FINANCE (TERRORISM FINANCING) AS A BACK BONE OF TERRORIST ORGANIZATIONS

FINANCE (TERRORISM FINANCING) AS A BACK BONE OF TERRORIST ORGANIZATIONS

INTRODUCTION:

                     The international community after 9/11 has seriously focused on terrorism financing and money laundering to combat the terrorist activities around the globe. Finance is the back bone for any terrorist organization or even for a lone wolf terrorist to carry out the activities. The terrorist organizations always use legal or illegal means to raise funds for them. It may involve funds raised from legitimate sources, such as personal donations and profits from businesses and charitable organizations, as well as from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion[1]. Even some organizations have developed a mechanism to raise funds and the rules to keep and to use the funds[2].  It also includes the facilitation of terrorist acts using other assets or stores of value (such as oil and natural resources, property, legal documents, financial instruments, and so forth). Another indirect method for terrorist financing is to store the value in various non-financial tangible/intangible assets[3]. It shows the ability of any terrorist organization to raise, keep and move the money from one place to the other. For example Al-Qaeeda had developed a well sophisticated mechanism in this regard, because Al-Qaeeda had the ability and capability in this context. Al-Qaeeda had also framed the rules to generate funds, to keep the funds and to use the funds. It is obvious from “MANUAL Of JIHAD: DECLARATION OF JIHAD [HOLY WAR] AGAINST THE COUNTRY’S TYRANTS”[4], a manual which was located by the Manchester (England) Metropolitan Police during a search of an al-Qaeda member’s home. The manual was found in a computer file described as “the military series” related to the “Declaration of Jihad.” The manual was translated into English and was introduced in the embassy bombing trial in New York[5]. This document was used as Government exhibit in the trial as 1677-T. (It will be discussed in detail latter on in the Article). So disrupting and preventing these terrorism-related financial flows and transactions is one of the most effective ways to fight terrorism. Not only can it prevent future attacks by disrupting their material support, the footprints of their purchases, withdrawals and other financial transactions can provide valuable information for ongoing investigations[6] in many cases in different parts of the world including Pakistan. So it is very important to break the back bone of terrorist organizations to curb the terrorism.

                                            WHAT IS TERRORISM FINANCING:

                       

                        The terrorism financing can be defined as:

 “The terrorism financing is an act of providing financial support funded from either legitimate of illegitimate source, to terrorist or terrorist organization to enable them to carry out terrorist acts or will benefit terrorist or terrorist organization”[7].

                        According to Financial Action Task Force (FATAF) terrorism financing means “Financing of terrorist acts, and of terrorists and terrorist organizations”[8].

“Terrorism financing is the financial support, in any form, of terrorism or of those who encourage, plan or engage in terrorism”[9].               

                                                THREE STAGES OF TERRORIST FINANCING

                        In the recent era terrorist funding has become a complex subject due to the modus operandi of the terrorist organizations. The terrorist organizations use different tactics to collect and use the funds to carry out their activities.  According to the experts on the subject, there are three stages of terrorist financing[10].

1)     Funds collection

2)     Movement of funds from one place to the other

3)     Utilization of funds

                      MEANS OF FUNDS COLLECTION USED BY TERRORIST ORGANIZATIONS:

                        The terrorist organizations use legal or illegal means to raise the funds. Because terrorists need money and other assets, for weapons but also training, travel and accommodation to plan and execute their attacks and develop as an organization[11]. These means may be Lawful Sources or Unlawful Sources. In Lawful sources the funds may be raised through Charitable Funds, Sadqa, Zakat etc. or Collection of Funds. In Unlawful Sources the finance may collected through, Proceeds of Crimes i.e. Drugs Trafficking, Arms Trafficking, Smuggling of gems and valuable woods, Extortion Money, Kidnapping for Ransom, Bank Dacoity or through Money Laundering, or by way of Corrupt Practices i.e. Tax Evasion or Suspicious Investments like investments in the business of Real Estate, or cross-border movement of cash.

                                                Modes of Terrorism Financing:

                        Terrorism Financing Current and emerging terrorism financing channels. In the short-to-medium term a number of channels are likely to pose an increased risk of being misused for terrorism financing:

» Self-funding from legitimate sources being used to pay travel and living expenses for Australians to fight alongside terrorist groups overseas. Family and associates in Australia have also knowingly or unwittingly transferred their own legitimately obtained funds to persons engaged in conflict. There is also a significant risk that self-funding may be used to fund the activities of any ‘lone wolf’ extremists within Australia. Lone wolf extremists act alone to plan or carry out violent acts in support of a group or ideology, without support or assistance from any group.

» There is a significant risk that the cross-border movement of cash may be used as a channel by Australians travelling overseas to fund terrorist groups and activity. The risk is heightened when Australians travel to Syria and neighbouring countries.

 » In Australia, the banking and remittance sectors are used more frequently than other channels to send funds to individuals engaged in foreign insurgencies and conflicts, some of whom are also suspected of engaging with terrorist groups. This largely reflects the central role of the banking sector in Australia and the utility of the remittance sector to move smaller amounts of money to jurisdictions where formal financial channels are less accessible[12].

» Online payment systems may be used to collect donations and transfer funds to extremists in Australia and overseas. The use of online payment systems may correspond with the use of social media by terrorist groups and extremists to radicalise, recruit and communicate with sympathisers.

» Stored value cards and credit/debit cards may be used by Australians linked to foreign terrorist groups to access funds overseas.

» Charities and NPOs may be used to raise funds for groups engaged in foreign conflict and as a cover to transfer funds offshore. Funds for legitimate humanitarian aid may also be diverted in Australia, or at their destination, and used to support terrorist groups[13].

This picture is taken from https://www.fatf-gafi.org/publications/mutualevaluations/documents/effectiveness.html

                                                The terrorism financing process

                        The terrorism financing process typically involves three stages:

» raising funds (such as through donations, self-funding or criminal activity)

» transferring funds (to a terrorist network, organisation or cell)

» using funds (for example, to purchase weapons or bomb-making equipment, for payment to insurgents, or covering living expenses for a terrorist cell)[14].

 

                                                What is terrorism financing and how does it occur?

                        It generally falls into two broad categories:

» funding the direct costs associated with undertaking terrorist acts – for example, expenses for travel, explosive materials, weapons and vehicles

» funding required to maintain a terrorist network, organization or cell[15].

                                                            Conclusion:

                        In short finance is the back bone of any terrorist organization, which required to carry out the operations by the organization. The law enforcing agencies must have knowledge about the modes and means used by the terrorist organizations to collect the funds, so that the law enforcing agencies can take steps to cope with the issue.    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


[2] Interview with Dr. Syed Manzar Abbas Zaidi, he is an advisor to the British High Commission. He has a PhD in Terrorism Studies and has published extensively on topics related to extremism, terrorism and radicalization. He has also taught at a prestigious British university on the subject.

[4] Manual of Jihad: DECLARATION OF JIHAD [HOLY WAR] AGAINST THE COUNTRY’S TYRANTS. Available at 

https://www.satp.org/Docs/Document/655.pdf

[5] ibid

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