A paper from the Non-Proliferation review on 28th June argues that the separation between export control and counter-proliferation finance (CPF) efforts may be undermining governments’ ability to detect and stop WMD proliferation; and that separating export controls from counter-proliferation finance efforts may be undermining both.  Using export-control information in screening financial transactions and using financial information in export-control decision making can be mutually reinforcing, each system feeding new information back to the other, creating a fuller picture of proliferation procurement networks.  One thing it says is that many in the international community tend to focus on international obligations, particularly targeted financial sanctions, despite the breadth of this definition.  This narrow reading of what constitutes “proliferation finance” is hindering governments’ abilities to identify and stop proliferation procurement networks. CPF is broader than simply refusing to do business with entities on UN sanctions lists or maintaining lists of export-controlled commodities (relatively easy tasks); it also requires identifying suspicious activities and financial transactions that support proliferation (a relatively difficult task).  Entities that are not sanctioned may be involved in illicit acquisitions, frequently involving dual-use goods.  It makes recommendations, including –

  • concrete ways to promote information sharing both domestically and internationally;
  • second a non-proliferation/export control expert to review SARs with the FIU;
  • conduct a systematic analysis of SAR to identify proliferation finance and export control links;
  • add a “Proliferation Finance” checkbox to SAR forms;
  • bring more insurance companies into AML/proliferation-finance efforts;
  • marine insurance companies offering cargo, hull, or liability insurance are at the forefront of international exports, making them potentially valuable players in the fight against proliferation;
  • improve goods- and activity-based automated screening tools and encourage financial institutions to use them;
  • increase collaboration between the FATF and the international export-control regimes;
  • continue improving FATF proliferation-finance typologies; and
  • export control and proliferation-finance information are mutually reinforcing; says, for example, export control authorities began systematically searching SAR information when evaluating the end users for export licenses, they could improve their understanding of end-user intent and therefore improve export-control decisions.


Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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