FinTech, terrorism-related fund transfers and behavioural finance

ABSTRACT The arrival of “FinTech” – non-bank companies offering financial services through new technology – has changed the regulatory landscape of the financial markets. This is especially the case in the funds transfer market. While terrorist finance might have once been more at risk of detection in some jurisdictions than others, FinTech threatens to bring about a levelling of risk across jurisdictions. To what extent, though, do we expect decision-makers engaged in transferring funds for terrorism to switch seamlessly in response to changes in risk? Because terrorist finance requires choice under risk and uncertainty, it may be characterized by systematic patterns of error deriving from human decision-making processes. These errors cause delays, or “stickiness” in adaptation to new conditions and may provide openings for counter-terrorist finance (CTF).