Treasury Issues 2024 Risk Assessments on Terrorist Financing and WMD Proliferation Financing

The Treasury Department issued the 2024 National Terrorist Financing Risk Assessment and the 2024 National Proliferation Financing Risk Assessment. The assessments are intended to assist both public and private sectors in understanding the current illicit finance environment and developing appropriate risk mitigation strategies.

The National Terrorist Financing Risk Assessment, an update since its previous issue 10 years ago, focused on the current environment for both terrorism, and the growth of other security threats, including those related to "humanitarian crises, international health concerns, and rapidly emerging or evolving technologies with the potential to disrupt traditional business and society, [that] are increasingly intertwined with broader national security risks." Treasury reported that "the primary terrorism threat to the homeland comes from individuals in the United States who are inspired by AQ, ISIS, or domestic violent extremist (DVE) ideologies and who seek to carry out deadly attacks without direction from a terrorist group."

The National Proliferation Financing ("PF") Risk Assessment was updated and reinforces recent PF guidance issued by the Financial Action Task Force’s ("FATF"). Treasury said the purpose of the report is to "better understand PF risk on a regular basis" and to "strengthen our ability to prevent individuals and entities from raising, storing, moving, and using funds, financial assets, or other economic resources in connection with the proliferation of weapons of mass destruction (WMD)." Treasury reported that "the United States has seen persistent efforts by PF networks, operating on behalf or at the direction of state actors, including the Russian Federation, Democratic People’s Republic of Korea (DPRK), Iran, the People’s Republic of China (PRC), Syria, and Pakistan, to exploit the U.S. financial system and other U.S. private sector actors to finance WMD proliferation." Treasury called out Russia and the DPRK as the "highest-risk threat actors ... because of the scope and sophistication of their illicit procurement and revenue-generation efforts."

In the risk assessments, Treasury highlighted vulnerabilities in the U.S. financial system, including: the falsification of beneficial ownership information and obfuscating end-user/end-use and ultimate destination. Among others, the reports raised concern as to:

• Money Laundering: The assessments highlighted AML program deficiencies at banks, money service businesses and broker-dealers, including providing substantial lists of enforcement actions. They also cover a number of bank or financial institution products, including money orders and prepaid cards.
• Terrorist Financing: The assessments focused on businesses engaged in money transfer activities, including both registered and unregistered money service businesses, as well as banks.
• Proliferation Financing: The assessments also covered "cyber-enabled" financing and sanctions evasion.