Eurobsit: We frequently hear about illicit trade that finances terrorism. What kind of products do they sell?
Louise Shelley: At the moment almost all terrorist groups are funded by crime and illicit trafficking. For example, ISIS used to get significant revenue from oil but they have diversified since then. Now they generate money by taxing the smuggling of human beings, of antiquities, of cigarettes, and they also robbed banks. ISIS also taxes narcotics that crosses their territory such as Captagon, that is a widely used narcotic in Saudi Arabia but little known in Europe: Captagon is a stimulant drug.
E: I read that they would be taxing pornography too, isn’t it paradoxical?
L.S.: There was indication that they might be trading these images that but it’s not clear, and if it occurred it was not a major funding source. Strict Islam forbids consumption of cigarettes or narcotic that are more important funding sources. It’s paradoxical, Islamist terrorists generate funds from forbidden items… « La fin justifie les moyens ».
E.: You differentiate the concepts of terrorism financing and business of terrorism. Can you explain?
L.S.: The financing is only a part of the business model of terrorist groups. To be able to act efficiently, you have to understand the whole business model which includes understanding products marketed, diversification, dealing with competition, and analyses of consumer demand and of market opportunities.
E.: When we talk about ISIS and the money it needs to function; how much are we talking about?
L.S.: In the beginning, we were speaking about half a billion dollars a year of funding coming from their oil business. Military and financial actions led by international organisations and banks have reduced ISIS’ ability to raise funds.
For instance, ISIS used to have control over banks on the territories they controlled. These banks were cut off from the international banking system creating liquidity problems for ISIS.
E.: Some terrorist attacks in Europe were organised with a very small amount of money, through small Nikes shoes trafficking for example. How can we stop that “micro-financing”?
L.S.: There are two different types of funding, that of ISIS overseas and that of ISIS in the Middle East. ISIS governing territory in the Middle East needed large amounts of money but terrorists in Europe needed only small funding for their attacks. Therefore, it is counterfeits, small-scale fraud and illicit trade and that help fund European terrorists. In Europe, it is small scale funding, like this sneakers-trafficking that helped finance the terrorists behind the Charlie Hebdo attack. In fact, it is very hard to eliminate this funding. The U.S looks at the crime-terror relationship to address threat finance. France, under the Macron government, is now focusing on the hybrid threat of crime and terrorism. This new enforcement approach seems to have some positive impact as there have not been any terrorist attack in France in the last 8 months.
E.: Do terrorist groups directly deal with some states and governments?
L.S.: In the past, mafias and terrorists were linked to a state. The Mafia had arrangements with the Italian state, the Yakuza with Japan… In the past, much of terrorism was state-funded. Now, we are facing a new type of organised crime that is not dependent on the welfare of a specific state as it operates in conflict regions.
Today, terrorists are not receiving support from states as in the past. They are, therefore, more dependent on crime for their support. Often the criminals parts are not aware of their partners’ links to terrorism. This happened when Italian organised crime groups did not know that their Balkan partners were a terrorist group until advised by ltalian law enforcement of the true nature of their associates. Smugglers don’t carry a card with criminal or terrorist written on it!
E.: What about crypto currencies? We talk a lot about terrorists using them to move money, is that a real thing?
L.S.: The dark web is primarily used by illicit actors including terrorists. They are also using the new cybercurrency. In the USA in late 2017, there was the first case of someone indicted for using bitcoins to fund terrorism. There are probably other cases under investigation, terrorists use different methods to move their money including cash, pre-loaded credit cards, hawalas1… and trade-based money laundering.
E.: To your point of view, what more could be done in this financial battle?
L.S.: We need to do more to address terrorist fund raising in cyberspace. For example, financial facilitators of terrorist groups may be selling antiquities on platforms such as e-bay. The countries within Europe must focus more on the relationship of crime and terrorism and the hybrid threat.
Following the money and understanding the business model of terrorists is a major way of diminishing their activity and capacity. Today, the fight against ISIS and other terrorist groups requires more than a military approach, it requires cutting the groups off from their financing.
1 An informal system for transferring money, especially across borders, in which local agents disperse or collect money or goods on behalf of friends, relatives, or other agents without legal protection or supervision, trusting that all remaining obligations will be settled through future transactions.