Targeting terrorist finances

Published : Nov 05, 2004 00:00 IST

Taliban supporters in Karachi protesting against the U.S. military strikes against Osama bin Laden in Afghanistan. A file picture. -

Taliban supporters in Karachi protesting against the U.S. military strikes against Osama bin Laden in Afghanistan. A file picture. -

Although the international community is waking up to the need to strike at the terrorists' sources of funds, it is yet to draw up a sound, sustainable strategy to tackle the problem.

"Terrorist-related accounts are not pools of water awaiting discovery as much as they are rivers with funds constantly flowing in and out."

- Stuart Levey, U.S. Under-Secretary for Terrorism and Financial Intelligence.

"UNLIMITED money" is, in Cicero's words, the "sinews of war". Nowhere is this more appropriate than to the might of modern terrorism and the relentless struggle that we are waging against it, nearly 2000 years after that incisive Roman philosopher wrote his Fifth Philippic. There is remarkable consensus that as long as terrorists have access to hordes of money, they can deal a decisive blow to the civilised world and get away easily with evil. The question is, after all the noise that the United States has made since 9/11, have the supply channels to the Al Qaeda dried up? Any categorical claim either way will be preposterous because of the enormous secrecy that envelops operations that bring in money and take it out of the terrorist pool. The general impression is that there has been no let-up in efforts to ferret out the inestimable wealth, which forms the "sinews" of Osama bin Laden and others of his tribe. What was woefully lacking until 9/11 was a political will to hunt for terrorist money.

The scene has definitely changed for the better. Until 9/11, only four countries had ratified the International Convention for the Suppression of the Financing of Terrorism. By April 2004, the number had gone up to a healthy 117. In addition, nearly 90 countries have now adopted or set in motion the process to adopt legislation that will directly or indirectly penalise those offering financial assistance to terrorists. More significantly, representatives of as many as 44 countries attended the February 2004 seminar on the subject held by the 33-member Financial Action Task Force (FATF) that came into being in 1989 at the initiative of the G-7 summit in Paris. Those present included more than 10 non-FATF members, including India and China. The FATF's energies are now dedicated not merely to the conventional money launderers and drug traffickers. Now, they also target terrorists who take advantage of the complex laundering mechanics to garner resources for repeating atrocities such as 9/11.

If after all these positive developments, we do not evolve and sustain a sound strategy which will make money a scarce commodity to those who are aiming at disruption of international order, posterity will not forgive us.

A sense of direction to the gargantuan task on hand was provided by the 9/11 Commission report released earlier this year. Although the Commission did not say that depriving terrorists of their financial stockpile was the only option available, it did believe that this was one sure way of reducing their capacity to organise themselves at the grassroots level. Deposing before the U.S. Senate Committee on Banking and Urban Affairs as recently as September 29, Stuart A. Levey said that the 9/11 Commission's decisive stand lent the focus required to put strategies in place. His claims before the Committee were modest, but definitely not shorn of the optimism that terrorists had been badly hurt in terms of finance. (According to one late 2002 estimate, suspected terrorist assets worth more than $100 million had been frozen since 9/11. The horror, however, is that the Al Qaeda and its allies in the International Islamic Front are still believed to command as much as $300 million.)

Concerted efforts of the international community have doubtlessly eroded terrorist capacity to raise resources needed for recruitment, training, travel and communication and for procuring weapons. As many as 285 Al Qaeda-linked targets have been identified for action. In addition, about 20 U.S. government agencies have provided technical training to high-priority nations for devising laws and procedures that would put on board counter-terrorist and anti-money laundering strategies.

Levey spurns a suggestion that terrorist operations were a low-cost misadventure, and starving them of money would not at all make any difference. The 9/11 Commission did not think so, and Levey is emphatic that the real operating costs for terrorists were "considerable", making fund-raising an inevitable and continual exercise.

Targeting terrorist money had another advantage. Every time an organisation like the Al Qaeda was deprived of a major source of funding, it looked for a new one, and in this process, it was subjecting itself to surveillance and exposure. Levey's logic is sound. At the same time, it is difficult to assert that deadly and scheming outfits of the Al Qaeda variety will not be able to cover their tracks whenever given a hard beating by enforcement agencies. Unless the contrary is proved, we will have to proceed on the assumption that they are gifted with the skill to rebound swiftly. What is, however, irrefutable is that they will be under relentless pressure to look for new avenues of funds whenever one of their fecund sources is neutralised by official action. Undeniably, in the process of hunting for new sources, they not only get distracted but also lose considerable energy and time. This is one major reason why we cannot relax our efforts even marginally.

Talking of the Al Qaeda, it has an unsavoury past that justifies the current international obsession with depriving it of all its known and suspected benefactors. The benefactors are many and some of them are not even aware that they are aiding bin Laden's operations. This is because the beneficiary on paper is a respectable charity that doles out money also for worthy causes like education or health care. There is a whole lot of literature on Al Qaeda finances, some of which is speculative, and some based on official studies buttressed by hard fieldwork and research.

