Luxembourg’s financial supervisor CSSF is urging banks, investment funds and the general public in the Grand Duchy to be extra vigilant in relation to money transfers that could finance terrorist groups such as Hamas and Islamic Jihad. The reminder comes just a month after the world’s top body for fighting money laundering and terrorism finance said the sector’s understanding of terrorism finance is «very low».
In a statement, CSSF said it wanted to notify the financial sector and the public of a recent communication from the Israeli Ministry of Justice and urged supervised entities to exercise heightened caution.
“The CSSF wishes to inform the public that we relay the following recent message from the Israeli Ministry of Justice, and asks the supervised entities to exercise particular vigilance in relation to the transfers referred to in the message,” the supervisor said.
91 NGOs already monitored
According to the Israeli authority, “activities of this kind will often appear under the guise of fundraising campaigns for humanitarian aid and be led by various associations and charities or private initiatives.”
Luxembourg already is monitoring 91 NGOs active in development and humanitarian projects abroad that «are likely to be at risk of (terrorism finance) abuse,» according last month’s report of the Financial Action Task Force (FATF). In the light of countering terrorism finance, Luxembourg ministry of foreign affairs since 2019 has enhanced its contacts with the financial sector whose «understanding of (terrorism finance) risks remains very low,» according to the FATF.
The message from the Israel Money Laundering and Terror Financing Prohibition Authority (Impa) calls on the financial sector and the public to increase their vigilance towards terrorist financing attempts in light of the ongoing war and state of emergency.
‘Maximum vigilance’
“Appropriate preparation and maximum vigilance are required of the financial sector in general and reporting entities in particular,” the authority said. “Special attention must be paid towards financial activity whose purpose is to finance and support terrorist activity and to assist terrorist organisations, particularly #Hamas and the #PalestinianIslamicJihad.”
Such campaigns will be published in various media, on crowdfunding sites, instant messaging applications and on the various social media networks, using a variety of channels and avenues for transferring money, including bank and electronic transfers, credit cards, advanced payment methods, gift cards and cryptocurrency.
Since the beginning of the war, the Israeli authority has been in continuous contact with its partners and financial intelligence units in other countries. It works in cooperation with its partners in law enforcement and security agencies to freeze and block accounts and other financial activities for which there is an indication that they are being used to raise funds for the terrorist organisations.
“The reporting entities, by virtue of their role as the gatekeepers of the financial system in the State of Israel, play a vital role in this struggle,” Impa said, adding that it wishes to increase vigilance.
‘Adequate experience’
Luxembourg law enforcement agencies have adequate experience and tools to identify and investigate possible terrorism finance activity, the FATF report has said. Its competent authorities, such as CSSF, have a good information mechanism and rapidly share all information linked to potential terrorism finance.
Luxembourg maintains limited trade relations with Iran for for instance medical equipment and has made some efforts to examine trade and direct financial flows, but, according to FATF, «has not considered common sanction evasion techniques.»Although this is a challenging exercise, it is critical for Luxembourg given its size and reach, which inherently has greater potential exposure to PF activities,» FATF said, referring to the financing of nuclear weapons proliferation. Luxembourg has no notable links with North Korea. The FATF report only referred to Iran in the context of proliferation finance and did not refer to Iran’s role as financial support of terrorist groups active in Israel.
The European Union has said that it will not suspend payment of development aid to Palestinians.