The Financing of WMD Proliferation: Conducting Risk Assessments

Preventing the spread of weapons of mass destruction is a critical priority for the international community. Global financial institutions are important players in this effort, as they sit on the front line of combating the financing of proliferation by illicit networks operating on behalf of non-state actors or states like North Korea. Unfortunately, many banks and companies are unaware of the best methods for discovering these networks, or what their legal obligations are for stopping these activities.

In a new report, “The Financing of WMD Proliferation: Conducting Risk Assessments,” CNAS Adjunct Senior Fellow Dr. Jonathan Brewer draws upon his extensive research into how banks can uncover financing of proliferation networks. The report provides practical advice for how financial institutions, and the national authorities that regulate them, can:

• Be aware of their obligations to combat proliferation finance;
• Identify the hallmarks of transactions and customer behavior that may be indicative of proliferation activity;
• Understand the role that risk assessments can play in strengthening the countering proliferation finance regime.

This report offers specific guidance on proliferation-focused financial crimes to national authorities and financial institutions concerned with:

• How to understand which parts of a customer’s profile or business activity may suggest involvement in proliferation activity;
• How to quantify the risk factors that constitute an indicative scorecard for financial institutions’ financing-of-proliferation customer risk.

Brewer concludes that, “by implementing effective controls to identify the financing of WMD proliferation, financial institutions can support efforts by governments and the international community, and thus contribute to global peace and security.”

The full report is available online.

For more information or to schedule an interview with experts from the CNAS Energy, Economics, and Security team, please contact Cole Stevens at [email protected] or call 202-695-8166.