Funding for Terrorists

1 Funding for Terrorists Introduction The execution of well coordinated activities of terror the world over is quite an expensive affair that can hardly be successful without heavy, proper and organized funding. The acquisition of numerous complex weapons as well as the high level training skills offered in order to handle such weapons among other activities requires millions of dollars to fund and support. In the recent past, terrorism has transformed itself into an illegal industry where poor disillusioned youth are easily lured into it by the sheer amount of funds they are promised after committing heinous acts of terror. These funds are mainly sourced from the sale of illicit drugs, sale of contraband cigarettes, weapons, minerals such as gold and diamond, contributions from charities as well as proceeds obtained from informal banking and other ruthless means like kidnappings and seeking for huge ransom. This report covers an in depth analysis of all these methods employed by terror groups and organizations as they seek to bank roll their activities to enable them run terrorism with relative ease and finesse.

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Illicit drugs and terrorism The manufacture and sale of illegal drugs is by far the single most reliable source of wealth in the world. These drugs are cheap to make but their market return value is super enormous, with the State Department Office for International Narcotics Matter estimating the production cost of a kilo of cocaine to be about $3,000. In the market, the same amount of cocaine will fetch about $20,000. According to the State Department figures for 2001, cocaine amount of at least 5,000 metric tons were sold whose street value is $50 billion. In that same year, heroine weighing 500 metric tons was also sold and fetched a collective figure of $30 billion (Ehrenfeld, 2002, p.392).

Terrorists use their huge returns from drug trafficking to corruptly buy their way through government enforcement agencies, especially in countries with weak economies where officials are paid poorly. The Eastern Asia region has particularly been exploited by terror groups in order to raise funds for the running of their activities. Southern Asia has equally been a lucrative market for illegal drugs, with former Al Qaeda leader Osama bin Laden said to have been involved in one way or the other.

In Latin America, there exist established support bases set up by international terror groups whose main objective is to financially support and maintain activities of terror. The common border area of Argentina, Paraguay and Brazil has for long been sighted as a safe haven for the activities of Hezbollah as well as HAMAS groups. The notorious groups generate substantial monies through the sale of contrabands such as drugs in their Latin American market and use the proceeds to support their activities in Lebanon (GAO, 2003, p.11).

3 One country that offers very tangible example of the financial link between terrorism and drugs is Columbia. The country’s sections and parts being controlled by guerrilla and paramilitary have witnessed the strongest mutual relationship between terrorism and narcotrafficking. The groups receive funding from the traffickers who, in turn, derive their protection from the illicit armed groups. The Revolutionary Forces of Colombia, written in short as FARC together with the Colombia self defence forces, abbreviated as AUC, are the major actors (McCollum, 2002, p. 15).

FARC has already sought to commercialize the sale of cocaine within Columbia and is now directly involved in selling the drug. There have also been close links between FARC and the Mexican drug cartel, with evidence showing FARC guerrillas actually supplied the cartel with cocaine in exchange for both cash and weapons. The paramilitary groups are also embroiled in bitter wars as they attempt to wrestle control of narcotic’s growing regions from the stronghold of FARC. In Afghanistan, which has been a safe heaven for terror for a long time under the leadership of Taliban, the production of illicit opium has been soaring every year to become the world’s largest producer. The illicit opium is refined further to produce heroin. Statistics indicate that opium from Afghanistan measuring 3,656 tons was produced in the country in the year 2000 alone, constituting 72% of the world’s total production (McCollum, 2002, p. 16).

Sale of contraband cigarettes Contraband tobacco refers to any product that goes against federal as well as provincial statutes on regulation in as far as taxes, manufacture and distribution of cigarettes is concerned.

The Canadian Criminal Intelligence Service has identified five main sources of contraband tobacco as follows: Cigarettes unlawfully manufactured in the United States’ Aboriginal

4 territories of Akwesasne’s reserve; lawfully manufactured cigarettes in the United States mainly purchased in states with low-tax such as West Virginia and North Carolina. These cigarettes are later smuggled into neighbouring countries, including Canada; tobacco products manufactured with fake or counterfeit brand names. China has been spotted to be leading in this area; tobacco products diverted to the black market which initially had been designated to be sold on Native reserves. These products often are exempted from both provincial and federal excise taxes; and tobacco products stolen while under shipment or from convenience stores by criminal gangs and later smuggled into the market (Gabler & Katz, 2010, p. 5).

Prior to the terrorist attack of September 11, 2001, estimates by the World Bank had indicated that global governments would lose between $24 billion and $30 billion every year worth of uncollected tax revenue. There is evidence that terrorists are engaging in tobacco diversion as well as collaborating with traffickers of tobacco to generate funds that can be used to run their organizations.

