"Cutting off the funds " is one of the most effective weapons in the arsenal of authorities trying to deal with terrorists and other organized criminals. The international nature of such criminal organizations forces them to move money between various countries and requires international transfers and currency swaps.
Often this necessitates the use of legitimate financial intermediaries in the middle in order to get the funds across. To avoid detection, these criminals use a variety of techniques to make the transactions seem innocuous - fake IDs, shell companies, decoy businesses and so on. Such things are not easy to detect and this is where the Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) regulations come in.
Most countries in the world today have some directives and guidelines to prevent use of the banking system by criminals and terrorists - these rules make up the AML/ CTF laws and regulations. Additionally, most banks have their own internal set of guidelines as well, which are usually even more strict than the local legal requirements. Still, government AML laws help tremendously as the authorities try to plug the gaps based on their investigative experiences with ongoing terrorist activities.
The enhanced AML directive will help to cut off terrorists financial resources
The EU has been one of the more active bodies in trying to keep it's AML directives relevant and up to date. The recent amendments seek not only to restrict the use of the banking and financial system by criminals, but also to serve as a mechanism of detecting any suspicious activity in the first place and highlighting it to the authorities in a timely manner. In addition to this, the EU has to ensure that all of this is done without violating the rights of its citizens. Here are some examples of how the changes to the AML directives will help in the fight against money laundering and terror financing:
Regulators have to strike a balance between improving compliance while minimising additional costs/ delays to the end customers. The fight against money laundering and terror funding is an ongoing one, but with the right tools, it's a fight that can be won.
eIDAS & 4th Anti-Money Laundering Directive - a short update(2017), by Andrea Servida
Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (2015), by the European Parliament and the Council of the European Union