In a recent article, we spoke about the Money Laundering-Terrorist connection:
fighting money laundering is key to fighting terrorism! This may not come as a surprise to most of our readers, but the growing importance of the ‘Crime-Terror Nexus’, as it is referred to, necessitates a closer look at some of its details.
New Trends
It cannot be denied that the recent face of terrorism in Europe has been defined by a new breed of terrorist: not sponsored, by state or others, but rather self-financed, individualist and with a significant criminal background accompanying each terrorist (Howard & Traughber 2008).
Petty crime is certainly not a new way of financing terrorist activities: ‘the Taliban relied on income from heroin production, al-Qaeda recommended credit card fraud, and the 2004 Madrid attackers had financed their activities with drugs and arms sales’ (Gaub & Lisiecka 2017). What is new is the scale on which Islamic State/Daesh have taken things to, relying on the following for funds: kidnappings, extortions, car thefts, the drug trade, oil smuggling. These sources of revenue for the group are reported to be depleting as they lose territory and international air strikes target their captured oil fields.
As Islamic State’s revenues fall, it encourages its supporters in the West to self-finance and carry out low-scale ‘affordable’ attacks. In doing so, it builds on a recent trend of moving away from terrorism as sponsored activity to one where terrorists themselves are expected to self-finance and are indeed given detailed guidance on how to do this (ICSR Report 2017).
As the cost of being a terrorist at the moment can easily fall under some tens of thousands of euros (the November 2015 Paris attacks cost the terrorists no more than €30,000) sources of terrorist self-financing can be varied, ranging from personal assets and savings, through legitimate income, to crime. Most importantly, the revenue needed is modest, hence the growing role of petty crime as terrorist financing stream.
What sort of petty crime are we talking about here?
The ISIS French language magazine, Dar al-Islam, states: ‘You should (if possible) try to obtain false documents, in order to reap the easy spoils, such as opening a bank account and paying by cheque in societies with low restrictions’ (quoted in Basra, Neumann, Brunner 2016).
Further, ‘VAT and business fraud are other highly lucrative sources of financing: a Swedish Salafi preacher funded activities of terror cells through “missing trades” (i.e., theft of Value Added Tax) worth over €60,000 until he was caught by security services in 2013’ (Gaub & Lisiecka 2017).
Similarly, ‘loans which are not paid back, the failure to return rental vehicles, as well as social insurance fraud are also handy revenue streams. Amedy Coulibaly, together with his wife, raised significant sums for his attack by taking out two consumer loans using a fraudulent payslip from a fake company (which had no employees registered). Using this method they were able to acquire €33,000, some of which was used to buy a car, which was later exchanged for weapons’ (Gaub & Lisiecka 2017).
‘People with the worst pasts’
The common theme among terrorists of recent years is their criminal past: ‘50- 80% of Europeans in Daesh have a criminal record – substantially higher than al-Qaeda, where the same statistic stands at around 25%’ (Gaub & Lisiecka 2017).
While we have spoken before about the overlap between terrorism and organised crime, the new trend of terrorist recruits are chosen precisely because their criminal past is seen as being of inexorable use in the preparation and execution of terrorist attacks.
In mapping out the profile of the ‘new’ terrorist, religious belief and ‘radicalisation’ do not play as large a role as perhaps they used to: ‘Unlike al-Qaeda, Daesh does not require a new member to possess religious knowledge, making the convergence even easier’ (Gaub & Lisiecka 2017). Rather, it is criminal past that is a common theme, with the radicalisation process usually benefiting from any time spent in prison (ICSR Report 2017). Equally disturbing, another common theme that emerges in recent years is terrorists’ violent past, and especially domestic violence. Profiling terrorists behind recent attacks, journalists find evidence of former wives and girlfriends having experienced controlling and abusive behaviour from them (Freeman 2017).
New Challenges
The trends described above have serious implications for those of us concerned with preventing terrorist financing. Although the connection between money laundering and terrorist financing is still there for as long as criminal proceeds – whatever their size – are used to fund terrorism, it is worth noting the growing consensus: a comprehensive approach to the matter means not only focusing on the transaction level but also the general profile of the new terrorist. This is a potentially overwhelming prospect.
Terrorists have recently favoured proceeds from petty crime not just because their terrorist plans cost relatively little, but also because petty crime can be kept fairly invisible from law enforcement. Though experts are still debating how terrorist financing from petty crime can be effectively countered, some ideas focus on improving mechanisms which alert authorities about multiple loan applications and especially those with no guarantees, or VAT fraud, as well as the fraudulent leasing of cars (Gaub & Lisiecka 2017). Indeed, the US Senate will soon be considering new legislation that, among other measures, tightens oversight over prepaid cards and digital currencies (Redman 2017). The connections then between money laundering and terrorist financing are still there, and law enforcement is continually updating its methods for effectively countering both.