The financing of terror in the age of the Internet: wilful blindness, greed or a political statement?
| Date | 01 April 2005 |
| Published date | 01 April 2005 |
| Pages | 157-158 |
| DOI | https://doi.org/10.1108/13685200510621154 |
| Author | Fletcher N. Baldwin |
| Subject Matter | Accounting & finance |
The Financing of Terror in the Age of the Internet:
Wilful Blindness, Greed or a Political Statement?
Fletcher N. Baldwin, Jr
PREFACE
The National Commission on Terrorist Attacks upon
the United States recently released a Sta Report to
the Commission entitled `Monograph on Terrorist
Financing' (hereinafter the Report).
1
The unclassi®ed
Report is valuable for many reasons not the least of
which is a rearmation of the methodology
employed to trace, and where appropriate seize or
freeze, the assets of terrorists, ®nancial facilitators
and accomplices. For obvious security reasons, details
were not made available. Nevertheless the Report
rearms earlier conclusions by some non-govern-
mental agencies with respect to fund-raising. The
Report concluded that Osama bin Laden does not
rely to any signi®cant degree upon personal wealth
for terrorist activities and the al-Qaeda's funding is
approximately $30m per year.
2
Not surprisingly, the
Report further concluded that al-Qaeda no longer
uses formal banking channels to transfer money, but
relies upon an informal system of ®nancial facilitators
as well as bulk cash couriers. The computer age and
wire transfers also ®gure signi®cantly in disguising
and distributing wealth.
3
The Report notes that prior to 11th September,
2001, the ®nancing of terrorism was not a major
focus of the US government.
4
Government agents
on the street worked diligently to gather intelligence;
there was, however, very little upper level focus on
terrorists' ®nancing, and there was minimal middle
management coordination.
5
The events of 11th Sep-
tember gave birth to a signi®cant change in direction.
Considerable resources, the Report says, are now
employed to trace the accumulation and movement
of money destined for terrorist cells. There does
appear to be somewhat improved international
coordination. As a result, has al-Qaeda's budget
decreased signi®cantly? The Report suggests that it
has.
6
Continued terrorism and suspected terrorist
activity suggests otherwise.
7
The Report conceded that the nature and extent of
al-Qaeda fund-raising and money movement make
intelligence collection exceedingly dicult.
8
Indeed,
for whatever reason, few funds have been frozen
post 9/11.
9
A tactic suggested in the Report to disrupt
terrorist activity would require the following of fund-
ing rather than the seizing of funds, hence $200m in
asset seizures post 9/11 would seem reasonable.
The Report attempts to respond to the four con-
gressional concerns as outlined by former Secretary
of Treasury Paul O'Neill:
(1) Who ®nances al-Qaeda? From among other
sources: Islamic charities, ®nancial facilitators,
NGOs, and organised crime, to name but a few.
(2) How? Formal and informal banking systems and
cyberlaundering.
(3) Where is it? Surveillance tactic: disruption of
terrorists' ®nancing globally by following, not
seizing, the funds.
(4) Why don't you have it (al-Qaeda's assets)? Dicult
because of user-friendly states, ®nancial facilities
and NGOs. Furthermore, intelligence collection
which, as noted in (3) above, entails following
the money trail which could be either a strategy
or a need for adequate funding to complete the
task.
10
After reading the Report it can be concluded that
although much has changed since 9/11 there is still a
chasm between the reality and the reporting.
The focus of this paper will be upon cyberlaunder-
ing and e-cash. The review is within the context of
public documents, articles and case law only. The
author assumes, as suggested in the Report, that
although a signi®cant eort is being carried on by
the world intelligence community, the results of
such eort are not as yet available for popular con-
sumption.
INTRODUCTION
One of the diculties with the task of responding to
the questions raised within the context of ®nancing
of terror is accuracy. Accuracy invades privacy. Privacy
is a core expectation for those living within a liberal
democracy. To invade that expectation of privacy
requires a compelling governmental interest. Thus,
speculation becomes the reality. This has not always
been the case.
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Journalof Money Laundering Control
Vol.8, No. 2, 2004, pp. 127± 158
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The Greeks, wrote Euripides, the great writer of
Greek tragedies who gave us reality with all its failings,
considered privacy of any sort to be undemocratic.
