Three Stages Of Terrorist Financing

The three stages of terrorist financing are usually given as raising funds, moving them, and using them. Each stage is short and the whole sequence can run in weeks.

They are often confused with the money laundering model of placement, layering and integration. That model describes a different problem. Placement, layering and integration exist to disguise the origin of criminal proceeds and return them to the legitimate economy.

Terrorist financing runs the other way. The origin may be perfectly legitimate, and the concern is the destination and the purpose. Nothing needs to be integrated back into the economy, because the money is spent.

Using the wrong model in training leaves staff looking for a disguised origin that may not exist, while paying less attention to destination and purpose, which is where the risk sits.

AUSTRAC publishes guidance for reporting entities. This is general information rather than legal advice, and obligations vary by state and territory.

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