Correspondent banking arrangements can be manipulated to disguise the movement of funds for terrorist financing purposes according to the International Monetary Fund’s (IMF’s) recently published book on counter terrorism financing frameworks (Trade-based Financial Crime, 15 May 2023).

But Countering the Financing of Terrorism: Good Practices to Enhance Effectiveness also suggests that financial service providers de-risking by closing down correspondent banking arrangements heightens the risk of terrorist financing, and that banks could be incentivised to maintain such arrangements.

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