PROLIFERATION, FINANCING, AND DUAL-USE GOODS definitions and source information

To put some structure around counter-proliferation efforts, the Financial Action Task Force (FATF) has developed a broad, working definition of proliferation financing.

Though not officially endorsed by the international community, it is most frequently referred to as the de facto definition :

• “Proliferation financing” refers to:
• The act of providing funds or financial services which are used, in whole or in part, for
• The manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and
• Their means of delivery and related materials (including both technologies and dual-use goods used for non-legitimate purposes),
• In contravention of national laws or, where applicable, international obligations.
• This definition is of an act of proliferation financing and therefore does not refer to knowledge, intention, or negligence.
• However, when a jurisdiction specifies the responsibilities of financial institutions or a possible criminal offence of proliferation financing, the legal principles governing these two regimes in that jurisdiction will apply, including the roles of knowledge, intention, or negligence.

FATF also says the financing of proliferation refers to the risk of

• Raising, moving or making available funds, other assets or other economic resources, or financing, in whole or in part, to persons or entities for purposes of WMD proliferation, including
• The proliferation of their means of delivery or related materials (including dual-use technologies and goods for non-legitimate purposes).   

Although it wields no legal power, the FATF is nevertheless an authoritative voice in the anti-money laundering (AML) and anti-terrorist financing (ATF) arena, and its findings and publications are highly influential worldwide. The standards, guidelines and evaluations published by the FATF

Due to the size, sophistication and/or nature of weapons of mass destruction (WMD), it would be impossible in this day and age for a regime to purchase and take delivery of fully functional WMD without international watchdogs intervening in short order.

However, some regimes—as well as some non-state actors—have explored ways to acquire or manufacture their own WMD without buying them pre-assembled.

The FATF has acknowledged that a growing range of goods and technology has commercial applications for WMD and WMD delivery systems (i.e. “dual-use” goods). While proliferators previously attempted to buy or sell whole manufactured systems with effective control systems, there is a growing trend to purchase or sell more elementary components.

Due to the catastrophic possibilities of acquiring and assembling elementary components into WMD, identifying items that could be used in this way and establishing international export controls help maintain global peace and security.

Definition of Dual-Use Goods According to the Wolfsberg Group,

• Dual-use items are goods, software, technology, documents and diagrams, which may have civil and military applications.

The Canadian government expands on this definition of dual-use goods, emphasising the potential threat their misuse could pose :

• Goods and technology that are capable of, or designed for use in, peaceful and legitimate civilian or commercial purposes,
• But which also have potential applicability in such activities as enhancing foreign adversaries' capabilities, including
• Their space capabilities, regarding the development or enhancement of weapons programs, including weapons of mass destruction.

Case studies

Information resources

1. Information provided at briefings for the private sector sponsored by the Policy & Resources Committee, in liaison with the Sanctions Committee, held in Guernsey in the fourth quarter of 2016 is available here [1Mb]. https://www.gov.gg/CHttpHandler.ashx?id=106057&p=0  

2. Information provided at briefings for the private sector held by the Policy & Resources Committee, in liaison with the Sanctions Committee, in Guernsey in the fourth quarter of 2018 is available here [5Mb]. https://www.gov.gg/CHttpHandler.ashx?id=116975&p=0  

3. Information provided at briefings for the private sector sponsored by the Policy & Resources Committee, in liaison with the Sanctions Committee, held in Guernsey in March 2023, is available here [1Mb].  https://gov.gg/CHttpHandler.ashx?id=169978&p=0  

4. Information provided at briefings for the private sector by the Policy & Resources Committee, in liaison with the Sanctions Committee, held in Guernsey in May 2023, is available here [265kb]. https://gov.gg/CHttpHandler.ashx?id=169914&p=0

5. Information provided by representatives from the Gibraltar and Isle of Man FIUs at briefings for the private sector by the Policy & Resources Committee, in liaison with the Sanctions Committee, held in Guernsey in August 2023, is available here [1Mb]. https://gov.gg/CHttpHandler.ashx?id=172558&p=0

6. Information provided at briefings for the private sector by the Policy & Resources Committee, in liaison with the Sanctions Committee, held in Guernsey in October 2023, is available here [9Mb].  https://gov.gg/CHttpHandler.ashx?id=172533&p=0

7. The slides for the Countering Proliferation Financing briefings conducted by RUSI in April 2024 can be found here [2Mb]. https://gov.gg/CHttpHandler.ashx?id=177248&p=0  

8. Additional typologies-based information from King's College London in 2017 is available here [3Mb]. https://www.gov.gg/CHttpHandler.ashx?id=116976&p=0  

Other References

• What is Proliferation Financing? - Financial Investigation Unit https://guernseyfiu.gov.gg/article/175969/What-is-Proliferation-Financing
• Proliferation financing - Financial Action Task Force https://www.fatf-gafi.org/en/topics/proliferation-financing.html
• The FATF Recommendations - Financial Action Task Force https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html
• https://shorter.me/Gem5z
• https://gov.gg/CHttpHandler.ashx?id=172558&p=0