financing of terrorism sources, pozamilitarne aspekty bezpieczeństwa
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Terrorism and Political Violence
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FINANCING OF TERRORISM: SOURCES, METHODS, AND CHANNELS
Nimrod Raphaeli
a
a
Middle East Media Research Institute, Washington, D.C..
Online Publication Date: 01 October 2003
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Raphaeli, Nimrod(2003)'FINANCING OF TERRORISM: SOURCES, METHODS, AND CHANNELS',Terrorism and
Political Violence,15:4,59 — 82
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Terrorism and Political Violence, Vol.15, No.4 (Winter 2003), pp.59
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DOI: 10.1080
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09546550390449881
FINANCING OF TERRORISM: SOURCES,
METHODS, AND CHANNELS
Nimrod Raphaeli
Middle East Media Research Institute, Washington, D.C.
Terrorism has global reach in its activities and in its sources of
funding. There are manifold sources operating through methods
that may be legal or illegal and sometimes even nefarious, and
through routes that are often circuitous. Indeed, so-called chari-
table organizations are often used as a front to mobilize funds or
serve as a conduit for the money. It is clear that if acts of terror-
ism are to be eliminated, the flow of money on which they ride
must be stemmed at the source. This is one area in which strin-
gent financial procedures and controls could be helpful. Equally
important is the control that central banks must exercise in the
financial sector, and the banking system in particular, to ensure
greater accountability and better record keeping. Realistically,
however, as long there is someone who operates a hawala system
from a back of a store, money will keep flowing. No less impor-
tant is the cooperation between countries and the enforcement of
international conventions. A recent article on the transfer of
money in Dubai notes that the authorities counted 429 sus-
picious money transfer operations between August 2001 and
May 2003. Of these, only 46 cases were thoroughly investigated
because there was little support from other countries involved,
including Britain, Switzerland and the United States.
1
Finally,
education systems that teach jihad (holy war) as the highest call-
ing for the individual and breeds religious intolerance must be
reformed.
INTRODUCTION
The financing of terrorism is a subterranean universe governed by
secrecy, subterfuge, and criminal endeavors; but also a good measure
of sophistication and an understanding of the global financial system.
It is best described as octopus with tentacles spreading across vast ter-
ritories as well as across a wide range of religious, social, economic
and political realties. Shutting the flow of money to terrorist
59
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Nimrod Raphaeli
organizations will require international cooperation at all levels, and
the results will be far from certain.
Money is the engine that drives terrorist acts, and it is not surpris-
ing that the financing of terrorism has become a matter of serious
concern for those responsible for tracing, intercepting and, if poss-
ible, preventing acts of terrorism. The events of September 11 have
heightened this concern. According to Interpol, the international
police organization, ‘the frequency and seriousness of international
terrorist acts are often proportionate to the financing that terrorist
groups might get.’
2
The September 11 attack, with its complex
planning, preparation and execution, would not have been possible
without abundant resources. On the other hand, funding constraints
have often limited the scope of an attack. One case was the bombing
of the Egyptian embassy in Islamabad, Pakistan. According to
Ayman al-Zawahiri, Osama bin Laden’s right hand, his group
wanted to take revenge for the ‘evil alliance’ between Egypt and
the United States. Their first choice of target was the American
Embassy in Islamabad; if bombing that target was not feasible, their
second choice was ‘a Western embassy famous for its historic hatred
for Muslims’; their third choice was the Egyptian embassy. In the
end, funding was the deciding factor. In the words of al-Zawahiri:
A short time before the bombing of the [Egyptian] embassy the
assigned group ... told us that they could strike both the Egyptian
and American embassies if we gave them enough money. We had
already provided them with all that we had and we couldn’t collect
more money. So the group focused on bombing the Egyptian
embassy.
3
In another case, Ramzi Yusef, the convicted mastermind behind the
1993 bombing of the World Trade Center admitted that, due to the
shortage of funds, the terrorists were unable to build as large a bomb
as they had intended.
4
DEFINITION OF FUNDS FOR TERRORISM
The International Convention for the Suppression of the Finan-
cing of Terrorism defines funds for terrorism to mean
assets of every kind, whether tangible or intangible, movable or
immovable, however acquired, and legal documents or instruments in
any form, including electronic or digital, evidencing title to, or interest
in, such assets, including, but not limited to, bank credits, travelers
checks, money orders, shares, securities, bonds, drafts, letters of credit.
