Why Following the Money Leads to Terrorists

Source: Matthew Levitt, European Voice, 14 February
The UN has just added three financiers to its terrorism list for providing financial support to al-Qaeda and other terrorist groups. This would be heartening news but for the fact that it took the UN more than a year to do this, even though the US Treasury had designated the three Kuwaitis supporters of terrorism, a full 13 months ago.

Does such tardiness matter? Hardly, according to the political scientist Ibrahim Warde, whose latest book The Price of Fear denounces such efforts as a waste of time or worse, ruining innocents and hampering world trade. The hunt for terrorist money is more political grandstanding than effective policy, according to Warde and a host of other academic critics.   Even after six years of following and freezing terrorists' funds, intelligence officials in both the US and Europe warn that al-Qaeda still has both the intention and the capability to conduct potentially devastating attacks.

 

But combating terror finance remains -- and should remain -- central to counterterrorism strategy. As deputy chief of the US Treasury's Office of Intelligence and Analysis, I saw first-hand the utility of denying terrorists access to the funds they need to carry out their plot.   Having left government service, I have lectured widely to think-tanks, bankers and governments in Europe over the past year. In contrast to the academics they understand perfectly well why it helps to prosecute, or at least name, those who finance terrorism.

Terror attacks are in themselves inexpensive and not infrequently funded by local cells through criminal activity -- the Madrid bombings, for instance. But considerable funds are needed to maintain terror networks -- for recruitment, training, travelling, planning operations, bribing corrupt officials and so on.

 

To eliminate or reduce a cell's means of raising and transferring funds is to degrade significantly its capabilities. As difficult as it may be to deter a suicide bomber, terrorist designations can deter non-designated parties. Major donors inclined to finance extremist causes may think twice before putting their personal fortunes at risk.  Unlike information derived from human spies or satellite intercepts, which require considerable vetting to determine their authenticity, a financial transfer is a matter of fact. Raising, storing and transferring money leaves a financial trail that investigators can follow.  The British authorities foiled the summer 2006 liquid explosive aviation plot thanks in large part to financial intelligence. Following the money will at a minimum make it harder for terrorists to travel, procure materials, provide for their own families, or radicalise others.

 

It can also force terrorists out of hiding. Financial intelligence played an important role in the capture of Hambali, the operations chief of Jemaah Islamiya and mastermind of the 2002 Bali bombing.  Designations and securing convictions for material support for terrorism are only the most visible of the tools in the counter-terrorism arsenal. In itself, following or freezing terrorists' assets will never drain the swamp of all available funds.

But it should not be under-estimated as a deterrent, nor as an effective way of disrupting logistical and financial support networks.   This view is confirmed by the terrorists themselves. In 1995, captured World Trade Center bomber Ramzi Yousef was flown over the twin towers on his way to a New York jail. When an FBI agent pointed out that the towers were still standing, Yousef replied: "They wouldn't be if I had had enough money and explosives."

 

Even today, terrorists lament their lack of funds and how it limits their capabilities. Mustafa Abu Yazid, reportedly the al-Qaeda chief in Afghanistan , broadcast an appeal this year complaining that: "In Afghanistan the mujahedeen especially need money. We have hundreds of volunteers for martyrdom operations, but don't have the money to equip them."   Abu Yazid knows what it's like to be strapped for cash; the US Treasury designated him as a terrorist in the wake of the 11 September 2001 attacks that he helped finance.

 

Matthew Levitt, a former deputy assistant secretary of the US Treasury for intelligence and analysis, is a senior fellow and director of the Stein Programme on Counterterrorism and Intelligence at the Washington Institute for Near East Policy and an adjunct professor at Johns Hopkins University's School of Advanced International Studies.

Cigarette Smugglers Funnel Money to Terror Groups, Report Finds

Source: Fox News, 29 April
Cigarette smuggling is generating millions of dollars every year that can be reaching terrorist groups, including Hezbollah, Hamas and Al Qaeda, according to law enforcement sources. In a single case, $100,000 was sent to Hezbollah.  A 15-page report congressional report, obtained by FOX News, includes intelligence from law enforcement as well as New York State ’s Department of Taxation and Finance.  The report reads in part: Cigarette smuggling is generating millions of dollars every year that can be reaching terrorist groups, including Hezbollah, Hamas and Al Qaeda, according to law enforcement sources. In a single case, $100,000 was sent to Hezbollah.  “This is a very serious homeland security issue, one that has gone unnoticed for far too long,” said Rep. Peter King, (R-N.Y.), the ranking member of the House Homeland Security Committee, who called for the investigation.

 

“Cigarette smugglers are able to generate millions of dollars in illegal profits with a great deal of this wealth being sent to terrorist groups overseas – groups that would like nothing more than to inflict devastating harm on our country and its citizens.”

One of the key issues, according to the report, is a potential flaw in New York State policy. According to King’s office, there is a policy in the state of “forebearance,” or refusing to collect on sales of Native American tax-free cigarettes to non-Native Americans.  Critics of the policy say it has effectively created a safe haven for smugglers. In some cases, the report says, a well-organized operation can buy cigarettes tax-free on New York ’s Indian reservations and sell them at a great profit in the New Yock City area, generating up to $300,000 per week with a loss of up to $576 million in tax revenues to New York State .  According to the report, citing federal and New York state law enforcement sources, nearly 60 percent of all convenience retail outlets in New York City are now Arab-owned, primarily families of Lebanese, Yemeni, Jordanian and Palestinian descent. While the vast majority of retailers are operating above board, some are not.

 

The report says that these retailers can funnel their profits from the sale of cigarettes to terrorist groups in the Mideast . It claims this “tobacco and terror” relationship has been found in a handful of recent cases.  “…the infamous ‘Lackawanna Seven’ reportedly received funding from an individual named Aref Ahmed for their travel from Buffalo to Afghanistan to attend an al Qaeda training camp,” the report says, referring to a group of American-born men of Yemeni descent who pleaded guilty to terror training.  “The State is losing hundreds of millions of dollars in tax revenue; and given the current budget shortfall, this would seem to be more than enough reason to put the so-called policy of forebearance out of its misery,” King said.  “But this is more than just a matter of lost revenue. It is a matter of national security. Cigarette smuggling in New York State must be brought to an end immediately.”  Hearings dealing specifically with the report are scheduled this Thursday in Washington before the House Judiciary Subcommittee on Crime, Terrorism and Homeland Security.