In lieu of an abstract, here is a brief excerpt of the content:

4 Financing Terror Terror groups raise money through legal and illegal means. Among criminal financing schemes terrorists have utilized include: trading in commodities (e.g., “conflict” diamonds and gold); bogus financial instruments ; currency smuggling and wire transfers; drug-trafficking; extortion , money laundering; smuggling products; securities fraud; and scams. Traditional banking and alternative financial services, including hawalas, are used to distribute terror-destined funds. These methodologies contributing to funding terror are covered in this chapter. Traditional Financial Services Terrorists, terrorist-front companies, and individuals contributing to terrorist groups have at their disposal the vast, multinational banking system. Bankers and law enforcement officials have difficulties distinguishing account holders with benign intentions from monies earmarked for terrorist goals. Should persons with malevolent intent place their funds at offshore banks with strict secrecy rules then the challenge to uncover terrorist financing is that much more difficult. Terror groups’ use of shell companies further complicates undermining terror financing. Financing the September 11 Attacks There is evidence that terrorist groups source part of their activities through the receipt of funds from traditional financial institutions (e.g., banks and money-service firms). According to the FBI, the 19 hijackers involved in the 9/11 attacks opened 24 U.S. bank accounts at four different , well-known banks, with an initial average deposit of $4,000. 68 The 9/11 hijackers received and sent wire transfers from various countries, including Germany, Saudi Arabia, and the United Arab Emirates. They had no consistent pattern of deposits and withdrawals. Moreover, traditional living expenses (e.g., rent and utilities) were not reflected in the accounts. As such, one can presume that they brought with them substantial amounts of cash or obtained additional funds in another manner (e.g., wire transfers or criminal activity). A number of the 9/11 hijackers purchased traveler’s checks overseas and used them in conjunction with credit cards and banks accounts issued by banks in Germany and the United Arab Emirates. Some of the perpetrators used money-transfer firms to wire money among some alQaeda supporters. Additional Financing Activities U.S. authorities are investigating the ties of Soliman Biheiri, a former banker of the Muslim Brotherhood (an Egyptian militant group), for his possible involvement in financing terrorism. Biheiri established an investment firm, BMI Inc. in New Jersey, with funding provided by a nephew of Osama bin Laden, a Saudi businessmen, and Islamic Resistance Movement (Hamas) leader. It is alleged that Biheiri used BMI to undertake financial transactions with terrorists. Biheiri was sentenced to one year in prison arising from immigration violations. Hawalas and Other Informal Money Transfer Systems Informal money transfer systems—including underground banking systems, such as the hawala (run by hawaldars) and hundi systems of the Middle East and Asia—are used for legitimate business, personal, and charitable purposes. In fall 2002, various international organizations , including the United Nations, used hawalas to move money from Pakistani banks to Afghanistan. Under these systems, brokers based worldwide pay off one another’s debts locally in cash through credit systems. The broker takes a commission for facilitating the transfer. In many Muslim nations, hawala networks are integral parts of the financial system. As such, they are not readily replaced. In Pakistan, for instance, it is projected that about $5 billion a year flows through Pakistan’s hawala networks. The headquarters of the global hawala system is deemed to be the United Arab Emirates. Unfortunately, terrorists also use hawalas to move money worldwide. Financing Terror 69 s In November 2001, the U.S. Customs Service froze the assets, and raided the U.S. offices, of a hawala group, Al Barakaat in Minnesota, Washington, Massachusetts, Virginia, and Ohio. Al Barakaat, a Somaliowned group, was implicated in managing, investing, and distributing funds on behalf of terrorists. The United States also blocked the assets of another hawala, Al Taqwa. Al Barakaat and al Taqwa are alleged to have: raised, invested, and distributed funds for al Qaeda; offered terrorist supporters Internet service and secure communications; and arranged for the shipment of armaments. Al Barakaat, established in 1989 by Shaykh Ahme Nur Jimale, operated in 40 nations and provided telecommunications, wire transfer, Internet, and currency exchange services. The conglomerate transferred instructions, intelligence, and funding to terrorist cells worldwide. Al Taqwa, controlled by naturalized Italian citizen, Youssef Nada, was based in four countries: Bahamas, Italy, Liechtenstein, and Switzerland . Al-Taqwa enabled al Qaeda and other terrorist groups to invest funds and transfer cash among its members. Nonpro...

Share