What is Proliferation Financing?
“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 1
Why is it an issue?
A Royal United Services Institute (RUSI) and Association of Certified Anti-Money Laundering Specialists (ACAMS) survey of sanctions professionals from across the global financial industry reveals significant gaps in private sector knowledge on proliferation finance and capacity to address North Korea and Iran sanctions 2.
The financial industry has developed in the last decades a good understanding of how to enable controls to avoid the use of an institution for money laundering or terrorism financing purposes. However, implementing counter proliferation finance measures in a financial institution is a complex task as it involves specific controls to be added over and above standard name list and payment screening activities.
This often results in two main challenges that financial institutions must overcome:
- False positives: Investigators spend most of their time dealing with false positives instead of using their time to investigate cases that pose the real risk. Adding more proliferation finance checks would further increase the number of alerts and could make it practically impossible to review all cases.
- Risk of missing real matches: Identifying the real people involved in proliferation finance transactions is not easy due to deceptive practices used by the perpetuators that include use of middlemen or third parties to disguise the identity of the entities or individuals behind the transactions. Financial institutions must develop strong processes and leverage intelligent tools in order to able to stop and review transactions when a risky party is involved.
What Contineo can do?
Contineo are the experts in calibrating screening platforms. We have significant experience in the area of implementing new processes for targeted screening such that effectiveness and efficiency are optimally balanced and in lines with your risk appetite. We also provide intelligent tools needed in today’s data driven environment to implement anti proliferation finance controls in a manner that provides full explainability.
Get in touch with our SMEs to get our point of view: [email protected]
1 Source: https://www.fatf-gafi.org/media/fatf/documents/reports/Status-report-proliferation-financing.pdf
2 Global Survey of Private Sector Reveals Significant Proliferation Finance and North Korea and Iran Sanctions Implementation Gaps (https://rusi.org/PFSurvey2020)
