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Bankrupting Terrorists


As part of the continuing campaign against al-Qaeda and other violent extremist groups, financial regulators are increasingly hobbling their financial support networks and undercutting their ability to use international financial systems to finance their activities.

According to the 9/11 Commission Report, Osama bin Laden financed al-Qaeda by resurrecting fundraising networks that drew "on ties to wealthy ... individuals that he had established during the Afghan war in the 1980s." The report also noted that over time, Al-Qaeda began to take "advantage of Islam's strong calls for charitable giving, zakat," and of "certain imams at mosques who were willing to divert zakat donations to al-Qaeda's cause." Most of the cash donations were siphoned from legitimate organizations.

Speaking before the Council on Foreign Relations, U.S. Department of Treasury Assistant Secretary for Terrorist Financing David Cohen said that "if we can deter those who would donate money to violent extremist groups, disrupt the means and mechanisms through which they transmit money, and degrade their financial support networks, we can make an extraordinarily valuable contribution to our national security."

The U.S. can choose from a number of tools to disrupt terrorist financial networks, from blocking the assets of terrorists and their supporters, to forbidding U.S. citizens and financial institutions from engaging in transactions with designated persons. On a transnational scale, the U.S. shares information with allied governments and financial institutions to help stop transmission of funds for illicit purposes.

Or, for example, by working to bring mobile banking and payment card services to the Afghan people, the U.S. Department of the Treasury, along with several other U.S. agencies, can help facilitate the distribution of micro-finance loans in the Afghan agricultural sector -- a top development focus of the U.S. government -- and at the same time help displace cash transactions, which will make Afghanistan less hospitable to illicit finance, said Assistant Secretary Cohen.

And there are signs that this effort is working. Some al-Qaeda recruits are forced to pay for their own training and supplies. Affiliate cells have increased solicitation of donations from supporters, as have senior al-Qaeda leaders; and recently, al-Qaeda's commander of operations in Afghanistan complained of a shortage of food, weapons, and supplies brought about by lack of funds.

"We can’t entirely stop the flow of funds to terrorist groups," said Assistant Secretary Cohen. " ... [but] by financial facilitation networks, we significantly impede terrorists' ability to operate."

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