Financial Action Task Force (FATF) releases Complex Proliferation Financing and Sanctions Evasion Schemes Report

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The report highlights major vulnerabilities across the global financial system in countering the Proliferation Financing (PF).

PF involves raising, moving or making available funds, other assets or resources to persons or entities for the purposes of Weapons of Mass Destruction (WMD), posing a serious threat to global security and international financial system.

Key Findings

Global Risks: Current risk environment is characterized by state- and non-state actors acquiring and/or sourcing dual-use goods, technology, and knowledge through the use of procurement networks.
Global Gaps: Only 16% of countries effectively implement targeted UN sanctions to stop WMD proliferation.
Techniques Used by Illicit Actors:
- Use of Intermediaries to evade sanctions: Networks use front/shell companies, financial facilitators, and third-country routes to hide end-users.
- Concealing Ownership: Falsifying beneficial ownership obscures true parties, especially through digital means, complicating detection.
- Using Virtual Assets: Sanctioned actors exploit virtual currencies and new technologies to bypass sanctions, moving funds directly or through non-compliant countries.
- Exploiting Maritime Sector: The complex shipping industry, including the “dark fleet,” is exploited to disguise vessels and evade sanctions.
  - For instance, Indian investigators confirmed a mis-declared dual-use equipment on a Pakistan-bound ship.

Regularly update threat assessments to keep pace with evolving PF tactics.
Enhance information sharing to strengthen public and private sector’s ability to detect PF and/or sanctions evasion.
Add a WMD PF definition to the FATF Glossary within five years to improve global coordination.
Conduct a global review of PF risk assessments within three years to identify best practices and strengthen responses.