Combating the Financing of Terrorism (CFT)
What the CFT domain tests
The Combating the Financing of Terrorism (CFT) domain tests whether you can detect and disrupt funds or assets linked to terrorism, terrorist organisations and individual terrorists. In Pakistan, this means applying targeted financial sanctions, understanding TF typologies and reporting suspicion to the FMU, while coordinating with NACTA, the CTD and sector regulators.
Core rules
- Targeted financial sanctions (TFS). Screen customers, beneficial owners and counterparties against UNSC consolidated lists and Pakistan's proscribed entities. Freeze funds and other assets without delay and without prior notice when there is a true match; prohibit making funds available; report the freeze.
- TF is not defined by amount. Small, legal-source donations can finance terrorism. Look at destination, beneficiary, intermediary and purpose.
- NPO and charity risk. Apply risk-based due diligence to non-profit organisations: governance, programmes, financial controls, partner vetting and foreign-transfer monitoring. Do not blanket-debar the sector.
- Hawala/hundi and alternative channels. These are high-risk where value moves outside regulated channels. Record indicators, conduct EDD and report suspicion.
- STR obligation. File with the FMU via goAML; do not tip off. A sanctions freeze and an STR are separate actions and may both be required.
Worked example
An NPO customer receives a foreign donation and immediately transfers most of it to an individual in a conflict zone, with no identifiable aid project and repeated cash withdrawals. Reasoning: the destination, unrelated beneficiary, lack of programme evidence and cash use are TF indicators. Conduct EDD, verify the donor and beneficiary, screen against sanctions lists, and file an STR. Freeze only if a designated person or entity is matched; suspicion alone does not authorise freezing.
Traps
- Assuming TF always involves large sums.
- Treating a sanctions match as a customer-service issue rather than a freeze obligation.
- Filing an STR but failing to screen or freeze on a true match.
- Ignoring in-kind support, such as equipment or travel.
- Tipping off the NPO or beneficiary.