A well-argued paper is that of William F. Wechsler's "Strangling the Hydra: Targeting Al Qaeda's Finances", written for a compilation entitled How Did This Happen: Terrorism and the New War (Public Affairs, Oxford, 2001). Wechsler knows his onions because, apart from being Special Adviser to the U.S. Secretary of Treasury, he chaired the interagency working group on Osama bin Laden's financial network. According to him, bin Laden's rise to fame (or was it infamy?) was through money, with fund collection being his forte. He was no doubt rich by birth. One account is that he inherited $300 million from his family. How far is this estimate correct is anybody's guess. There is no credible information either, as to whether he ploughed any of this money into his reckless adventures.

However, it is well known that he financed many of the armies fighting the Soviet forces in Afghanistan in the 1980s. The Taliban fondness for him is attributed to his generosity, which again was something that flowed from the remarkable international financial network built assiduously by him. The presumption is that he played the religious card most effectively to get at money from a host of Islamic bodies.

Wechsler's analysis unfolds four methods by which the Al Qaeda raises funds. Some are unique to it, and some, probably, it shares with other terrorist groups. There are first the legal businesses and investments under assumed names. For instance, its holdings in Sudan such as construction firms, agriculture businesses and investment firms, are formidable. Secondly, substantial income comes from crime, especially trade in opium produced in Afghanistan, an activity in which the Taliban is an active ally. Al Qaeda cells are not averse to petty crime such as cigarette smuggling and financial frauds. Donations from rich Muslims are a third avenue for making money. It is possible that not all donations are voluntary. A few have probably come after intimidation or blackmail. A fourth known channel is fund raising through Islamic charities, which are found all over the world. The enormous geographic spread of these charities facilitates easy and unobtrusive movement of funds. Contributing to charities is, by all accounts, intertwined with the laudable Islamic way of life. The tragedy is that many donors are oblivious of the possibility that their contributions could be misused to promote violence. Rightly, many charities have come under law enforcement's scanner, particularly in the U.S.

The pressure of international counter-terrorist operations has forced terrorists to devise new ways of transferring money to where it is needed. At one point of time, lawful transfers through banking channels were not all that difficult. Anti-money laundering laws and sequential controls imposed on banks and other financial institutions have made such transfers problematic. As a result, the newest trick of the trade is cash smuggling. There is, therefore, a need for greater vigilance on the part of Customs personnel at airports and seaports. Large seizures of cash by these authorities could be significant, requiring in-depth follow-up investigation.

Another modus operandus that has come to notice is counterfeiting of currency. The U.S. dollar is a favourite target. Stuart Levey's testimony on September 22, to a panel of the U.S. House of Representatives points a finger at North Korea.

One nation that has received minute attention from those tracking terrorist finances is Saudi Arabia. Despite all its protestations to the contrary, until Riyadh itself was attacked by the Al Qaeda on May 12, 2003, the Saudi government was distinctly lukewarm to the need for curbing the former and cutting off all monetary assistance that it was receiving from a variety of sources. The subsequent assaults on November 9, 2003 and April 21, 2004, both again in Riyadh, and the two offensives against the oil industry at Yanbu and Kohar in May 2004 brought home the message that continued ambivalence towards the Al Qaeda could prove disastrous. The Saudis have, therefore, enacted laws aimed at curbing money-laundering and devised regulations which would tighten supervision over charities and the formal and informal financial sector. They have also collaborated with U.S. authorities in bringing to book the Al Haramain Foundation and several of its suspect branches in Indonesia, Kenya, Tanzania and Pakistan.

To a cursory observer this could strike as a semblance of a political will to neutralise the Al Qaeda. Ironically, all this has not impressed the Independent Task Force on Terrorist Financing sponsored by New York's Council on Foreign Relations, a respected research body which also publishes the erudite journal Foreign Affairs. The Task Force believes that the Saudi official claims of "having closed the door on terrorist financing and money-laundering" are premature. In its Second Report of June 15, it draws attention to the Saudi reluctance to be transparent while acting against known financiers. Pointing out that several notorious individuals remain unpunished, the Task Force names Yasin al-Qaidi of Muwafaq Foundation as one who has gone scot-free. What is of interest to Indian readers is the Task Force's unequivocal assertion that a large number of madrassas in Pakistan have received Saudi funding to the tune of several million dollars. This funding has nursed the spread of jehadi culture in Pakistan, and encouraged "virulence and intolerance" towards other countries and religions. Can there be a stronger indictment of the half-hearted Saudi response to international terrorism?

Nothing much is gained by mere fingerpointing at Saudi indifference. Even countries such as India that are victims of terrorism and have assumed an unequivocal position, need to be extremely vigilant in monitoring financial inflows and outflows. We have had the infamous hawala case not very long ago. Memories of that sordid episode do not give us much confidence when we reckon the fact that a resort to the hawala route is popular with many terrorists in the region. We also had the Mumbai blast of 1993 in which a senior Customs official permitted the landing of explosives on the west coast that was eventually used in the attack on the metropolis.

Any number of bank frauds in our country in the recent past also do not inspire faith in bank personnel at the cutting edge. These staff should be honest enough to report to law enforcement suspicious transfers of large sums of money. Whether they do this is a matter of conjecture. The ambience in India corroded by political and civil service corruption gives me the uneasy feeling that our administration is not exactly equipped to meet the challenge posed by those who are determined to finance terrorism. I hope I am not being unduly cynical.


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