Know Your Customer/Risk Management Procedures Against Terrorist Cross-Border Finances: Lessons From Russia-Chechen Conflict

The political contradiction of “one man’s freedom fighter is another man’s terrorist” is very much evident in the international terrorism aspect of Russia-Chechen conflict. While the U.S. administration fails to recognized this problem as a terrorist flash-point, for the Russian government there were no doubts that one of the major financial supporters of the Chechen extremists has always been Usama Bin Laden has, in fact, mirrored the Russian problem of preventing the proliferation of radical Islamic terrorist finances. Meanwhile, Russia is still on the FATF “black” list of non-co-operative nations. One of the reasons named being is lack of anti money laundering procedures for the banks. This short paper will try to show that the situation can only harm the efforts to comat illicit terrorist finances. Furthermore, there should be a procedure in place, which would allow banks to apply to release their money if they challenge the freezing. If the legal framework has been put in place banks have to have a compliance program and even software to be able to identify the suspected companies and persons out of thousands of transactions banks has each day. Eventually, the whole problem comes down to availability of the resources within existing the legal, compliance and due diligence framework as outlined by FATF. In this respect the operational and preventive aspects of Know Your Customer (KYC)/Risk Management (RM) procedures of financial institutions (FI) have come to play a pivotal role.