Though the 9/11 attacks are believed to have cost as much as a half million dollars, most terrorist operations have much more modest budgets. The UN estimates the 2002 bombing of a Bali nightclub cost about $50,000. By comparison, the 2004 Madrid train bombing is believed to have cost between $10,000 and $15,000. The 2005 attacks on London’s mass transit system cost about $2,000, says Loretta Napoleoni, an expert on terrorist financing. (From an article by Eben Kaplan).
If it isn’t done through the ordinary banking system, it’s done through shell companies says Bill Tupman, a senior lecturer at the University of Exeter who specializes in transnational crime. Financial crime is so widespread that as much as 10 percent of the global GDP is estimated to be from such funds. Despite heightened efforts to track terrorist financiers, the vastness of the modern financial system means government officials often find themselves looking for the needle in the haystack with nothing of substance happening.
Another, more traditional means of transfer is also widely used by terrorists. Hawalas are time-honored, trust-based remittance agencies popular across Asia and found throughout the world, particularly in Muslim communities. With no more than a handshake and a password, individuals are able to transfer money across the world.
In the 2008 Mumbai attack in India it was noted that there were 25 gunmen armed with AK47s, machine guns, hand grenades, automatic rifles, anti air craft missiles to attack helicopters the approximate cost coming to similar figures, whereas the 20011 attack had 3 bombs planted in 3 places Dadar, Zaveri Bazaar and Ophera House showed large traces of ammonium nitrate with is easily available in market as it is a widely used chemical fertilizer (Rs.15,750 to 31,500 a ton)
TRANSFERRING FUNDS
There are three main methods by which terrorists move money or transfer value. The first is through the use of the financial system, the second involves the physical movement of money (for example, through the use of cash couriers) and the third is through the international trade system. Often, terrorist organizations will abuse alternative remittance systems (ARS), charities, or other captive entities to disguise their use of these three methods to transfer value. Terrorist organizations use all three methods to maintain ongoing operation of the terrorist organization and undertake specific terrorist activities. All of these methods are discussed in turn below.
Financial institutions and other regulated financial service providers represent the formal financial sector and serve as the principal gateway through which retail and commercial transactions flow. Additionally, the services and products available through the formal financial sector serve as vehicles for moving funds that support terrorist organizations and fund acts of terrorism. The speed and ease with which funds can be moved within the international financial system allow terrorists to move funds efficiently and effectively and often without detection between and within jurisdictions.
Alternative remittance systems (ARS) are used by terrorist organizations for convenience and access. ARS have the additional attraction of weaker and/or less opaque record-keeping and in many locations may be subject to generally less stringent regulatory oversight. Although FATF standards call for significantly strengthened controls over such service providers, the level of anonymity and the rapidity that such systems offer have served to make them a favored mechanism for terrorists.
Charities are attractive to terrorist networks as a means to move funds. Many thousands of legitimate charitable organizations exist all over the world that serve the interests of all societies, and often transmit funds to and from highly distressed parts of the globe. Terrorist abuses of the charitable sector have included using legitimate transactions to disguise terrorist cash travelling to the same destination; and broad exploitation of the charitable sector by charities affiliated with terrorist organizations. The sheer volume of funds and other assets held by the charitable sector means that the diversion of even a very small percentage of these funds to support terrorism constitutes a grave problem.
GOVERNMENTS ROLE
What difficulties government faces in tracking these financers?
The greatest difficulty is that terrorist networks have stayed aware of governments’ efforts to stand as an obstacle to their activities and to reduce their operations accordingly. Terrorist financing bodies continuously keeps terrorists a step ahead of the authorities. Terrorists have increasingly riley completely on illegal activities, such as smuggling, counterfeiting, to generate revenue that is difficult to track through the financial system since it has not be though legal paper it difficult even to estimate an amount. Terrorists have also begun to depend more on cash, leaving less of a paper trail.
According to Napoleoni, much of the funding for Abu Musab al- Zarqawi’s al-Qaeda organization in Iraq is brought into the country by couriers carrying cash. The July 2005 attacks in London were also funded entirely by cash, is untraceable.
The London attacks highlight another development in terrorist finance, the use of domestic sources in planning and funding attacks. The bombings were planned inside Britain by British citizens who raised all the money locally for the attacks. Because the plotters only used cash and didn’t cross any national borders, it was difficult to track their financial activities.
Enforcement of new financial laws has also proven difficult. According to the British Bankers’ Association, UK banks spend about $430 million each year to comply with anti-terror and antimony laundering laws. Experts say the U.S. Department of Treasury is overwhelmed by the number of suspicious activity reports it receives, which have risen some 350 percent since 2001.
How can terrorist funding be effectively stopped?
Most terrorist financing is connected to a network of social odds which contribute greatly to the same. Funding cannot be through legal channels but black money, drug deals, prostitution or similar illegal methods, hence it is important to monitor the flow of black money to curb terrorism funding.
CONCLUSION
The strategy of the Administration of the UN and the government gave hope that this war on terrorism includes the long over-due war on Narcoterrorism, corruption, and money laundering. However, it is clear that the sources of money for terrorists and other international criminals have not been shut down. Unless the government takes the lead to nip it in the bud before it further fortifies, and undermine our economic and political stability, we will lose the war. Going after all the resources, including illegal drugs, will help the government to sever the money sources of these evil organizations that poses a threat to democracy, the free market, and freedom. In conclusion, to confront global terrorism, especially Radical Muslim organizations, we need to cut off their money. Thus, we must also fight their support systems: criminal organizations, money launderers, and illegal drug producers and traffickers.
By Parvathy Kumar