In the time period between 2002 and 2007, the American Tax Federation had initiated close to 500 investigations on tobacco trafficking cases, seizing over $8.1 million in the process worth of contraband cigarettes. In related cases, two defendants Hassan Makki and Elias Mohamad Akhdar were imprisoned for 57 and 70 months respectively after it was discovered that they provided material support to Hizballah and conspired to violate the Racketeering Influenced and Corrupt Organization Act. Similarly, Haissam Nashar pled guilty in March 2002 to transporting tax stamps for counterfeit cigarettes in federal court. He also testified against an accomplice, Mohamad Hammoud, for trafficking illicit cigarettes and supporting Hizballah in the process. The investigation nabbed close to $1.5 million worth of assets (General Accounting Office, 2003).

5 ATF’s participation in identifying, investigating and, where need be, arresting traffickers of contraband cigarette has played a significant role in the seizure and forfeiture of proceeds and assets of this crime (Elagab & Jeehaan, 2007, p. 164).

Sale of weapons Terror groups have exploited the smuggling and sale of weapons as a means of supplementing revenues to help in the funding of their activities. The Ireland Republican Army (IRA) works closely with organized groups of crime in both Croatia and Bosnia to trade in guns and bombs (Biersteker & Eckert, 2008, p. 38).

In 1993, data obtained from the Egyptian Ministry of Interior indicated that close to 2.5 million weapons had been in the hands of various terror groups operating in the country. Only a smaller percentage of this, 244,350 had been licensed for possession. The country’s security agencies had seized up to 70,000 weapons that were held by civilians without licence. Islamic fundamentalists together with drug dealers in the country were primarily responsible for the illegal smuggling and sale of these arms. In the same year, the authorities discovered an existing illegal factory at a location known as Assiut. The factory was manufacturing automatic Russianstyled weapons which were later sold to fundamentalists for about 500 Egyptian pounds (Tal, 2005, p. 89).

Donations from charities With the spread of internet reaching almost every corner of the globe, terror groups have found it easy to solicit funds mainly from charities, governments, organizations and individuals.

The money transfer deals are not as open since many of the groups disguise themselves as genuine community groupings raising funds for worthy course. Some of the charity organizations may not even be aware that their contributions actually end up in the hands of

6 criminal gangs. The transfer of funds is happening in varied forms, ranging from electronic couriers to existing legitimate bank accounts.

The Global Jihad Fund at some point came up with a website urging well wishers to help in sustaining various Jihad Movements the world over. The funds were specifically to be used for purposes of acquiring weapons and training needs. Several bank accounts in Pakistani were listed by the group as well as an existing list of direct links to different terror groups it supported.

These groups were Taliban, Hamas, Hezbollah as well as Lashkar Taiba. Other modes such as online modes of raising funds being exploited by such groups include chat rooms, mass-emailing and bulletin boards.

To keep their identity anonymous, the terrorist gangs are using public computers like those found in libraries and cyber cafes to conduct their on-net businesses. They also use service providers with anonymous IP and keep shifting between different web hosting services in a bid to conceal their identity.

These groups conduct their finances in legitimate banks, some of which are in the United States and most of European established banks. Hezbollah, for instance, raises funds in the US via the Islamic Resistance Support Association website. This forum gives the opportunity to any individual who wishes to support activities against the “Zionist Enemy”. Majority of such websites encourage well wishers to use either credit cards or electronic fund transfer means to avail their cash.

Second Life is an online community created by a US company, Linden Lab and currently boasting of more than 6.2 million users. Players are using money contributed by this community which are then converted from real currencies. There are few existing check mechanisms to determine the legitimacy of such huge transfers of funds. “Linden dollars” were exchanged on

7 Second Life and eBay for real currencies by use of PayPal accounts as well as credit cards (Centre of Excellence Defence Against Terrorism, 2007, p. 170).

Several religious groups have been registered in different countries strategically for purposes of raising funds for terror activities. These groups are tax-exempt by virtue of their registration statuses in their host countries where they are labelled as charitable organizations.

Significant amounts of money raised by these groups end up in the custody of quasi-paramilitary bodies at the centre of a network of organizations.

Islamic charity networks have been expanding very fast in the recent past, a factor that has been attributed to the age-old tradition of “zakat” which is some form of voluntary contribution for assisting each other. It is one of the main pillars of Islamic faith and the religious obligation is adhered to strictly by many Muslims (Giraldo & Trinkunas, 2007, p. 210).

Kidnappings and seeking for hefty ransom Terror groups particularly those operating in Latin America have perfected the heinous crime of holding people hostage and thereafter seeking substantial amounts of money in exchange for the release of their captives. This trend has spread over the years to other parts of the world and threatens to be a global phenomenon if counteractive actions are not considered.

Experts assert that this phenomenon is mainly prevalent in gangs and groups that are still in their formative stages and which need funds fast to sustain their activities. The ‘Red Brigades’, Abbu Sayyaf Group as well as Baque Fatherland are some of the notorious terror groups that have used this means to raise funds. Often, the gangs responsible for such kidnappings use the threat of killing their captives as a way of expediting the ransom monies they quote.

In Nigeria, a leftist Islamic group, Boko Haram has been kidnapping foreign workers of Royal Dutch International Petroleum Company involved in oil mining in the country and

8 demanding ransom in exchange for the release of the captives. In some instances, the criminal groupings kill their victims if the ransom money is not paid before the deadlines they give.

