Experts and politicians last week in Paris adopted new measures to combat the financing of terrorism. Terrorists, on the other hand, show great creativity in obtaining funds and find new sources of financing.
Representatives of more than 70 countries agreed in Paris on further steps in the fight against the sources of funding for terrorist organizations. Thus, for example, the financing of travel and recruitment of new extremists will be treated as criminal acts, even when they have no connection with specific attacks. Special attention should be paid to the so-called micro-financing. For example, in Lebanon and Turkey there is a network of at least 320 money collectors who deliver money to the Islamic State.
But is that enough? Because terrorists have so far shown unprecedented creativity when it came to obtaining money.
The ivory business
Take away their income - you will stop the ivory trade! It was seen as a breakthrough in the fight against terrorism, when it became known in 2013 that the Somali terrorist organization al-Shabaab was mainly financed by the illegal ivory trade. The conclusion was obvious: if this trade was stopped, the jihadist challenge would be partially overcome.
Then US Secretary of State Hillary Clinton declared the fight against ivory dealers an integral part of the war against terrorism. Only later did it become clear that in this way it would be possible to take measures against Al Shabaab - but not against Al Qaeda and the Islamic State in Iraq and Syria - for the simple reason that there are no elephants there and therefore the ivory trade plays no role.
Ultimately, the story contains some lessons for the fight against terrorism. One of the most important principles is that terrorist organizations nest in the economic structures of the regions in which they operate. Al-Shabaab sells ivory from East Africa, the Taliban manufacture and smuggle opium, and IS sold oil in Iraq as long as it controlled the oil fields there. The diamond trade is important for terrorist organizations operating in West Africa. In the Sahel, on the other hand, cigarette smuggling plays a significant role.
Cracks in the financial system
Until now, Western countries have primarily tried to cut off money transfers. But it did not bring much success, writes terrorism expert Peter Neumann in an essay for the New York magazine Foreign Affairs. This is not surprising, he writes, and adds that the connection of certain persons with terrorist networks is sometimes very difficult to prove. Accounts are opened in the names of people who serve only as cover and are usually almost insignificant in the hierarchy of terrorist groups. These people are not known as terrorists either by the banks or the authorities.
In addition, as Neuman writes, banks are unable to check every single transaction. First of all, most financial transactions of terrorists do not take place through the global financial system. Instead, the jihadists, it is further stated, used the Hawala system in many Arab countries, which is popular there and allows money to be transferred through trusted intermediaries. Jihadists had to exploit the cracks in the international financial system, Osama Bin Laden once said. "The Hawala system is not a crack, it's a whole canyon," said the former head of al-Qaeda.
Because of this, suggests Neumann, the financial sources of terrorists would have to be put to an end by different methods. "Promoting development, improving local governance, fighting corruption: all of these will be far more important in the future than preventing terrorists from using the international financial system," Neumann wrote.
Integration into local economies
Al-Shabaab's ivory trade points to another principle of the terrorist economy: if an organization controls territory, its income increases. This has been convincingly proven by the history of the Islamic State, which has controlled larger areas in Syria and Iraq since the end of 2013. This increased its income, and if in 2013 the terrorist organization had a little less than 500 million dollars, the following year its income amounted to more than 1,9 billion dollars.
During that year, IS controlled an area of six to eight million people. On the one hand, the jihadists have unimpededly taken possession of the property of banks, minorities and refugees. On the other hand, he was able to collect taxes, duties and fees, and levy fines. All this, together with oil deals and donations from wealthy sympathizers, led to monstrous wealth.
However, it subsided just as quickly – after Arab and Western powers recaptured the occupied territories and expelled IS. For example, in 2016, after a counterattack by an international military alliance, IS had "only" a little more than a billion dollars.
The richest terrorist organization
An important role, in addition to control over a smaller or larger field, is also played by financial support. In January, Forbes magazine ranked the richest terrorist organizations. According to them, the richest terrorist organization in the world is the Shiite Hezbollah. He benefits greatly from the nuclear deal, which Iran signed with world powers in the summer of 2015.
The lifting of sanctions enabled a new flow of money, which in turn opened the way for the Islamic regime to get involved in parts of the Syrian war and arm Hezbollah. Just a few years ago, this organization was in possession of a fortune of about 200 million, but now it is only 1,1 billion dollars.
At the same time, Hezbollah was integrated into global structures for a long time. The US Drug Enforcement Agency (DEA) was able to show that this Shia terrorist organization has maintained stable relations with drug producers and smugglers in South America since the eighties. Revenue is estimated at several hundred million dollars a year. Hezbollah members are also active in the international real estate trade, as well as the used car market.
In second place are the Taliban. They make a large part of their wealth thanks to the cultivation and production of drugs. Meanwhile, the area they control and grow opium occupies a larger area than the area where coca is grown in Latin America. Revenues from natural resources and kidnappings, as well as donations from their supporters, supplement the business model.
Breakthrough into the digital world
Businesses can also be conducted in virtual space. In August, US intelligence agencies worldwide exposed a financial network through which IS organized the transfer of funds to the United States. An American managed to collect almost $9.000 through a fake eBay user account. He used part of that money to buy laptops, iPhones and other equipment, which helps him camouflage his communication with IS members abroad.
Terrorist organizations have long been familiar with the possibilities of digital money-making. "By using cryptocurrencies and the Darknet, terrorist organizations have meanwhile found themselves in a situation to develop creative ways of making money," says Joseph Fitsanakisn, a security expert at Coastal Carolina University. "They sell illegally recorded music, movies and video games, as well as counterfeit branded products - such as clothing, electronic and pharmaceutical items, and counterfeit tickets to sporting events and concerts."
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