How terrorists exploit gaps in US anti‐money laundering laws to secrete plunder
| Date | 01 July 2005 |
| Pages | 200-214 |
| Published date | 01 July 2005 |
| DOI | https://doi.org/10.1108/13685200510620957 |
| Author | Courtney J. Linn |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control Ð Vol. 8 No. 3
How Terrorists Exploit Gaps in US Anti-Money
Laundering Laws to Secrete Plunder
Courtney J. Linn
INTRODUCTION
The question of how terrorists secrete money invites a
more fundamental question: how do terrorists acquire
money? Many notorious terrorist organisations have
in the past relied extensively upon so-called legitimate
money to ®nance their activities. Prior to 9/11, for
example, al-Qaeda funded its $30m per year oper-
ations largely through `charitable' donations.
1
Like-
wise, Hamas reportedly receives extensive ®nancing
through `charitable' donations.
2
These terrorist organ-
isations, or those providing material support to them,
seemingly have access to great caches of money.
3
In
such cases, US and international counter-terrorism
strategies rightly place emphasis on the problem of
`reverse money laundering', ie the process of conceal-
ing the future use of money to ®nance a terrorist act.
4
Other terrorist organisations do not have such
ready access to money.
5
A terrorist cell may receive
initial `seed' money from al-Qaeda or some other ter-
rorist organisation, but progressively it will be
expected to fund itself. How does the terrorist cell
fund itself? Osama bin Laden's February 1998 procla-
mation of a jihad in the name of the `World Islamic
Front', provided a clue. In that proclamation bin
Laden called upon his followers:
`to kill Americans and their allies, both civilian and
military . . . By God's leave, we call on every
Muslim who believes in God and hopes for
reward to obey God's command to kill the Ameri-
cans and plunder their possessions wherever he ®nds
them and whenever he can.'
6
With the 9/11 attacks, and subsequent attacks in Bali,
Djerba, Madrid, and elsewhere, there is a fresh and
painfully vivid sense of what bin Laden meant in his
1998 proclamation when he spoke of killing Ameri-
cans and their allies. However, many years after this
proclamation, we still have little understanding of
what he meant when he spoke of plundering our pos-
sessions.
This paper begins by exploring the connection
between the one activity (plunder their possessions)
and the other (killing Americans and their allies). As
suggested in the 9/11 Commission Report, the con-
cept that terrorist organisations like al-Qaeda continue
to fund activities through a centralised ®nancial sup-
port network of donations may be outdated.
7
In the
USA there is increasing evidence that terrorists acquire
money, as Osama bin Laden instructed, through
ordinary criminal activity. These criminal activities
are varied, but include crimes involving immigration
bene®t fraud, identity theft, credit card fraud, welfare
bene®t fraud, the sale of counterfeit goods, and drug
tracking.
In this emerging model of terrorist ®nancing, ter-
rorists use traditional money laundering techniques
to conceal and transfer criminally derived proceeds.
For example, the terrorist who fraudulently acquires
a welfare bene®t cheque by assuming a false identity
faces the same obstacle any person engaged in an iden-
tity theft type crime might face: how to convert the
cheque to cash without someone (like an honest
bank teller at a traditional bank) demanding proper
identi®cation.
8
Once the terrorist has converted the
cheque to cash he must move the proceeds to places
where those proceeds can be used to promote terror-
ism. In the case of money generated in one country
and transferred to another, this step often means
depositing the cash into a bank account maintained
at a traditional bank by an illegal money service
business (MSB), such as an unlicensed money trans-
mitter.
9
The terrorist should face the greatest risk of detec-
tion when he converts the cheque to cash, and then
attempts to introduce the proceeds into a traditional
bank by depositing them into the account of an illegal
money transmitter. These transactions draw the ter-
rorist into close contact with the legitimate and heav-
ily regulated ®nancial world.
10
It is at this point that
anti-money laundering and counter-terrorism eorts
have the greatest possible chance of disrupting terrorist
®nancing.
11
Unfortunately, for reasons explained below, US
laws do not adequately regulate the points of contact
among the terrorist, the unlicensed MSB and the tra-
ditional bank. The terrorist who has acquired a cheque
through a form of identity fraud can readily bypass the
Page 200
Journalof Money Laundering Control
Vol.8, No. 3, 2005, pp. 200± 214
#HenryStewart Publications
ISSN1368-5201
To continue reading
Request your trial