Discovery of intrusion into legitimate as well as illegi-
timate enterprises, funding, and disbursement would
not have posed the problems to the Greek government
of Euripides that today's searchers face.
Contemporary investigators must work within
constitutional restraints, which limit eciency. If the
nation state is a police state, the answer to the questions
of ®nancing terrorism within that state would prob-
ably be much simpler, but much more reprehensible.
What is the relationship of funds, illicit or other-
wise, to terrorist activity? How does a government
lawfully monitor the transfer of funds for terrorists'
purposes and what is the proper methodology
required to ensure that legitimate governmental
objectives in monitoring and regulating the move-
ment of those funds are met? The methodology
implicates a constitutional concept of privacy within
the context of due process.
11
Make no mistake, wealth in disposable form fuels
terrorism and organised crime. As the Report notes,
terrorists obtain wealth in numerous ways including
self-reliant criminal activity. Post 9/11 wealth
accumulation can be subject to governmental regu-
lation because its acquisition could provide a means
to destabilise governments.
12
Detection of wealth,
regardless of amount, is critical,
13
no matter the
source, as long as the detection follows compelling
goals. Prompt response to terrorists' threats must be
deemed by governments to be legitimate and impera-
tive.
It can be concluded from the Report that modern
terrorists can secretly obtain more assets with a com-
puter than a gun. Terrorists are able to do more
damage with a keyboard than a bomb.
14
The internet,
friendly NGOs and ®nancial facilitators, combined
with the low rate of successful forfeitures and con-
®scations worldwide, would suggest that the terrorist
have a lethal and reasonably safe system of wealth
accumulation.
The enormity of this post 9/11 potential is under-
scored by an incident unrelated to wealth accumu-
lation pre-9/11, in which two individuals in San
Francisco gained access to and control of the computer
network regulating the US Air Force logistics sys-
tems.
15
The reality was not that Saddam Hussein
had broken into the network to sabotage the US
aerial campaign in Iraq. The reality, the government
later determined, involved 14-year-old precocious
children.
16
The intrusion caused no setback in the
air-eort against Iraq in the ®rst Iraq war. It high-
lighted a grave concern, however: the US computer
infrastructure was, and probably still is, vulnerable
to intrusion, attack, signi®cant disruption, or hiding
and transferring wealth from an array of young and
old perpetrators with vastly diering motivations.
17
The USA is not alone in this regard.
18
Although the
USA may be the most at risk, every country in the
international community relying on computer net-
working to support its critical infrastructure is vulner-
able to disruption and more, at the hands of those who
have the will, expertise and capabilities to achieve such
ends.
19
Much more dangerous than the teenage com-
puter hacker is a nation state, criminal syndicate, or
terrorist organisation that is willing to use cyberspace
as a means of gaining assets to facilitate complex crim-
inal or terrorist activities.
20
Some have compared the
potential impact of cyberlaundering and cyberterror-
ism to that of conventional weapons of mass destruc-
tion.
21
Governments are not the only victims, the
private sector, including unsuspecting charities, are
equally vulnerable. Yet, many nation states seem to
ignore the reality, especially when fuelled by a pro®t
motive combined with political fervour. With the
aid of the internet and capitalism funding, revealing
and seizing assets of terrorists by governments is
riddled with obstacles. Add to this depressing con-
clusion the apparent reality that there are probably
many nation states still ready and willing to perform
user-friendly banking tasks for both organised crime
and terrorists. Hard currency reward is an easy sell
for many, including otherwise legitimate multina-
tionals.
For example, at this writing, according to the
Chilean Ambassador to the United Nations, there
are nearly 100 nations who have failed to enforce the
UN sanctions against al-Qaeda. The Honourable
Heraldo Munoz, the Chilean Ambassador in question,
recently briefed the Security Council on the uphill
struggle to implement asset freeze, travel ban, and
arms embargos. He noted that his review concludes
that only 93 nations of the 191 UN member states
have submitted detailed reports with respect to
measures being taken to implement UN Security
Council Resolution 1373. Ambassador Munoz
suggested possible reasons for the failure to comply
with the requirement to submit reports including
lack of political will, reporting fatigue, lack of
resources and technical ability, and problems with
national coordination.
