Suppression Of Terrorist Financing. Hamed Tofangsaz
Terrorists need money “to buy weapons, bribe local officials, pay operatives, write propaganda, provide a social network that builds a popular base and otherwise fill a myriad of purposes.”7 It is also a convenient means of storing wealth.
Tangible resources are also needed by terrorists. At the very least, terrorists need four types of tangible goods to carry out their operations.8 “Life’s necessities” including food, accommodation, clothing, travel cost, and so on are the basic needs of members of terrorist organizations. Terrorist groups also need human resources: members and “personnel” to carry out their activities. In addition, terrorists need to have an effective communication system such as access to media, internet, cell phones, and so on to communicate with each other, disseminate their information, justify and advertise their ideology, and send their messages to their victims.9 Tangible goods also include “operational resources,” which are required to commit violence.10 They range from simple knives to very high-tech weapons, depending on the complexity of the terrorist operations and groups.
Terrorists also require “intangible instruments.”11 “Operational space” or sanctuary is the time and space needed to plan, train for, and execute terrorist attacks.12 A sanctuary can be a small house at the center of a big city or a big camp or farm far from any prying eyes. “Operational security” resources are also needed to enable terrorists to keep security forces from discovering their location, plans, and the people involved in terrorist activities.13 Furthermore, terrorists need “intelligence” to plan how, where, and when they execute their terrorist activities. How much information is needed depends on the scope and complexity of operations.14 Terrorist groups also need “publicity” to promote their ideology, to justify their violent actions, and to encourage people to join them.15 Without effective “leadership,” all of the resources might be useless; so, “command and control” mechanisms are needed to help terrorists to plan, coordinate, and execute their attacks.16 In essence then, it is obvious that terrorists do require different forms of support to carry out terrorist acts.
The Sources of Terrorist Financing
Terrorists meet their funding needs in different ways, depending on the type and purposes of groups, the inherent capabilities of groups, the “opportunities at hand,” and the types of resources needed.17 Also, terrorists can be self-financing or sponsored by states or private actors, individuals, companies, and organizations. In either situation, funds can be derived from legal or illegal sources, or both.
Illegal Sources
It is believed that because of the dramatic decrease of state-sponsored terrorism, terrorists have turned to alternative sources of funding, including criminal activities such as arms trafficking, extortion, credit card fraud, smuggling, robbery, cheque fraud, racketeering, kidnap-for-ransom, and most importantly, drug trafficking or the sale of oil and gas.18
Drug trafficking is the most important and attractive source of funds for large terrorist groups.19 This phenomenon, called “narcoterrorism,” involves terrorist groups cultivating, refining, and distributing narcotics across the world.20 This trend has been apparent since the 1990s. It usually takes place in countries where such groups control territories.21 Evidence shows that, for example, the Revolutionary Armed Forces of Colombia, the Peruvian Shining Path, Taliban, Al-Qaida, and Islamic Movement of Uzbekistan all used drug trafficking as an important source of terrorist funding.22 The United Nations Al-Qaeda and Taliban Sanctions Monitoring Team’s assessments reported that, out of the total 2011–2012 budget of the Taliban of US$400 million, “one third was raised from the poppy trade.”23 Also, a 2007 United Nations report declared that the total value of the export of drugs from Afghanistan stood at around US$4 billion divided up among insurgents, warlords, and drug traffickers.24 Opium production in Afghanistan has been rising in the last few years.25 It is not clear how much these groups, such as Taliban—a designated terrorist group, “profit from the drug trade, but whether they do isn’t up for serious debate.”26
Legal Sources
Terrorism may be financed with considerable support and funding from and through legal sources, including donations and investment in legitimate businesses.
Donations and the Role of Nonprofit Organizations
Donations, which may come from individual donors or from charitable organizations, are a common means of terrorist funding.27 An individual donor can be a wealthy person who directly donates huge sums of money to a terrorist group. A very famous example of a wealthy donor is Osama Bin Laden who spent his estimated US$20 to 30 million inheritance on funding Al-Qaeda. Also, it is claimed that Shad Sunders, a rich Tamil living in California, donated US$4 million to the Tamil Tigers.28
Donations can be also solicited from those who donate as part of their religious obligations such as Islamic “Zakat.” Zakat is 2.5 percent of one’s accumulated wealth, which is an example of donation. It might be collected by some Islamic charity organizations that are in contact with terrorism.29 Donations may be raised by diasporas who seek self-determination. Tamil diaspora was a noteworthy example of a diaspora “as a people with common national origins who lives outside a clamed or an independent country.”30 Sri Lankan Tamil diasporas across the world provide and transfer considerable amount of money and materials to the Tamils people in Sri Lanka. It was high likely that while it existed, some part of the funds provided went to the Liberation Tigers of Tamil Eelam group; the group is designated by some states such as the United States, the United Kingdom, and EU as a terrorist group, which fought for Tamil self-determination against the Sri Lankan Government.
Donations are usually collected through nonprofit organizations such as charities. Enjoying public trust, having a global presence that provides a framework to operate internationally and being subject to lighter regulatory requirements than other financial institution are characteristics of these organizations which make them attractive to terrorists.31
Charities can be abused in different ways. Terrorists may take over an entire charity and use it as a front organization. In such a case, called a “sham charity,” terrorists use the charity as a vehicle to perpetrate fraud against donors in order to raise and disguise funds for terrorism.32 Terrorists may also infiltrate an established charity by taking over some branches of a large charity and diverting some portion of the donations collected for humanitarian purposes to terrorists. For instance, in 2003, the chief executive officer of the Benevolence International Foundation, an Illinois-based charity in the United States, was convicted of diverting of US$315,000 of charitable donations to terrorist groups.33
Nongovernmental organizations can also provide facilities for terrorists, such as a “shipping address[es], housing, employment, identity cards, [or] a recognized reason to be at a particular location.”34 For example, Al-Qaeda members confessed that they received identification cards from the Kenya-based Mercy International Relief Organization as they plotted the 1998 U.S. embassy bombings in Nairobi.35
The role of nonprofit organizations, companies, and “sympathetic financial institutions” in transferring funds or logistical resources to terrorists is also considered important. For example, those entities can use their bank accounts to collect funds or to transfer those funds to any destination required.36
Investment in Legitimate Business
Legitimate businesses are a complex and “versatile tool” for the financing of terrorism.37 In its simplest form, terrorists can establish a local business and use its income for their purposes. They can also invest in stocks, bonds, real estate, construction companies, honey shops, tanneries, banks, agricultural commodity growers and brokers, trade businesses, bakeries, restaurants, and bookstores and in any business, local or international, open to such investment. Evidence shows that large terrorist groups like Al-Qaeda have invested in the past in various businesses such as wood and paper industries in Norway, hospital equipment in Sweden, real estate in London, and newspaper