Terrorist financing – an underestimated phenomenon

The place where small amounts may convert to terrorists money unsplash-logoMichal GADEK

There is great fear that terrorists will supply themselves with money bypassing the supervisory authorities. And this fear is legitimate. However, the “big solutions” sought by the European Union and others are not effective, as an analysis by @EurObsIT shows.

In September 2019, Egypt imposed draconian punishments on the leader of the Muslim Brotherhood, Mohammed Badie and his accomplices. He and his accomplices each received a life sentence – a sentence which in Egypt means at least 25 years in prison. Now the handling of the Muslim Brotherhood in Egypt is certainly highly political and therefore has to be considered under special circumstances. Nevertheless, the proceedings show that the questions of the financing of terrorism is an essential one. As in any hierarchical organization, the bosses take care of the finances. This is not a sector that is administered to unimportant employees. If you find the puppet masters behind the financial flows, you also have your sights set on the leadership elite of the organisation in question. This is the calculation of the law enforcement authorities. And they are wrong. It is therefore not without reason that law enforcement agencies focus on finances. Likewise, financial matters are essential for criminal and terrorist organisations. Finally, it can be stated that organised crime networks in particular exist only for the purpose of obtaining money. But the transitions are fluid.  

The OECD states: “Some terrorist organisations have separate criminal networks to collect funds. Drug trafficking, fraud, cybercrime and white collar crimes are common illicit activities for terrorist financing. For individuals such as foreign fighters and home-grown violent extremists, the abuse of public assistance/benefits programs and the creation of fictitious refunds are identified typologies. Along the way, these criminally-derived proceeds would likely be laundered before they may be directed to terrorist financing purposes. Terrorist organisations occupying large areas may seize the state-owned financial assets and natural resources within the territory under their control. The non-cash assets and resources (e.g. antiquities, crude oil, natural gas, minerals, precious metals and stones) must then be monetised, for example via covert or black market sales, to provide funds for the terrorist organisation’s daily use. Those black markets may operate largely outside of the territories or countries where the terrorists are located.”

And here are the main problems. As a rule, terrorist financing and “normal” money laundering for greed cannot be distinguished from each other. And they take place outside the dominions of criminal and terrorist gangs. A third, essential aspect is scaling. As a rule, large amounts of money are not involved at all. The amount of small amounts makes up the big picture. A few days ago, two Austrians were found guilty of financing terrorism. They had transferred a total of EUR 1300 to a family member in Syria who belongs to the Islamic State. At the same time, the first young man accused of financing terrorism is on trial in Singapore. He is being charged with the sum of 450 dollars. It are these small sums that add up. The terrorist system finances itself on a microscopic level. Western politicians want to find the sledgehammer which destroys whole systems. Instead of this, state authorities should focus on the small flies at the window.