5
Financing of Terrorism: Sources, Methods, and Channels
61
THE PURPOSE OF THE STUDY
Terrorism today has a global reach both in terms of activities and
in terms of its sources of funding. As the title of a recent article in the
Wall Street Journal on the activities of one individual suspected of
financing terrorism in Spain poignantly read: ‘Mapping the Trail of
Terror Money Proves Daunting.’
6
A report by the Council of Foreign
Relations points out that the financial network of Al-Qaeda, for
example, is characterized ‘by layers and redundancies.’
7
In response
to US measures to freeze terrorist funds, the Al-Qaeda leader Osama
bin Laden defiantly, and with a good measure of exaggeration, sta-
ted: ‘By the grace of Allah, Al-Qaeda has more than three different
alternative financial networks’. Al-Qaeda, he said, ‘is being run
around the world by well-educated young men. We do not have a
few hundred or a few thousands but hundreds of thousands of highly
educated young men who were well aware of these things and know
the alternatives’.
8
Perhaps not in direct response, but definitely rel-
evant, is the retort by the US Attorney General John Ashcroft who
said: ‘The war against terrorism is a war of accountants and auditors,
as well as a war of weaponry and solicitors’.
9
The methods of raising funds often commingle legitimate with il-
legitimate sources of funding, the individual parts of the mix becom-
ing not only untraceable to their source, but virtually
indistinguishable from each other. On the one hand, funds may de-
rive from legitimate charitable organizations but, on the other hand,
funds may come from credit card fraud, smuggling, protection rack-
ets, extortion, violation of intellectual property rights, and front busi-
nesses.
10
A former Al-Qaeda operative, Shadi Abdullah, a Jordanian
national who was recently arrested and interrogated in Germany, ad-
mitted raising hundreds of thousands of dollars by forging passports,
smuggling militant Muslims and asylum seekers into Germany and,
most important, by fraudulently soliciting contributions for allegedly
religious or humanitarian purposes.
11
The purpose of this study, therefore, is to highlight and illustrate
the sources, methods and channels by which terrorist organizations,
primarily but not exclusively, Al-Qaeda, have made extensive use
to finance their activities.
ZAKAT—THE PRINCIPAL SOURCE FOR CHARITABLE
ORGANIZATIONS
Zakat, or almsgiving, somewhat similar to the Christian tradition
of tithing, is one of the five pillars of Islam. Zakat is the one pillar
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Nimrod Raphaeli
whose purpose is to purify the intentions of a believer through a
social manifestation that benefits those who are less privileged. Zakat
is seen as a claim of the poor against the wealth of the rich and as a
means to maintain social equilibrium among the various segments of
the population. All other pillars, such as five daily prayers and pil-
grimage to Mecca, focus on the belief and practice of the individual
for the individual. By contrast, Zakat is the act of an individual
toward the larger community. The Zakat assumes a particularly sig-
nificant role in countries such as Saudi Arabia which, for religious
reasons, have no income tax. In lieu of income tax, individuals are
expected to donate 2.5 per cent of their income to the charity of their
choice. Huge amounts are involved but there is no reliable figure on
the size of the donations and how they are used but it is obvious that
some of the donations have found their way to nurture religious ex-
tremism or to finance terrorist activities. In a recent congressional
hearing on Saudi funding of extremism, two US senators and a panel
of terrorism experts said that top Saudi officials and institutions
spend huge sums from the kingdom’s oil wealth to promote an intol-
erant school of Islam embraced by Al-Qaeda and other terrorist
groups.
12
Not only may charitable organizations use their own money to
finance terrorist related organization but they may also serve as a con-
duit for the transfer of money to finance terrorist activities far afield.
For example the Philippines and Georgia branches of the Inter-
national Islamic Relief Organization (HRO), which is a Saudi chari-
table organization, were used by Al-Qaeda to fund the Abu Sayyaf
group in the Philippines and Ansar al-Mujahideen in Chechnya,
respectively. The HRO is characterized by a Saudi daily as ‘the
world’s biggest Islamic charity’.
13
Funds may also originate from
charitable contributions at mosques. Certainly, not all charitable
organizations finance terrorism and not all donors knowingly contrib-
ute money for terrorist activities. However, it is often convenient for
both the donor and the recipient to operate in a world of uncertainty.
FRONT AND FRAUDULENT ORGANIZATIONS
Terrorist organizations have resorted to a variety of charitable as
well as front and fraudulent organizations to mobilize resources for
terrorists to carry out their campaigns. Quite often, these organiza-
tions are disguised as legitimate business enterprises until their cover
is exposed or lifted. In the section that follows, a number of these
organizations, their disguises and their methods of collecting and
disbursing money will be highlighted.
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