Counter Proliferation Financing – Can It Be Done?

The Threat of Proliferation Financing Is an Ever Increasing and a Concerning Threat

Forensic & Litigation Consulting

April 17, 2020

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The threat of proliferation financing is an ever increasing and a concerning threat. The reality is that not all banks (and countries for that matter) understand what proliferation finance is, what it looks like, how to identify it and what measures to put in place to mitigate this risk.

A 2010 FATF report by a project team comprised of international experts put forward the following working definition of proliferation financing: Proliferation financing refers to the act of providing funds or financial services which are used, in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials (including both technologies and dual use goods used for non-legitimate purposes), in contravention of national laws or, where applicable, international obligations.

In spite of there being a number of international treaties and country export controls regimes being put in place, proliferation financing for nuclear, chemical and biological weapons (referred to as Weapons of Mass Destruction – WMD) and their related delivery systems is an on-going occurrence and proliferators have been very innovative in how they go about obtaining the various components required to manufacture these weapon systems. In order to obtain the various components, proliferators need to access the formal banking system and embark on trade activities to support their illegitimate activities.

The role played by banks is thus a vital cog in the machinery of combating proliferation finance (CPF). North Korea continues to pose a significant threat and continues to gain access to the international financial system which is required to assist them in funding their development of WMD.


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