TERRORISM AND ITS FINANCING

There are two main factors that define the operational quotient of an organization and, hence, its dangerousness: its recruitment and financing capabilities.

Youth with no future

Recruitment is not a problem today, since there is a large offer of manpower in both the Arab and Muslim world. The widespread instability provides immense operational opportunities; the mixture of social unease, rancor and economic frustrations pushes masses of hopeless people to dedicating themselves to an ideal inspired by religion. The hammering propaganda of Islamic organizations or the sermons in the mosques fuel resentments, inspire and spread radical theories disguised as social services.

The youngster with no expectations about his future, with no work or money, living under a totalitarian regime or being abused or simply poor, is ready to turn his rage and frustration into violence and, if the recourse to force is justified on religious grounds, any psychological barrier between acting for good or evil will easily decay. Terrorism for him will become a necessity, an opportunity, an expectation. If you have no future, you have no fear of the future. The social context and the above mentioned circumstances facilitate the recruitment of potential terrorists.

Follow the money

What is definitely more complicated is the financing of terrorist groups because, even though there is a lot of money around, you need to be cautious, concealed and hidden when it comes to moving such masses of cash. In other words, these movements ought to be invisible to avoid being spotted: both to preserve the anonymous identity of those supplying the funding, and to ensure that the money reach its destination.

The funding of terrorism is a field that sees a massive involvement of intelligence agencies, organizations tasked with preserving the security in various countries; they are particularly equipped and involved in fighting this scourge and that's why radical groups have to take a series of precautions. This is also because in anti-terrorism the motto “follow the money” always has a positive fall back.

There are different ways money can circulate, both formally (as in banks), regardless of the stringent banking controls and the fact that any financial transaction leaves indelible traces behind it, and outside the legitimate circuits. It is clear that terrorist organizations are more inclined for the latter of solutions, even though large portions of their funding still finds its way on “official” channels.









The official channels

The primary “official” highway for the transiting of money towards fundamentalist organizations are Islamic banks, that is those financial institutes where, in the attempt of applying a concept of equity in the distribution of wealth as dictated in the Koran and by Islamic law (the 'sharia'), both the concepts of interest rates and financial speculation (perceived as usury) are refused.

Initially founded in 1963 in Egypt, and which then spread with creation of the Islamic Development Bank in 1975 and the Islamic Association of Islamic Banks in 1977, Islamic financial institutes have expanded throughout the Arabic world and beyond. The nature of these banks, due to their religious approach, the vicinity to the Muslim clerics and their recruitment of personnel borne out of religious structures, better than others adapts to all those financial transactions with a preeminent ethical-religious physiognomy.

Being channeled in the apparently clean-money form that may end up being ill employed is mainly the 'zakat', that is the system of financial donations devolved by pious Muslims in favor of the poor. This form of charity, which is proportional to one's income, is a toll of Islamic solidarity whose aim is to compensate social inequality. This money is official, public, known and thus exempt, until proven otherwise, from any suspicion. But the fact that these sums transit through these banks and that they circulate mainly in Arabic or Muslim countries makes the attempt to “follow the money” problematic. We should all remember that the funding for the 19 attackers that carried out the 911 terrorist attacks was channelled through legitimate banks based in Dubai.

Islamic finance is today particularly widespread also in Western countries and manages a yearly estimated turnover between 1.500 and 2.000 billion dollars. It is thus easy that, in such an enormous flow of money, transactions bearing hidden purposes may well pass unnoticed. Some of these Islamic banks have been accused of being a direct – and not fortuitous – tool for the financing of terrorist and/or extremist organizations. This is the case of the Al Barakaat Bank, that owns at least 40 branches worldwide, the Al Taqwa Bank, allegedly controlled by the Muslim Brotherhood and also hosted in tax havens, the al Daar al Mahal al Islami and the Dallah al Baraka, in the recent past allegedly under the control or influence of Osama bin Laden.

Along the Islamic banking sector are the Islamic foundations, commonly known as 'waqf', whose role is to manage both funds for charitable purposes and religious real estate, such as mosques. The foundations receive donations, charity and endowments. Often, in the folds of this financial flux, circulate money with dubious goals. To understand the dimension of this phenomenon, the mosques managed by Islamic foundations are about a thousand only in Italy.

