Dynamics of terror financing :How terror groups mobilise funds for operations?
Since the 1990s, law enforcers have focused on identifying and deterring criminal activities revolving around the proceeds of crime. This has been done through the establishment of regulations and procedures designed to prevent the flow of illicit money. There are various types of terrorist organizations, such as state-like institutions, self-directed networks, and decentralized groups. Attacks carried out by lone actors are also common. Lone actor terrorists are usually divided into two groups: those who are inspired by terrorist groups' ideas and those who are radicalized based on their environment. The first group includes those who are already planning an attack.
Terrorists have financing requirements that are different from those of other organizations. While they may require funds for specific operations, financing is also required to support the development and operation of a terrorist organization. Those who carry out terrorist acts require funds to support their activities. The funds they raise must go towards various expenses, such as food and shelter. Lone actors can self-fund their activities through various means, such as wages, savings, credit cards, and illicit means. Attacks are usually conducted with low costs due to the damage they can inflict. The maintenance of a terrorist network or a specific cell can drain a significant number of resources. An organization's core business is to sustain itself and promote its goals over time.
Why criminals launder money? People who commit a crime usually try to prevent law enforcers and tax administrators from seeing their actions. They also try to avoid getting caught and having the proceeds of their crime traced back to their illicit origin. When criminals are asked to spend the proceeds of their crimes, they face a difficult choice: how to spend the money without generating a legitimate source of income. This can lead to the scrutiny of tax authorities or law enforcers. To avoid getting caught with money, criminals will try to hide their illicit proceeds by investing them in the legal economy. They may also try to establish a plausible explanation for their money origins.
FINANCIAL ACTION TASK FORCE
The FATF is a global organization that aims to combat money laundering, terrorist financing, and other threats to the integrity and profitability of the financial system. FATF monitors the compliance with the standards of anti-money laundering and counter-terror financing. Many countries have developed robust frameworks for addressing these issues. Terrorist attacks have a significant impact on the lives of citizens. They can also cultivate a climate of fear and undermine the safety and security of the people. The spread of terrorist content online can enable individuals to carry out attacks in a wide or small scale. The rise of radical ideas in many countries has raised concerns about their ability to carry out terrorist acts. Terrorist financing can be defined as the financing of acts of terrorism. It can involve the use of other assets or stores of value such as real estate or commodities. The United Nations has officially defined terrorism as an act of violence designed to incite a state of terror.
The United States is still vulnerable to the flow of illicit funds due to the nature of terrorist groups and their financial supporters. TF activities are carried out by networks and individuals to carry out their goals. The US is the primary trading partner of over 60 other countries. The value of a transaction is often denominated in US dollars and completed with a US dollar-denominated funds transfer. The 2018 NTFRA uses the terminology and methodology established by the FATF, which is the international standard-setting organization for anti-money laundering/counter-terrorist financing safeguards. The concepts covered by the framework are threats, vulnerabilities, and risk.
The 2018 NTFRA is based on the principles of the FATF's Risk Assessment Guide. This framework provides a step-by-step process for carrying out a national risk assessment: A threat is an act of violence or terrorism that has the potential to cause harm to a state or society. It can also include groups or individuals that are trying to carry out terrorist acts and a vulnerability is a situation that enables a terrorist organization to raise funds or carry out transactions related to funds. It can be exploited to facilitate the movement of funds or the exploitation of certain financial products whereas some TF methods have more potential consequences than others. The methods that allow for the most amount of money to be raised have the greatest potential repercussions. Many countries have anti-terrorist financing legislation. This legislation can help tax examiners and tax auditors investigate and prevent terrorist financing. Many foreign fighters who joined the fight in conflicts in other countries but were trained to fight survived and exited the battlefield. However, their return to their home countries is very worrying since they may carry out attacks against their home countries. By referring to suspicious transactions and behavior, the tax administration can help prevent terrorist financing. Another trend is the use of lone actors, who are very difficult to detect. Tax professionals should be aware of the various factors that can contribute to the radicalization process. They should also be able to identify individuals who are ready to participate in the process. Only rarely can the presence of a terrorist be observed unless there is a direct contact with them. The goal of a lone actor terrorist is to acquire the necessary resources to carry out an attack. An attack with a more complex level of complexity can be observed through various indicators. For instance, a lone terrorist may try to use various strategies such as real estate fraud to raise capital. This company is also used to acquire goods that could raise concerns. It may also be used to cover the movement of goods to and from the attack site.
THREATS:
ISIS: Despite the gains made against ISIS, the terrorist group still has a significant presence in the region. Despite its recent successes, the US intelligence community continues to assess that ISIS and its regional affiliates are still a threat to the country. The group's ability to carry out attacks and attract new members remains a concern. While ISIS lost territory in Iraq and Syria, it still derives its revenue from two primary sources. These sources include the smuggling and sale of oil products and the taxation of civilian populations. Due to the efforts to disrupt these sources of revenue, ISIS has resorted to other sources of funds, including from US persons. Despite the decrease in the number of Americans traveling to Syria and Iraq, the threat posed by terrorist groups remains. Despite the reduction in the number, the number of FTFs remains high. The US authorities are still investigating individuals who are planning on traveling to join ISIS in support of the group. Most of these individuals are purchasing plane tickets in anticipation of traveling to join the terrorist organization's territory. ISIS supporters and financial backers are also looking to move funds to support the organization and its regional affiliates in the US and other countries. Although some terrorists have avoided using regulated banks due to concerns that their transactions could be used to monitor their activities, some supporters of the Islamic State have shown less concern over their security. Authorities also identified various types of transactions that ISIS operatives might carry out through third parties to avoid getting caught. Although banks generally have effective systems in place to prevent suspicious activities, they may be unknowingly exposed to funds that originate from ISIS.