Page 128
Baldwin
Recently, the Assistant Secretary for Economic and
Business Aairs in testimony before the US House of
International Relations Committee presented a more
upbeat assessment:
`Key to our success in tackling terrorism ®nance
is eective US interagency coordination. A Policy
Coordination Committee (PCC), established
under the auspices of the National Security Coun-
cil, ensures that these activities are well coordinated.
This strong interagency teamwork involves the
intelligence and law enforcement communities,
led by the FBI, as well as State, Treasury, Homeland
Security, Justice, Defense and the ®nancial regulat-
ory agencies collectively pursuing an understanding
of the system of ®nancial backers, facilitators and
intermediaries that play a role in this shadowy
®nancial world. The Treasury Department devel-
ops and coordinates ®nancial packages that support
public designations of terrorists and terrorism sup-
porters for asset freeze action. The Department of
Justice leads the investigation and prosecution in a
seamless, coordination campaign against terrorist
sources of ®nancing. And, the State Department
initiates asset freeze designations and shepherds the
interagency process through which we develop
and sustain the international relationships, strategies
and activities to win vital international support for
and cooperation with our eorts. These eorts
include the provision of training and technical
assistance in coordination with Justice, Treasury,
Homeland Security and the ®nancial regulatory
agencies. Our task has been to identify, track and
pursue terrorist ®nancing targets and to work
with the international community to take measures
to thwart the ability of terrorists to raise and channel
the funds they need to survive and carry out their
heinous acts.
Our diplomatic posts around the world have
been essential partners in implementing this global
strategy. They have each designated a senior ocial,
often the Ambassador or Deputy Chief of Mission,
as the post Terrorism Finance Coordination Ocer
(TFCO). These ocers chair interagency meetings
at posts on a regular basis not only to evaluate the
activities of individual countries, but also to develop
and propose individual strategies on most eec-
tively getting speci®c targets in certain regions.
The increased level of interagency cooperation
being seen on this front in Washington is generating
new embassy initiatives focused sharply on terrorist
®nance. The ability of posts to develop high-level
and immediate contacts with host ocials in these
eorts has ensured broad responsiveness around
the world to various targeting actions.'
22
REALITY: TERRORISM AND
ORGANISED CRIME
The terrorist attacks of 11th September, 2001, and
the international responses that followed (in some
instances), appeared to place democracy on hold.
23
The subsequent discovery of political will in the
war on terrorism changed the intelligence and
counter-terrorism infrastructures in the USA and
elsewhere. Nations re-examined the role of terrorism,
and, in particular, the ancillary issue of wealth
accumulation, money transfer, money laundering
and asset forfeitures, in their respective regions. The
United Nations, the International Monetary Fund/
World Bank (IMF) and the Organisation of American
States (OAS), to name but a few, responded to the
threat by implementing various programmes
attempting to address the many complex faces of
terrorism.
24
The reach of terrorism surfaced publicly in many
spheres after 11th September. For example, Sinn
Fein representative Gerry Adams declined an invita-
tion to visit the USA approximately two years ago.
For one who had always received support from the
Irish-American community in the USA, such a refusal
was unusual. The invitation had come from Represen-
tative Henry Hyde, who requested Adams testify
before the Committee for International Relations.
25
On the hearing's agenda, entitled International
Global Terrorism, was an investigation of the arrest
of Provisional IRA militants detained in Colombia.
The militants were accused by the Colombian
government of providing training for leftist guerrillas
of the Revolutionary Armed Forces of Colombia
(FARC).
26
An investigation of the incident revealed:
`that seven known IRA members, including two
signi®cant leaders, had trained drug-running ter-
rorists in explosives and urban warfare. The Provi-
sional IRA . . . had helped the FARC guerillas
develop expertise in mortar, bombs, missiles and
intelligence. [In addition . . . ] the IRA had
worked with Iranians, Cubans and, possibly, Bas-
ques in Colombia to hone their terrorism skills.'
27
The tri-border area of Brazil, Paraguay and Argen-
tina, and, in particular, the Paraguayan city of
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The Financing of Terror in the Age of the Internet
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