The Economics of Terrorist Groups
Last month, btw published news of “cultural vandalism” committed by the Islamic State (which is variously referred to as IS, ISIS, and ISIL). The extremist group appeared to have destroyed ancient artifacts in the Middle East because the objects were viewed as religiously offensive. However, there is growing evidence to suggest that ISIS has been illegally selling the stolen religious artifacts to fund its terrorist network. This week, btw digs a little deeper into the history of how terrorist organizations finance their organizations.
The Importance of Revenue
While the motivations of organized terrorists groups vary (promoting extremists religious beliefs or fighting for independence), political goals are difficult to accomplish without money. This can include maintaining a central location for leadership–even if it is hidden and secretive, supplies, communication, weapons, recruitment, training, and travel.
Because terrorists are involved in violent acts and other illegal activity, it is usually necessary to acquire funding in ways that cannot be easily detected by the authorities. Here are a few of the most common ways terrorists obtain and manage their money:
Illegitimate Charities
There are tens of thousands of Islamic-sponsored charities. Most of these are legitimate and provide needed services to the members of the Islamic faith. But some of these “charities” exist solely as money-raising outfits for terrorist organizations. Charities are a good front because they often deal in cash and lump-sum deposits. This makes it difficult for law enforcement to differentiate between who is doing good and who is not.
Illegal Activities
The ISIS confiscation and re-selling of artifacts is a good example of illegal activity, but not the most common. The drug trade has long been a lucrative practice of terrorists. Kidnap-for-ransom, arms trafficking (the smuggling of illegal guns and ammunition), credit card fraud, and extortion (threats or blackmail) are other common ways for criminals to raise money.
Legitimate Business
There are some businesses that deal in cash more than others, such as restaurants, convenience stores, parking lots, or vending machines. Terrorists can deposit money obtained by illegal means by including it in deposits of cash made legitimately. Once inside of a bank, funds are transferred to different accounts to avoid detection by authorities.
Countering Terrorist Financing
The direct costs of carrying out an individual attack can be relatively low relative to the damage created. (The 1995 Oklahoma City bombing is one example of this.) However, without consistent funding and infrastructure, terrorist groups have considerably less power. This makes the act of disrupting and ultimately dismantling financial networks a crucial element to counter-terrorism efforts.
During World War II, Nazi soldiers stole works of art from many European countries they invaded. Allied soldiers reclaimed many of these economic treasures as the war ended. Photo credit: US National Archives & Records Administration (111-SC-203453-5)
After the September 11, 2001 attacks on the World Trade Center, the Federal Bureau of Investigation (FBI) created the Terrorist Financing Operations Section (TFOS). This department, located within the Counterterrorism Division, is responsible for providing financial expertise on all terrorist investigations. TFOS agents scrutinize accounting and tax records of alleged terrorist financing operations, as well as track any suspicious activity.
In 2006, the United Nations adopted a Global Counter-Terrorism Strategy. The efforts of the TFOS and the UN have resulted in the arrest and/or disruption of several high-profile suspects, including those linked to the Taliban and al Qaeda.