No counterterrorism tactic, including stemming the flow of terrorist financing, will stamp out terrorism. Terrorism, in fact, cannot be eradicated like Polio or Small Pox. There will always be grievances, causes, and conditions that, coupled with a healthy dose of evil, will lead people to target civilian noncombatants for political purposes or even as a means in itself. The primary responsibility of all states, however, is to protect its citizenry, and to that end it is incumbent upon all states to employ the full range of protective, deterrent, and preventive counterterrorism measures available in an effort to provide for the security of its populace. The fact that terrorism cannot be eliminated does not absolve states of the responsibility to fight it as vociferously as possible.
In this regard, tackling terrorist financing represents a critical and effective tool both in reacting to terrorist attacks and engaging in pre-emptive efforts to prevent future attacks. Often, as was the case in the investigation of the September 11, 2002, attacks, financial transactions provide the first and most concrete leads for investigators seeking to flush out the full scope of a terrorist attack, including the identities of the perpetrators, their logistical and financial support networks, links to other terrorist groups, and accomplices. Since September 11, the US government has spearheaded a groundbreaking and comprehensive disruption operation to stem the flow of funds to and among terrorist groups. Combined with the unprecedented law enforcement and intelligence effort to apprehend terrorist operatives worldwide, cracking down on terrorist financing denies terrorists the means to travel, communicate, procure equipment, and conduct attacks.
Following the Trail of Terrorist Financing
The potential investigative value of following the trail of terrorist financing simply cannot be overstated. Then-FBI Director Louis Freeh testified before Congress in 1999 that a shortage of funds prevented the 1993 attack on the World Trade Center from being as devastating as it otherwise could have been. After his capture in 1995, Ramzi Yousef, the convicted mastermind behind the 1993 bombing and other attacks, admitted that the terrorists were unable purchase sufficient material to build as large a bomb as they had intended because they were strapped for cash. In fact, the operation itself was rushed and carried out earlier than planned because the cell simply ran out of money. In the end, the terrorists’ attempt to reclaim the deposit fee on the rental truck used to transport the bomb provided a key break in the case.
Early financial leads in the September 11 investigation established direct links between the hijackers of the four flights, identified co-conspirators, and led investigators to logistical and financial support cells in Germany and elsewhere in Europe as well as in the Gulf. Financial leads led investigators to key al Qaeda operatives and money-men such as Ramzi Bin al-Shibh in Germany and Mustafa Ahmed al-Hasnawi in the United Arab Emirates. Financial analysis provided some of the earliest evidence proving the synchronized suicide hijackings were an al Qaeda operation, and linked the German cell, the hijackers, and Zacarias Moussaoui. Wire transfers between Moussaoui and Bin al-Shibh played a crucial role leading to Moussaoui’s indictment for his role in the attacks. Financial investigation also established links between Moussaoui and members of the al Qaeda associated cell of Jama’ah al-Islamiah terrorists arrested in Malaysia.
Sometimes the money trail goes cold, as appears to have been the case with Richard Reid, the infamous “shoe-bomber.” Financial information may yet play an important role in this case too, but although Reid was carrying a significant amount of cash on his person when he was arrested, a dearth of banking transactions has made financial analysis difficult to date. However, as investigators continue to track e-mail and other means of communication used by Reid, identify his contacts in England, Belgium, and elsewhere, and glean further intelligence from the vast amounts of intelligence seized in Afghanistan, evidence of financial transactions are likely to emerge and provide some of the strongest evidence linking Reid to the rest of his as of yet unidentified co-conspirators.
Disrupting the Flow of Terrorist Financing
Through analysis of the financial information collected on the September 11 hijackers and their accomplices in Europe and the Gulf, the FBI quickly developed a financial profile from the hijackers’ bank accounts and financial activity. This included profiles of the domestic accounts, financial transactions, international financial activity and non-financial information gleaned from financial documents. Pattern analysis focused the direction of the ongoing international investigation toward specific countries, especially in Europe, and played a central role in the FBI’s predictive effort to foil the terrorist attacks intelligence information indicated were still being planned.
Since September 11, the Bush administration has issued a series of financial blocking orders targeting terrorist groups, including terrorist organizations, front companies, and individuals. In total, the US government has designated some 191 individuals, organizations, and financial supporters of terrorism as SDTGs from around the world, including over US$34 million in terrorist assets. Other nations have reportedly followed the US lead. The secretary of the treasury reported that 150 “countries and jurisdictions” have blocking orders in force, and have blocked more than US$70 million in assets. According to US officials, intelligence information indicates that terrorist operatives are finding it increasingly difficult to gain access to funds needed to escape the international dragnet targeting them, communicate effectively between cells in different parts of the world, and conduct further operations.
