TBTF often comes under the umbrella of anti-money-laundering whereas sanctions, including those against terrorism, are often dealt with separately. However, we can see the two working in tandem and posing an area of risk.

TBTF is the practice where terrorist groups hide their proceeds using trade transactions to covertly move value. This is in order to evade detection and to make their funds appear legitimate. Methods used include Trade-Based Money-Laundering (TBML) practices. The terrorist groups which sanctions are aimed at vary largely across jurisdictions. In the case of ISIL (Da’esh) and Al-Qaida, we have a largely unified global response whereby The UN Security Council resolution S/RES/2253 (2015) establishes these sanctions on a nation-by-nation basis. In the UK, the most relevant piece of legislation is The ISIL (Da'esh) and Al-Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 (S.I.2019/466). Since both measures are concerned with reducing the access terrorist groups have to resources, we can see how they are closely aligned.

In trade finance, when considering the many steps in the process, and particularly the recipient of goods, the wording of the 2019 Regulation on ISIL and Al-Qaida, s.12 (1) ‘A person (“P”) must not make economic resources available to any person for the benefit of a designated person if P knows, or has reasonable cause to suspect, that P is making the economic resources so available’ is part of the legal underpinning, working in tandem with sanctions legislation, to prohibit the direct or indirect funding of terrorist groups.

Therefore, we should consider how that relates both to the origin of the trade, with the importers, but also the recipient of the trade. In particular, we should consider the possible connections of parties involved in the trade, and how a body can be sympathetic or agnostic to the aims of a terror group. This is where resources can end up supporting terrorist groups inadvertently, breaching sanctions and failing TBTF controls. This can also happen in an area where local entities have no other choice than to engage with terror groups. The issue of entities engaging with terror groups is made even more complex when the government of the country the entity is located in, such as the Taliban in Afghanistan, is designated. We can see that the issue of inadvertently giving economic resource to terror groups is one which has caused issues for some, such as in the case of Ericsson. After investigation, it was highlighted that ‘transport routes have been purchased through areas that have been controlled by terrorist organisations, including Isis’. Within the challenges of TBTF and sanctions on terrorism, dual-use goods have to be considered, with innocuous items such as car parts, for example heavy-duty axles, and washing machine parts, particularly the timer, being adapted for military use by terror groups. Identifying these goods that might be of need and who they are truly going to is a significant challenge.

Part of the challenge facing TBTF and counter-terrorism sanctions is that TBTF is the hardest form of money laundering to detect. Given the scale of sanctions against ISIL and Al-Qaida, they are actively trying to use obfuscated methods of transferring money as much as possible. Indeed, this relationship between TBTF and sanctions on terrorism demonstrates the need to see them as a linked phenomenon. In order to try to combat this, companies should consider the synergies between their CTF (Counter-Terrorist Financing), trade and sanctions teams in order to ensure they have the appropriate controls to help identify instances of TBTF and sanctions overlap.