The East African coastline has also witnessed cases of kidnappings perpetrated by Somali insurgents whose operations are closely linked to the Al Qaeda terror group. Cargo ships approaching the coast line are waylaid by the terrorists who communicate immediately the ransom figures they want, often very exorbitant amounts, before they can release the vessels (Canter, 2009, p. 190).

Other criminal activities Terrorist groups also indulge in ordinary criminal activities as a way of raising funds to finance their activities. The criminal activities include carjacking and robbery with violence committed in different countries worldwide. The stolen cars are later on dismantled and sold as parts either within the countries in which the crime took place or exported to other countries.

Terrorist groups, through their affiliate criminal gangs, have also been known to commit cyber crime where fake and stolen credit cards are used to wire funds from one account to the other.

Many of the con websites that are currently flooding the internet also have a close connection to terrorist groups. The sites lure unsuspecting public with prizes which they promise to send only after they obtain credit card details of the “winner” (Centre of Excellence Defence Against Terrorism, 2007, p. 170).

Government funding Several terror organizations are known to be receiving part of their funding from established ‘legitimate’ governments which hive off their substantial revenues for this purpose.

The Iranian government has for long been linked to a number of terror groups operating in the Middle East region, with Hezbollah being one of them. Iran is richly endowed with oil which

9 generates much of the country’s revenues. The Iranian government has roundly been condemned internationally for this move but there still exists evidence that the country bankrolls terrorism through various criminal groups.

In the year 2000, the Iranian government had transferred $400, 000 to Qassam Brigades, an existing arm of Hamas to support its military action in Israel as well as fund suicide operations. Over the same period, another $700,000 was transferred from Tehran to aid other Islamic organizations that were fighting the Palestinian authority (Levitt & Ross, 2007, p.175).

Apart from Iran, the US government also listed 6 other nations in the year 2000 as having sponsored various terrorist activities in the world. These countries include Iraq, Libya, Sudan, North Korea, Cuba and Syria. Iraq is accused of providing bases for Iranian as well as Palestinian terrorists while Libya refused to hand out suspects who are believed to have bombed a Pan Am Flight 103 in 1988 over Lockerbie, Scotland. Sudan is said to be a meeting point where training of several terror groups takes place. Hijackers of an airline belonging to Japan in the 1970’s are harboured in North Korea and US fugitives evading justice are believed to have settled in Cuba. Syria funds training camps used by several terror groups in the country. The long standoff between India and Pakistan over the disputed border region of Kashmir is believed to be fuelled by both governments, by funding terrorist groups on either side of the border (Griset & Mahan, 2003, p. 48).

Conclusion Global terrorism uses both illegal and legal means to raise funds that support its numerous activities. From the various ways exploited by terrorists to raise money, illicit drug trafficking has the biggest return and is the biggest and most preferred source of funding. The drug money is used to corrupt government officials in many countries used as transit and markets

10 by the cartels. Terrorists work in cahoots with various other drug cartels that form a mutual relationship in which the latter enjoys protection in exchange for the drug monies. Money transfer is by use of electronic means and most of the accounts are opened in legitimate banks in Middle East region, America as well as Europe but can hardly be discovered to belong to terror groups as they disguise themselves in the name of other worthy projects and organizations.

Contributions by charity groups and individuals also constitute a bigger percentage of terrorist funding. The groups register charity organizations in the name of raising funds for humanitarian reasons but eventually use the resultant funds in sustaining their activities.

Individuals also make voluntary contributions either knowingly or they are duped into believing they are supporting a worthy course.

Other sources such as the illegal sale of arms and contraband goods also contribute substantial amounts of money used by terrorists to support their activities worldwide. The use of the internet has further enabled terror groups to mobilise the masses and control their global networks with much ease and flexibility. There have been international efforts aimed at combating terrorism but these efforts must now aim at sealing all the avenues through which terrorist gangs source their funds if at all they intend to be triumphant.

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Canter, D. (2009). The faces of terrorism: multidisciplinary perspectives. West Sussex, UK: Wiley Publishers.

Centre of Excellence Defence Against Terrorism. (Ed.). (2007). Suicide as a weapon.

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Ehrenfeld, R. (2002). Funding terrorism: Sources and methods. Confronting Terrorism-2002, 391-399 Elagab, O. Y. & Elagab, J. (2007). International law documents relating to terrorism, (Third Edition). New York, NY: Routledge.

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Griset, P. L. & Mahan, S. (2003). Terrorism in perspective. Thousand Oaks, CA: SAGE. Levitt, M. & Ross, D. (2007). Hamas: Politics, charity, and terrorism in the service of Jihad.

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McCollum, B. (Ed.). (2002). Threat posed by the convergence of organized crime, drug trafficking and terrorism. Washington, D.C.: Diane Publishing Co.

13 Tal, N. (2005). Radical Islam in Egypt and Jordan. Portland, OR: Sussex Academic Press.