Cracking down on terrorist financing demands an all-encompassing approach to if there is to be any chance of successfully disrupting terrorist activity. This requires targeting the full array of groups, individuals, businesses, banks, criminal enterprises and humanitarian organizations that finance terrorism. At the most macro level, financial blocking orders must include the terrorist groups themselves in an effort to seize any funds they may have in their own name. Realistically, terrorist groups tend not to open bank accounts under their organization’s name, especially in the West. Nonetheless, the message is important, and there are in fact cases, such as Hizballah in Lebanon, where groups operate openly and have accounts in their own name. More significantly, listing the groups themselves subjects other entities that support them to scrutiny as well. Should the Islamic Action Front in Jordan or the Muslim Brotherhood in Egypt openly state their financial support for Hamas, for example, they could be subject to financial penalties themselves despite the fact that they are not listed in any of the terrorist lists published by the United States or others.
Individuals who support terrorism play a critical role in financing terror, highly disproportionate to their numbers. Unfortunately, a few wealthy individuals are able to sponsor much terror. For example, Mustafa Ahmed al-Hasnawi, the Saudi national and bin Laden money man, sent the September 11 hijackers operational funds and received at least US$15,000 in unspent funds before leaving the UAE for Pakistan on September 11. According to US officials, Yasin al Qadi, a prominent Jedda businessman and the head of the Muwafaq Foundation, has supported a variety of terrorist groups from al Qaeda to Hamas. According to US court documents, in 1992 al-Qadi provided US$27,000 to US-based Hamas leader Muhammad Salah and lent US$820,000 to a Hamas front organization in Chicago, the Quranic Literacy Institute (QLI). Based on their connection to Hamas, the US government has frozen the assets of both Salah and QLI. Similarly, US officials maintain that the Muwafaq Foundation is a front organization through which wealthy Saudis forward millions of dollars to al Qaeda. In another example, Israeli authorities arrested Osama Zohadi Hamed Karika, a Hamas operative, as he attempted to leave Gaza via the Rafah border crossing in December 2001. Karika was found with documents detailing the development of the Qassam rockets, and admitted under questioning that he was on his way to Saudi Arabia to brief unidentified persons on the development of the rockets and to obtain their funding for the project. Before his arrest, Karika had already made one successful trip to Saudi Arabia where he secured initial funding for Hamas’ Qassam rocket program.
Investigation into al Qaeda sleeper cells in Europe in the wake of September 11 revealed the widespread use of legitimate businesses and employment by al Qaeda operatives to derive income to support both themselves and their terrorist activities. According to Congressional testimony by a senior FBI official, a construction and plumbing company run by members of an al Qaeda cell in an unnamed European country hired mujahadin (holy warriors) arriving from places like Bosnia where they had fought what they considered a Jihad (holy war). Cell members ran another business buying, fixing and reselling used cars, and in these and other examples cell members deposited their legitimate salaries, government subsidies, supplemental income from family members, and terrorist funds received by cash or wire transfer into the same one or two accounts.
International and unofficial banking systems have also played a role in terrorist financing. For example, the Treasury Department froze the assets of 62 organizations and individuals associated with the al-Barakat and al-Taqwa financial networks in November 2001. Federal agents raided these groups’ offices across the United States and, subsequently, in Europe and the Bahamas as well. In his remarks at the time, President Bush stated that the two institutions provided fundraising, financial, communications, weapons-procurement, and shipping services for al Qaeda. A few months later, Deputy Assistant Secretary of the Treasury Department Juan C. Zarate testified before Congress that “in 1997, it was reported that the US$60 million collected annually for Hamas was moved to accounts with Bank al Taqwa.” Al-Taqwa shareholders reportedly include known Hamas members and individuals associated with a variety of organizations linked to al Qaeda. A 1996 report by Italian intelligence reportedly further linked al-Taqwa to Palestinian groups, the Algerian Armed Islamic Group (GIA) and the Egyptian Gama’at al Islamiyah.
Criminal enterprises have also aided in the spread of terrorism, especially as central nodes in the matrix of terrorist financing. Ahmad Omar Sayed al-Sheikh, now on trial for the abduction and murder of Wall Street Journal Reporter Daniel Pearl, linked up with Aftab Ansari, a prominent figure in the Indian mafia, to provide al Qaeda with recruits, false documents, safe-houses and proceeds from kidnappings, drug trafficking, prostitution and other crime. Officials in the Balkans are equally concerned about developing links between terrorism and mafia activity in Chechnya and other parts of the Cuacusus spreading to Albania, Bosnia and beyond Southern Europe. Authorities in Belgium have issued an arrest warrant for Victor Bout, a notorious arms trafficker suspected of supplying weapons to the Taliban and al Qaeda as well as warring factions throughout the African continent in an elaborate guns-for-diamonds scheme.
