Combating terrorist financing in the first decade of the twenty‐first century
| Date | 30 December 2011 |
| Published date | 30 December 2011 |
| Pages | 38-57 |
| DOI | https://doi.org/10.1108/13685201211194727 |
| Author | Nicholas Ridley,Dean C. Alexander |
| Subject Matter | Accounting & finance |
Combating terrorist financing
in the first decade of the
twenty-first century
Nicholas Ridley
London Metropolitan University, London, UK, and
Dean C. Alexander
Western Illinois University, Macomb, Illinois, USA
Abstract
Purpose – The purpose of this paper is to investigate the strategic intelligence oversights with
regards to the funding of terrorism.
Design/methodology/approach – The paper considers the modus operandi of terrorist financing,
and how and how speedily or otherwise they were identified, and the international and national
anti-terrorist financing measure implemented post 9/11.
Findings – The paper concludes that there were (and still are) strategic oversights, delays and
distractions by government law enforcement and financial regulatory agencies in combating terrorist
financing.
Practical implications – The paper suggests there should be more proactive exchange of
intelligence by law enforcement and financial regulatory agencies in combating financing of terrorism.
Originality/value – The added value is lessons learned in international efforts against financing of
terrorism.
Keywords Terrorism, Financing, Legislation,Regulations, Intelligence, Terroristfinancing,
Internationalefforts, Conventions, Terroristfunding, International financialregulatory measures
Paper type Viewpoint
Introduction
The attacks of 9/11 were cataclysmic. They ushered in a new dimension of terrorism.
Law enforcement and governmental strategists were forced to craft responses to
terrorism, and did so. Law enforcement has adapted with a characteristic dedication
and professionalism beyond reproach.
However, during the first decade of the twenty-first century, almost inevitably –
given the nature of the new dimension of terrorism – fundamental strategic oversights
have occurred. Such weaknesses occurred particularly in countering terror financing.
The lack of a comprehensive definition of terrorism, even in the late 1990s, hindered both
strategic analysis and formulation and enactment of anti-terrorist financing legislation.
In response to 9/11, there was an opportunity to promulgate a unified definition as a basis
when international governments, law enforcement and regulatory agencies were focussed
against a threat that had apparently assumed proportions hitherto unknown and
unforeseen. However, paradoxically, the 9/11 crisis necessitated such a focus. The frenzy of
international interface was the very reason why no such legal definition was forthcoming.
The general consensus appeared to be that such efforts were of lesser priority, as:
With the still smouldering twin Towers visible from our respective emergency meetings,
we would have been ridiculed and damned for ever if it had become known that we had spend
The current issue and full text archive of this journal is available at
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JMLC
15,1
38
Journal of Money Laundering Control
Vol. 15 No. 1, 2012
pp. 38-57
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201211194727
even one minute of valuable time trying to obtain an academic and legal definition of
terrorism[1].
One particular problem in formulating countermeasures against terrorism, and the
financing of the terrorist, is the difficulty known as “double criminality”. This is
criminalising terrorist acts, designating them as specific criminal offences. All the
statutes and legislative measures cannot cover each and every modus operandi. One
example is that of Nigeria. There, a myriad of inter-locking laws and investigative
powers relating to the criminal acts involving oil and commodity fraud as well as theft of
oil. But, in Nigeria, there is no specific criminal act in blowing up oil pipelines. This lack
of statute is surprising given that Nigeria is criss-crossed with oil pipelines, the majority
of which are ideal targets for potential terrorist attacks (Chukwiuemerie, 2006).
The difficulties of definition and specific terrorist offences have led to differing
perceptions amongst various countries leading, as in 2004, to intense exchanges. At an
operational level, law enforcement investigations against terrorist financing resulted in
the perpetrators being charged with other criminal offences. Of note was the case of
Arnoaut. Between 2002 and 2003 US investigations of the Islamic charity Benevolence
International Foundation resulted in illicit transfers of monies to Islamist extremist
movements in Pakistan. Enaam Arnaoutwas the Chief Executive Officer of Benevolence
International Foundations. After negotiations with prosecutors, Arnaout entered into a
guilty plea to one count of racketeering. More specifically, Arnaout admitted subverting
between $300,000 and $400,000 of charitable funds. In return, the prosecution
acknowledged that neither Arnaout nor BIF had acted contrary to the interests of the
USA, nor had they ties to al Qaeda or Osama bin Laden (Washington Post, 2005). Yet,
there is substantial intelligence and documentation to the close relationship between
Arnaoutand Osama bin Laden, dating from the mid-1980s (USDept of the Treasury, n.d.).
The UK, which has been that has been impacted by terrorism for over 40 years, is not
lacking in legislation against terrorist financing. The 2001 Terrorism Act contains four
specific offences against terrorist financing, covering fundraising, use and posses sion of
terrorist funds, facilitating terrorist financing and concealment of such funds[2]. Upon a
showing of reasonable suspicion, the Anti-Terrorist Crime and Security Act of 2001
enables the freezing and seizing of potential terrorist assets anywhere in the UK[3].
The statute, too, places the burden of proof on the defendant. The Counter-Terrorism Act
2008 empowers a UK Government Department, HM Treasury, to undertake several
activities, including to: direct and order the freezing of the assets of, and deprive material
assistance and financial resources from, any individual or commercial entity or
organization. The statute also designates as involved in terrorist financing or in the
proliferation of nuclear, chemical or biological weapons.
Moreover, the UK has generated ample target for the ire of such legislation. By 2009,
the UK Government proscribed no less than 45 international groups and 14 domestic
groups (the latter all linked to Northern Ireland)[4] all of which are impacted by such
legislation.
Enacting legislation against nefarious activities can be effected, given favourable
political will and speedy legislative drafting. The difficulty for law enforcement is that
of securing convictions, and the difficulty for policy makers is that of assessing the
effectiveness of such policies.
Combating
terrorist
financing
39
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