Will terrorist financiers and money launderers take advantage of South Ossetia hostilities?

For those of you who are watching the disturbing developments in South Ossetia and Georgia; note well, whenever there is armed conflict resulting in civilian casualties and refugees, the United Nations and private charities are not the only one who react. Money launderers, particularly those involved in terrorist financing operations, look upon these as opportunities. Let's look at the types of activities they typically engage in as they seek to take advantage of the chaos and urgent needs in the aftermath of war.

Compliance officers at international banks whose clients often include charities might want to raise the level of awareness of their staff to financial crime by using these illustrations:

• Terrorist financiers divert desperately needed air relief, food and supplies whilst it is en route to the region. I personally would be watching the accounts and assets of Kurdish charities, particularly those linked to the PKK terrorist organisation, for an increase in activity.
  

• Small and previously obscure EU charities specialising in the Caucuses could be co-opted by terrorist groups, to then make a broad-based appeal for funds for South Ossetia, which, of course, never reach the needy.
  

• Financial professionals working for terrorist organisations might obtain large amounts of relief donations by using the name of a charity or NGO that is deceptively similar to that of a known, bona fide entity. Given the diplomatic and military support rendered to Georgia in the recent past by America, I would look for a terrorist financing group to try to raise funds inside the United States, properly assuming that donors would not vett the entity too closely, due to their emotional response to the Russian attack.
  

The other emerging threat is that money launderers, operating in the region for narcotics traffickers, will seek to move the proceeds of crime by disguising the wire transfers as relief funds in transit, hoping that compliance officers will not investigate in the rush to get relief to the injured, wounded and displaced refugees.

Remember, the emergency nature of the emerging South Ossetia/Georgia refugee problem operates to interfere with normal customer identification, due diligence and overall compliance functions.