Proliferation Financing risks: key facts
Proliferation Financing (PF) forms part of the compliance landscape, like anti-money laundering and counter-terrorism financing (AML/CTF). However, only recently have regulators started introducing tighter measures to help businesses identify PF risks.
What is Proliferation Financing?
- While there is currently no international definition of PF, it can be described as
- Providing products and financial services for the transfer and export of nuclear, chemical or biological weapons.
- Including their means of delivery and any related materials.
- It can also include.
- Providing other financial or legal support or arrangements that engage in proliferation,
- Along with financing trade in proliferation-sensitive goods [EG Dual-use goods].
Steps FATF has taken.
- In September 2022, the amended standards drafted by the Financial Action Task Force (FATF) to identify, assess, and mitigate PF risks were formally introduced.
- Financial institutions and some designated non-financial businesses must now undertake a PF risk assessment and produce a copy of the assessment on request.
How Proliferation Financing differs from AML/CTF
- Until recently, PF hasn’t been considered a foundational aspect of enterprise-wide risk assessment (EWRA) like AML and CTF.
- However, in the UK’s first national risk assessment on PF, it’s been elevated as a key component of building a robust compliance program.
- But because PF is less understood than money laundering and counterterrorism, it’s also more difficult for businesses to detect.
So what is PF THREAT Risk?
According to FATF, it involves.
- Threat, vulnerability, consequence, and a business’s obligations to identify, assess, and understand the risks of a potential breach, non-implementation, or evasion of the targeted FINANCIAL SANCTIONS OBLIGATIONS.
Potential Red Flags
- There are some common factors to look out for when identifying PF activity, including:
- Transaction deals involving dual-use goods or other controlled commodities.
- Dual-use items are:
- Any goods, software or technology used for civilian and military purposes.
- These items represent a greater PF risk because proliferation networks are more likely to procure individual goods and component parts.
- For those in the supply chain, or even people processing payments, these transactions may appear harmless but can be a red flag for PF activity.
Meet the team of industry experts behind ComsureFind out more
Keep up to date with the very latest news from ComsureFind out more
View our latest imagery from our news and workFind out more
Think we can help you and your business? Chat to us todayGet In Touch
As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email firstname.lastname@example.org.