In plain English
Countering the financing of terrorism (CFT) is closely linked to AML but different in an important way: the money used to finance terrorism may come from legitimate sources and may be small, so detection depends less on spotting dirty money and more on knowing who the money is going to, and why.
CFT relies heavily on targeted financial sanctions, which require institutions to freeze the assets of designated individuals and entities and not make funds available to them. Many frameworks also address the financing of proliferation of weapons of mass destruction, often called counter-proliferation financing.
Why it matters to a board
Obligations on sanctions and terrorist financing are generally strict, and expectations on speed are high. Boards should know how quickly the institution can act when a list changes.
Common mistakes
- Assuming AML controls alone will catch terrorist financing.
- Updating screening lists slowly after a designation.
- Looking only at the customer and missing owners, controllers and counterparties.
What the standards and regulators say
- FATF Recommendations: international standards on combating money laundering and the financing of terrorism and proliferation
- UAE: Federal Decree-Law No. 10 of 2025 on anti-money laundering and combating the financing of terrorism and proliferation, and its executive regulations (Cabinet Resolution No. 134 of 2025)
- UAE Executive Office for Control and Non-Proliferation: targeted financial sanctions and the Local Terrorist List