DEFINITION
Combating the Financing of Terrorism (CFT)
CFT regulations refer to the rules and measures designed to combat the financing of terrorism. These regulations require financial institutions to implement policies and procedures to detect, prevent, and report transactions that may be linked to the funding of terrorist activities. CFT regulations are often paired with Anti-Money Laundering (AML) regulations due to their similar policies.
Synonyms
Countering the Financing of Terrorism
Acronyms
CFT
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Synonyms
Countering the Financing of Terrorism
Acronyms
CFT
Examples
In order to comply with CFT regulations, financial institutions will need to perform Know Your Customer (KYC) and Know Your Business (KYB) checks during onboarding and throughout their customer lifecycle. This can include logging identification material, monitoring transactions, establishing the Ultimate Beneficial Owners (UBOs), and so on.
FAQ
What is the purpose of CFT regulations?
The purpose of CFT regulations is to prevent financial institutions from unknowingly supplying funds to terrorist organizations.
How can banks comply with CFT regulations?
Banks can comply with CFT regulations by implementing a robust KYC/KYB system and a risk-based approach when dealing with new or existing customers.
What is the difference between AML and CFT regulations?
While the two sets of regulations utilize similar policies, they differ in scope. Namely, CFT regulations specifically target the financing of terrorism while AML regulations prevent transforming illicit money into legitimate funds.
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