FATF Recommendation 5 Explained | Criminalization of Terrorist Financing

🌍 In this video, we provide a detailed breakdown of the Financial Action Task Force (FATF) Recommendation 5, which focuses on the criminalization of terrorist financing. This recommendation forms a cornerstone of global efforts to combat terrorism financing (CFT) and its close link with money laundering (ML).

💡 Why It Matters:

Terrorist financing poses one of the greatest threats to the integrity of the global financial system. FATF Recommendation 5 requires countries to establish robust legal frameworks, apply criminal sanctions, and ensure prosecution of individuals and entities involved in terrorism financing — whether funds are actually used to commit acts of terror or not.

⚖️ Key Objectives:

✅ Ensure countries can prosecute and sanction terrorist financing offences.
✅ Recognize terrorist financing as a predicate offence for money laundering.
✅ Strengthen legal tools to disrupt financial flows to terrorists and terrorist organizations.

✨ Core Requirements of FATF Recommendation 5:

1️⃣ Criminalization of Terrorist Financing
Countries must criminalize the financing of terrorism, terrorist acts, and terrorist organizations, including:

Funding the travel of individuals for terrorist purposes.

Supporting training, planning, or preparation of terrorist acts.

Financing organizations or individual terrorists, even if funds are never used.

2️⃣ Scope of Offences
Applies to anyone who provides or collects funds knowingly or willfully, whether directly or indirectly, with the intent or knowledge that funds will be used:

To carry out terrorist acts.

By terrorist organizations.

By individual terrorists.
Covers both legitimate and illegitimate sources of funds.

3️⃣ Prosecution and Sanctions

Offenders must face effective, proportionate, and dissuasive criminal sanctions.

Legal persons (companies/entities) must also be held liable.

If criminal liability cannot apply due to domestic law, civil or administrative penalties must still be imposed.

4️⃣ Related Offences
Countries must criminalize:

Attempts to commit terrorism financing.

Acting as an accomplice.

Organizing or directing others to commit terrorist financing offences.

Contributing to terrorist financing with a shared purpose.

5️⃣ Inference from Circumstances
Intent and knowledge can be proven by objective factual circumstances, ensuring prosecutions don’t collapse due to lack of direct evidence.

6️⃣ Jurisdiction
Terrorist financing laws must apply regardless of where the terrorist act or organization is located — ensuring cross-border accountability.

7️⃣ Implementation Guidance
Countries must:

Continuously update laws to address new terrorist financing trends.

Provide training and resources to law enforcement and judiciary.

Conduct regular assessments of their legal frameworks.

📌 Conclusion
FATF Recommendation 5 creates a comprehensive framework for combating terrorist financing by criminalizing all aspects of it, including travel and training, and ensuring effective sanctions. By making terrorist financing a predicate offence for money laundering, it reinforces the interconnected nature of financial crimes and the need for global cooperation.

📚 Video Timestamps
0:00 – Disclaimer & Intro
1:05 – FATF Recommendation 5 Overview
2:20 – Legal Framework & Objectives
4:15 – Criminalization of Terrorist Financing
7:10 – Scope of Offences
10:45 – Prosecution & Sanctions
13:25 – Related Offences & Accomplices
15:00 – Jurisdiction & Implementation Guidance
17:30 – Conclusion & Final Thoughts

🌟 Key Takeaways:

Terrorist financing must be criminalized fully and comprehensively.

Legal persons, as well as natural persons, must face sanctions.

Financing applies even if funds are not ultimately used.

FATF Recommendation 5 strengthens global AML/CFT standards.

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