Combating Proliferation Financing: A European Banking Perspective

Summary:

The issue of financing the proliferation of weapons of mass destruction (WMD) has gained momentum recently as a result of international disputes over the nuclear armament programmes of Iran and the Democratic People’s Republic of Korea. The European Union (EU), as part of wider efforts by the international community, has put in place a complex regime to prevent and combat the financing of WMD proliferation. This regime can be characterized as a new hybrid, with elements borrowed from the conventional financial sanctions and the anti-money laundering/ combating the financing of terrorism regimes. This paper addresses the practical implementation difficulties of the EU’s anti-proliferation financing regime and the role that the banking sector can play in the fight against WMD proliferation and its financing. It argues that—next to national export control measures aimed at restricting the illicit transfer of proliferation-related goods and services—financial measures can only play a limited role, because banks are not provided with adequately updated and actionable information on proliferators by the competent authorities.

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