Humanitarian organizations have played a particularly disturbing role in terrorist financing, and present an especially sensitive challenge as authorities are faced with discerning between legitimate charity organizations, those unknowingly hijacked by terrorists, and others proactively engaged in supporting terrorist groups. The key challenge that arises is in government’s ability and willingness to share information linking such organizations to terrorism in light of the cost of exposing intelligence sources and methods.
Some cases, however, are rather clear-cut. Last October, NATO forces raided the Saudi High Commission for Aid to Bosnia, founded by Prince Selman bin Abdul-Aziz and supported by King Fahd. Among the items found at the Saudi charity were before-and-after photographs of the World Trade Center, US embassies in Kenya and Tanzania, and the USS Cole; maps of government buildings in Washington; materials for forging US State Department badges; files on the use of crop duster aircraft; and anti-Semitic and anti-American material geared toward children. Six Algerians are now incarcerated at Guantanamo Bay's Camp X-Ray for plotting an attack on the US embassy in Sarajevo, including an employee of the Saudi High Commission for Aid to Bosnia and another cell member who was in telephone contact with Osama bin Laden aid and al Qaeda operational commander Abu Zubayda. Authorities are now trying to track down US$41 million of the commission's missing operating funds. Now that Abu Zubayda has been apprehended, authorities are likely to learn more about the relationships between al Qaeda and this and other humanitarian organizations used as terrorist front organizations.
In December, US authorities raided the Chicago offices of another Saudi-based charity, the Benevolence International Foundation. The foundation's videos and literature glorify martyrdom, and, according to the charity's newsletter, seven of its officers were killed in battle last year in Chechnya and Bosnia. US officials suspect the foundation of financing terrorist activity, and at least one former employee has been subpoenaed to appear before a grand jury.
Al Qaeda is by no means the only terrorist group to use humanitarian organizations to finance their terrorist activities. On December 4, 2001, the Bush administration exposed the Holy Land Foundation for Relief and Development as a front organization for Hamas. According to its year 2000 tax return, Holy Land Foundation total revenue exceeded US$13 million. In a detailed 49-page memorandum, the US government established that these funds were used by Hamas to support schools and indoctrinate children to grow up into suicide bombers. Money raised by the Holy Land Foundation was also used by Hamas to recruit suicide bombers and to support their families. Five days before the September 11 attacks, the FBI raided the offices and froze the assets of Infocom, an Internet company that shares personnel, office space, and board members with the Holy Land Foundation, officials said. The two organizations were formed in California around the same time, and both received seed money from Hamas leader and Specially Designated Terrorist Mousa Abu Marzook.
Targeting a wide array of groups and organizations funding and transferring terrorist funds is critical, but must be conducted as part of a well-coordinated international effort. Many nations have followed the US lead in this regard, blocking millions of dollars in terrorists’ assets. This is a particularly sensitive issue, especially in the Middle East. In November 2001, for example, a senior US delegation went to Saudi Arabia to solicit greater cooperation in the arena of tackling terrorist financing. Secretary of the Treasury Paul O’Neill visited again three months later, agreeing to quietly broaching concerns regarding specific humanitarian organizations with Saudi officials before putting them on US terrorist lists. The new tactic fits the mold of traditional US-Saudi diplomacy, and quickly bore fruit: the US and Saudi governments jointly froze the accounts of the Bosnian and Somali offices of the Saudi-based al-Haramain Humanitarian Organization just days later. Subsequent reports, however, already indicate that US authorities are concerned that Saudi authorities are glossing over the terrorist connections of other humanitarian organizations, including the Wafa Humanitarian Organization, the International Islamic Relief Organization (IIRO) and its parent the Muslim World League.
Nor are divisions over terrorist financing exclusive to the Middle East. US officials complain that European allies have contributed few names to the list of alleged terrorist financiers subject to financial blocking orders, that they have yet to act on all the names already on the list, and that those names European allies have added to the list are primarily domestic groups such as Basque and Irish groups. Europeans, in return, have repeatedly expressed their frustration with US requests to add people or groups to terrorist lists while supplying insufficient evidence, if any. Even within the US intelligence and law enforcement community the financial war on terrorism has been hamstrung by bitter turf wars between the Departments of Treasury and Justice. The Departments have reportedly launched parallel task forces that do not communicate or share information.
Terrorism will always exist. Counterterrorism is a form of conflict management, not conflict resolution. To bear any fruit, counterterrorism techniques must be as comprehensive, ongoing, and cooperative as possible. Cracking down on terrorist financing will only succeed in dismantling terrorist groups’ logistical and financial support networks and preventing terrorist attacks if the governments and agencies involved in the effort act in concert.