home > by publication type > daily analysis > Rethinking Terrorist Financing
Email
| Prepared by: | Eben Kaplan |
|---|
Illegal narcotics, such as these seized in Kabul, Afghanistan, are only one of many sources of terrorist financing. (AP/Emilio Morenatti)
When the 9/11 Commission issued its final report (PDF) in December 2005, it assigned letter grades to rate the federal government’s progress on its various recommendations. Of the forty-one areas considered, combating terrorist financing received the highest mark, an A-. But as he unveiled the latest revision of his National Strategy for Combating Terrorism, President Bush noted that “al-Qaeda continues to adapt in the face of our global campaign against them.” Sue Eckert, an expert in terrorist finance from Brown University, says in this CFR.org Podcast that the U.S. approach to terrorist finance “has not fundamentally changed” since shortly after 9/11. In order for the United States to continue its success in disrupting clandestine financial networks, she says, it must reevaluate its approach.
The post-9/11 financial actions initiated by the United States and its allies successfully froze some $140 million in terrorist funds. With their traditional sources of support gone, terrorist fundraisers have increasingly turned to illegal activities—such as drug smuggling or peddling counterfeit CDs—to bankroll their sinister work (openDemocracy). The expansive, loosely regulated global financial system offers ample opportunities (Foreign Policy) to launder the money with little fear of getting caught.
The formal financial sector has proven one of the most reliable sources of intelligence regarding terrorist networks. David D. Aufhauser, former chair of the National Security Council’s Committee on Terrorist Financing, told a recent CFR meeting, “The evidence that the financial system coughs up is actually true and correct; it doesn't lie.” Thus, terrorists have tried to carry out their attacks on the cheap to avoid detection. As this Backgrounder explains, experts estimate the July 2005 bombing of London’s mass transit system cost as little as two thousand dollars. Though similar attacks cost as much as twenty times that amount, these remain relatively small sums compared to the half million dollars the 9/11 Commission says al-Qaeda spent on the 2001 plot.
Eckert says it remains unclear whether forcing terrorists to rely on black markets for their funds will make it easier or more difficult to detect their activities. Regardless, most ongoing U.S. efforts to combat terrorist financing remain fixated on official channels. The U.S. Treasury Department is developing a data collection system for cross-border financial transactions, though a CATO Policy Analysis suggests that such data-mining systems only have limited usefulness. Earlier this year, the New York Times revealed the Defense Department and Central Intelligence Agency have requested access to Americans’ financial records as part of their counterterrorism intelligence gathering effort. This move pushes the envelope regarding restrictions (WashPost) against either agency engaging in domestic intelligence gathering.
American officials have long maintained lists of terrorist groups and state sponsors of terrorism. The European Union's own counterterrorism strategy includes maintaining a roster (PDF) of terrorist groups. Nations who directly sponsor terrorism or do business with terrorists face a host of penalties (PDF), such as financial restrictions and arms embargoes. The United States recently ratcheted up its sanctions on Iranian financial institutions it believes support terrorism or Iran’s nuclear program. Some evidence exists to suggest this approach works; a Backgrounder describes how Libya got off the list.
Weigh in on this issue by emailing CFR.org.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1.800.537.5487, fax +1.410.516.6998.
For information on other reports that are not for sale, or for general publications information, please call +1.212.434.9516 or email publications@cfr.org.
Start-Up Nation addresses the trillion-dollar question: How is it that Israel—a country of 7.1 million, only sixty years old, surrounded by enemies— produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK? With the insights of geopolitical experts and investors, the authors examine this nation’s adversity-driven culture to answer this question and offer prescriptions for a global economy on the rebound.
In Forces of Fortune, Vali Nasr presents a paradigm-changing revelation that will transform the understanding of the Muslim world at large. He reveals that there is a vital but unseen rising force in the Islamic world—a new business-minded middle class—that is building a vibrant new Muslim world economy and that holds the key to winning the cold war against Iran and extremists.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba's unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
Complete list of CFR Books
The report of this bipartisan Task Force of distinguished leaders and experts represents a strong consensus on the importance of repairing America's immigration policy. It makes the case that maintaining America's political and economic leadership depends on attracting talented and hard-working immigrants, and on securing the country's borders in a smart, effective, and humane way.
This report finds that nuclear weapons will remain a fundamental element of U.S. national security in the near term, and makes recommendations on how to ensure the safety, security, and reliability of the U.S. deterrent nuclear force, prevent nuclear terrorism, and strengthen the nuclear nonproliferation regime.
About Independent Task Forces at CFR
Complete list of Task Force reports
Identifying international threats and acting on them may be the most difficult job for U.S. policymakers. This report
provides an actionable road map for managing international threats before they erupt into crises and makes a strong case that preventive action is not a luxury but a necessity.
For more than a decade, the United States has mostly watched from the sidelines as Asian countries organize themselves into an alphabet soup of new multilateral groups. In this report, the authors review the relationship between pan-Asian and trans-Pacific institutions and suggest policy guidelines for a new U.S. approach to this new Asian landscape.
Complete list of Council Special Reports
To request permission to reprint or reuse CFR material, please fill out this permissions request form (PDF), referring to the instructions on page 1.
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.