HIZBALLAH: Hizballah continues to be a major terrorist threat to the US and its allies. Its funding comes from Iran. Iran uses various deceptive tactics to hide its illicit activities. Some of these include forging documents, hiding transactions, and suppressing data. The objective is to prevent the public and companies from knowing that they were being used to carry out Iran’s illicit activities. Aside from Iran, Hizballah also receives funds from a wide network of supporters and businesses around the world. These supporters generate funds through various illicit activities, such as money laundering and terrorist financing. Through its extensive network of companies and intermediaries, Hizballah can obtain weapons and equipment in order to carry out its overseas operations. Its funds are also used to support its operatives. This access is also facilitated by the fact that, unlike ISIS and AQ, Hizballah is not subject to UN sanctions. This means that it is not restricted when it comes to raising funds. Despite the US' commitment to fight terrorism, companies in the US continue to purchase dual-use goods and equipment from companies that support the Hizballah terrorist organization.
AQ: As a result of the rise of ISIS, Al Qaeda and its regional affiliates, such as the Yemen-based group AQAP, continue to pose a threat to the US and its allies. Almost all the organization's revenue is generated outside the US, with its operatives and supporters located in various countries, including Afghanistan, Pakistan, and East Africa. In April 2018, three individuals from the US pleaded guilty to concealing the funds they sent to Anwar Al-Awlaki, a member of the AQAP. They were allegedly able to send thousands of dollars to his associates using a variety of financial transactions. Two of them also withdrew money without intending to repay them. When funds are transferred between regional affiliates outside the US, they may be routed through the country's financial system. Direct fundraising has various methods, such as social media, where funds are sent through various channels. These methods are usually used for fundraising under the false pretenses of charity. Individuals on behalf of the ANF have also sought to acquire weapons and supplies from US companies to support their activities in Syria. This individual and his co-conspirators conspired to provide material support to groups in Syria that are associated with Ahrar al-Sham, a terrorist organization that the US has labeled as a terrorist organization. They purchased various weapons and equipment from US companies and transported them to Syria.
OTHER GROUPS: Aside from the groups previously identified, supporters of other terrorist groups located outside the US may also conduct TF activities in the country. While these groups may not be as active in the US as those previously described, they may still seek to receive funds from US-based supporters. While most of the Taliban's revenue comes from its operations in Afghanistan and Pakistan, there have been cases where its supporters in the US have raised funds for the group. Since the 1990s, the Colombian Revolutionary Armed Forces have used drug trafficking to fund their terrorist activities. They have also used intermediaries to hide their funds. Authorities in the US have identified instances where individuals who were radicalized bought various weapons and materials to make explosive devices. These individuals were inspired by the ideology of ISIS but did not act on behalf of the group. On September 17, 2016, Christopher Lee Cornell purchased several items commonly used to make explosives from an online marketplace. He was arrested after he tried to attack government officials during the 2015 State of the Union address.
CONCLUSION:
The US' wealth and resources make it a target for terrorist funds. Its ability to accept global payments is also vulnerable to the funds sent on behalf of terrorist groups. Terrorist groups, such as ISIS and al-Qaeda, receive funds from US-based individuals. They use social media to target and recruit followers. Supporters of these groups may also purchase commercial goods from US companies. Despite the significant efforts of US banks to prevent TF risk, the banking system is still vulnerable to fraud and money laundering. TF facilitators can obtain funds through the banking system by abusing MSBs. While financial regulators have worked to mitigate the potential vulnerability, the risk of employees helping TF facilitators remains. Terrorist groups may also use the US currency to move funds. Due to the increased cost and time required to transfer funds, they may also use the currency of their choice. Those with branches outside of the US face higher risk of TF abuse, especially in high-risk areas where terrorist groups operate. Those with domestic operations face low risk. Although there have been cases where terrorist groups have sought funds in virtual currencies, such as Bitcoin, the risk of terrorist financing is not currently significant. Due to the nature of the transactions conducted in virtual currencies, their existence is not yet sufficient to prevent money laundering and terrorist financing. The US government has a comprehensive strategy to address the challenges of disrupting terrorist organizations' financial networks. The strategy includes the use of both enforcement and financial sanctions. The US has been aggressively targeting ISIS and its supporters around the world since 2014. Since 2014, over 90 ISIS leaders, including several senior operatives, have been sanctioned by the US. The US' efforts to disrupt ISIS' financing have included targeted air strikes against the group's cash storage facilities and support for the Iraqi government. authorities have targeted supporters of the militant group Hizballah in over 20 countries. The use of financial sanctions has significantly impacted the group's operations. The US's coordinated efforts with other countries to address terrorist financing have strengthened the fight against ISIS. The Terrorist Financing Targeting Center carries out this work by linking foreign terrorist organizations to the US. These targeted measures are designed to prevent terrorist financing through the use of funds. They are also built upon a foundation that prevents the use of anonymous funds. Through these efforts, the US was able to close off financial and logistical gaps that terrorist groups could exploit. This capability will help prevent them from financing their operations.
Pic Courtesy-Baudouin Wisselmann at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
