Within the realm of policy discussions, anti–money laundering (AML) and countering the financing of terrorism (CFT) efforts are generally treated as a package deal. From a policymaking standpoint, the combination makes sense. There is a convergence between the types of information and stakeholders relevant to money laundering and terrorism financing, and after the September 11, 2001 attacks it was expedient to add CFT to existing AML frameworks. Yet in practice, critics have argued this “marriage” places undue burden on the private sector and resulted in ineffective and even harmful outcomes.

This brief examines where and how AML frameworks are fit for purpose relative to CFT and considers where additional CFT-specific efforts are necessary. It begins with a brief summary of the evolution of money laundering and terrorism financing policies, discussing the unification of the two fields and the key differences between the motivations and typologies of money laundering and terrorism financing crimes. Against that backdrop, it explores the four objectives of CFT efforts (prevent, detect, freeze, and trace) to identify areas where existing unified AML/CFT frameworks are working and areas where more nuance is required to effectively combat threats specific to terrorism financing. Although particular attention is given to the United States and United Kingdom as international financial centers, similar approaches and convergences between AML and CFT policies and practices occur worldwide. The brief concludes with recommendations on how current CFT policy discourse and evolution can meaningfully support broader counterterrorism objectives.

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