- tinct phenomenon which the island has not been immune to. A report by Malta's Financial Intelligence Analysis Unit (FI- AU) has revealed various cases in which Maltese credit institu- tions were used for the funding of terror organisations, as well as for illegal activities of hu- man smuggling inside the Afri- can continent. According to a risk assess- ment from the National Co-or- dinating Committee on Com- bating Money Laundering and Funding of Terrorism, which used data held by the FIAU, Malta is vulnerable at any stage of raising, movement or the use of terrorist funding. "Given Malta's open economy and status as an international financial centre, it is most vul- nerable to being misused in the movement of funds destined for terror activity or terror or- ganisations," the FIAU said in its report to stakeholders. The more likely exposure to such terrorist funding arises from high levels of cross-bor- der business – mainly complex transactions – and the use of charities or non-profit organi- sations to act as cover for the flow of this money. However, the FIAU said that even the high rate of trans- actions passing through Mal- tese credit institutions were a source of concern: in one case, one licensed credit institution – whose name was not pub- lished – noticed that a num- ber of employees of a company held bank accounts with it, in which funds were being trans- ferred back and forth between themselves, labelled as loans and loan repayments. The transfers were signifi- cantly high. The bank was not convinced that these loans were legitimate: one employee would loan a sum of money to another employee, who then would loan a sum of money to another employee. "The bank conducted more checks on the clients and dis- covered that their common employer had been identified by reputable media sources to have links with a designated terrorist group. The credit in- stitution proceeded to report this suspicious activity, which led the FIAU to launch its own analysis." In another case, a crowdfund- ing company and its chairman opened a Maltese bank account which attracted the interest of the FIAU's foreign counter- parts. It turned out that the chairman ran a charity that received and donated funds to multiple charitable causes and jurisdictions that required hu- manitarian aid. "Further analysis established that the person belonged to an extremist Islamic movement, and that the charity, which he presided over, was linked to other non-profit organisations that supported radical Islamic causes. The analysis also iden- tified significant inward pay- ments that were made in favour of the chairman's account, held with the Maltese credit institu- tion." The transactions had origi- nated from the crowdfunding company, for onward remit- tance to various individuals: for example, first a €90,000 deposit to the chairman's account, fol- lowed then by smaller, frag- mented deposits into other EU bank accounts. "On one particular day, the chairman received a payment of €150,000 from a PayPal ac- count, and proceeded to send out a total of €88,813 in fa- vour of another natural person through six structured transac- tions. "Transactions from the Chair- man's bank account also in- dicated that he remitted close to circa €600 to a person who is suspected by the Malta Po- lice Force to be a terrorist. It is worth pointing out that, while this data and information was available to the Maltese cred- it institution in question, the subject person did not report this suspicious activity on its own initiative, but rather did so after being probed following the FIAU's request for infor- mation." In another case study, a Mal- tese credit institution submit- ted 46 STRs to the FIAU after finding similar suspicious ac- tivity linked to 58 individuals in their employment, transac- tions, residential addresses and flight ticket purchases – all of which revealed several links and relationships between the individuals. These persons were suspect- ed of being involved in human smuggling and illegal immigra- tion, as well as the funding of terrorism, by providing financ- es for logistics, to individuals linked with terrorist organisa- tions and their sympathisers. "For example, one of these individuals was later arrest- ed in an EU country following suspicion that the person was aiding illegal immigration and of assisting persons involved in terrorist organisations. On analysing the customers' trans- actional activity, various trends and commonalities were iden- tified. All the customers pur- chased a considerable number of airline tickets, both for them- selves and for third parties." In fact, a total of 4,418 airline ticket purchases were identi- fied, of which 600 were con- ducted by the same individual who was later arrested due to his links with a terrorist or- ganisation recruiter and his involvement in a migrant traf- ficking ring. Their bank accounts were al- so funded by frequent cash de- posits and third-party cheque deposits, later remitted to third parties in foreign jurisdictions, apart from having amassed a high number of Voice Over IP subscriptions. Case studies revealed in FIAU report show Maltese credit institutions can be prone to suspect transactions for the funding of terrorism "Given Malta's open economy and status as an international financial centre, it is most vulnerable to being misused in the movement of funds destined for terror activity or terror organisations."