Charitable organizations supplying humanitarian aid are next down the line. They also receive charity and zakat, but the key issue with them is the overlapping of illicit financing and recruitment activities. The same thing can be said of the koranic schools across the world, where books, recordings are sold, member fees are collected, conferences and meetings are organized.









The alternative systems

Beyond the so-called official channels, lies an alternative informal system for financial transactions: the famous and widely utilized in Somalia (and then replicated elsewhere) 'hawala' (transfer in Arabic). I give my money to an agent in my country, while another agent provides the same amount of cash to the recipient in another country. The two agents are financially compensated on an account managed by the hawala company in a third country. The names of either the sender or the recipient are unknown, there is no trace of an international money transfer. The hawala system has its main operational base in Dubai, it guarantees clients their anonymity and it is hence extremely useful to those who want to conceal their financial dealings. Its yearly estimated turnover is between six to eight billion dollars. The hawala system has recently evolved and expanded thanks to a partnership with legit money-transfer agencies who sometimes operate disregarding national laws on financial security and control.

Complementary to the informal money transfer system is the physical carrying of cash by a person from one country to another. The risks, in this case, are mitigated by the employment of relatives. Internet is another tool where financial transactions between illegitimate agencies can be carried out quite easily. One of the latest developments is also the transfer of funds via phone cards and top ups (opposed by the Al Shabab in the areas under their control in Somalia; they preferred the hawala).

Illicit money transfer activities for terrorist goals often go hand in hand with similar criminal money laundering activities. As widely confirmed by facts, despite their different criminal and subversive backgrounds there is a collusion and synergy between these two underworlds that share a common goal. The Afghan Talebans are involved in drug trafficking and impose levies on opium cultivators (known as 'ushr'), the Somali Al Shabab impose duties in the territories under their control (in the ports, on carbon trade, at checkpoints). The proliferation of similar activities is common to other parts of the world where terrorist groups are present: racket, laundering, human being and arms trafficking, robberies, thefts, kidnappings and ransom requests (Mali and surrounding areas), forgery of identification papers (the Algerians in Italy), the trade in precious gems (Boko Haram in Nigeria and apparently also Ansar al Sharia in Tunisia).

Lastly, front companies whom, behind a legit and official facade, conceal their illegal dealings also deserve our attention. Western intelligence agencies have discovered similar outfits several times in the past. First in the row are import-export companies. This is a specific sector Al Qaeda has invested on since its beginnings. It is sufficient to remember all the investments (funded to generate revenue, but also to transfer money) that were allegedly owned by Osama bin Laden: the already mentioned import-export companies, agricultural land in Tajikistan and Sudan, real estate and forestland in Turkey, paper mills and timber in Norway, fishing vessels in Kenya and so on. The estimated value of both properties and investments is of around five billion dollars.

A difficult fight

The globalization of markets, offshore companies, tax haves, trusts, all offer great opportunities to covert financial transactions. The modern terrorist is not the sedimented stereotypical bearded mujaheddin with a kalashnikov in his hand shouting “Allah Akbar”. The radical combatant is just the bottom of the heap of the terrorist chain, the manpower and not the mind. Behind him, and definitely more dangerous, is the expert of financial and banking systems, the manager who is familiar with communications and internet, has knowledge of the markets, of the laws that regulate them and knows how to avoid them. He is the so-called white collar behind the radicals on the field.

It is a difficult task to decipher a world where legal and illegal activities overlap, where it is hence arduous to find a clearcut demarcation between finance and terrorism. This is why intelligence agencies have dedicated massive resources to this area of research. The United States, for instance, have approved extremely strict financial laws. Europe has done the same against money laundering thanks to the initiatives of the Financial Action Task Force. The United Nations, despite being incapable of strongly imposing their measures, have adopted and approved a series of measures aimed at fighting the financial circuits that fuel terrorism. This is because it has been widely proven that the money fueling a terrorist group mainly come from abroad and hence need, in some way or the other, to be transferred.

The financing of terrorism is far from being eradicated and, if this is not done efficiently, we can forget about defeating terrorism. Any terrorist, even one with strong ideological motivations, needs money to survive and to succeed in his deadly fight.