House Financial Services Subcommittee Issues Testimony From George Mason University
"In late 2014, the
"This statement will focus on the relationship between illicit trade, transnational crime, and terrorism focusing on the present state of trade in diverse funding sources. This includes, but is not exclusively confined, to drugs. The central premises of this analysis are:
* Almost all current terrorist groups rely on funding from crime
* Terrorists are functioning like diversified criminal businesses (
* Terrorists choose to fund their activity through many of the least policed forms of criminal trade such as counterfeits-- (clothing, cigarettes), antiquities, petty fraud, stolen telephones, and low-level intellectual property crime
* These petty forms of illicit trade have high profit and low risk
* Dual Use Crime--terrorists commit these crimes because they can generate revenue and degrade political stability simultaneously
A. Drugs--keep people subservient or incapacitate communities
B. Kidnapping--devastation of community makes them unable to resist
C.Trafficking for sex can be a means of destroying communities and groups undesirable to the terrorist organization - (i.e.
Drug Trafficking
"Drug trafficking, a multi-billion transnational crime business, has diverse perpetrators involved in different segments of the market. As in the past, countries have engaged in the drug trade to benefit the state. A key contemporary example of this is
Origins of Terror-Drug Connection
"Terrorists are important non-state beneficiaries of drug trafficking. The term narco-terrorism first was used in
"The Colombian case is an unusual example of the state reasserting control over territory once controlled by crime and terrorist groups. In
"The peace agreement of the Colombian government with the
"The main obstacles faced in implementing this program have been to an increase in violence, particularly murder rates in municipalities, where most of the coca plantations are concentrated. This increase is related to disputes among different illicit actors and the reconfiguration of markets in cocaine trafficking. Violence has also emerged from the clash between eradication teams and communities opposed to this policy. Also, landmines are present in some areas. This hinders the government's eradication efforts. The Colombian government seeks to eliminate coca cultivation from 50,000 hectares (or approx. 125,000 acres).
Northern Route from
"Drug trafficking and use in
Southern Route and Trafficking from
"Whereas post-Soviet organized crime groups benefit from the drug trade through the Northern route, Iranian and Turkish groups derive profits from the Southern route. The Iranian Revolutionary Guard (IRGC) may be involved in heroin smuggling to
"
"The majority of AQIM's drug income derives from taxes on traffickers operating through AQIM territory.24
"
"The Pakistani-based crime-terror group, D-company (whose origins lie in
Future Concern
"The fentanyl that is currently imported into
Human Trafficking
"Terrorists related to the
"Terrorist groups, such as Al-Nusra are involved in the kidney trade. 30 Purchasers enter chat rooms on the Dark Net, finding suppliers of kidneys and doctors ready to perform the necessary surgery.31 Wealthy buyers travel to access kidneys "sold" by desperate individuals in the
Antiquities Trade
"The large-scale illicit trade in artifacts from
"It is clear from satellite imagery and news reporting that archaeological sites throughout
Illicit Cigarette Trade
"The trade in counterfeit and diverted cigarettes, and illicit whites resembles and sometimes intersects with the trade in drugs and humans. Ignored by many law enforcement agencies, illicit cigarette trade provide an ideal funding source for states, corrupt officials, criminals, and terrorists.
"The illicit cigarette trade has been particularly attractive to terrorist groups, because it is low risk and high profit. One of the Kouachi brothers, the murderer of the
"Other terrorist groups also profit from illicit cigarettes.
"The tri-border area of
"Older terrorists groups, such as the IRA (
Terrorists and Energy Markets
"Illicit actors, including terrorists, have recently shifted to significant trading in fossil fuel products.
"Billions of dollars were invested in renewables, even before the adoption of the
"A British-Italian case of carbon credit fraud apparently helped fund terrorism. The Italian government accused
Terrorism and Environmental Crime
"The United Nations Security Council Resolution pointed out the links between environmental crime and the funding of terrorism. For example, in
"The deforestation to benefit terrorists in not a problem confined to
"Terrorists also slaughter animals to enrich their coffers. Illicit networks of criminals, insurgents, and terrorists often cooperate with high-level officials to make the global trade work. They hire killers and then move the animal parts thousands of miles to lucrative markets. Illustrative of this is that elephant tusks have been used to buy weapons for
"What to do?
* Illicit activity that funds terrorism often occurs in remote areas. But terrorist financing is often enabled by a limited number of large-scale facilitators who can be targeted by the international financial community. This is often a more effective strategy than pursuing kingpins of criminal organizations, who can be more easily replaced.
* Illicit trade supporting terrorism often intersects with the legitimate economy and can be targeted with intelligence from the legitimate private sector. North Korean financing was in the past processed through a bank in
* Those countering threat finance have focused on the drug trade, whereas illicit actors have diversified to many different commodities. When they diversify, they tend to be more careless than in their drug operations. This makes the traffickers more identifiable and easier to pursue. Therefore, we must focus on the convergence of different forms of illicit trade and not focus exclusively or disproportionately on drugs.
* The US should continue and expand its sanctioning of terrorist facilitators such as it did with the Russian politician,
* Public-private partnerships need to be enhanced to ensure that corporations take more action in certifying their supply chains against corruption and exploitation by terrorists. This is a particular concern in the natural resource and extractive industry sectors where corruption is particularly pronounced and where terrorists have recently diversified their fund-raising. Businesses, especially in new areas of technology, need to ensure that social media and online platforms are not facilitating corrupt, criminal and terrorist activity where there has been exponential growth of illicit activity in recent years.
* There need to be more public-private partnerships between the government and the business community. Both share a mutual concern that terrorists not be allowed to operate. Businesses can identify anomalies and can mine data at their disposal to detect possible cases of terrorist financing and activity. The business and security community should work against the business side of terrorism just as they would work against a business competitor.
* The financial community and the branches of the
* In order to address the criminal and corrupt sources of funding for terrorism, it is necessary to follow the money. Corrupt officials and financial institutions that facilitate illicit flows must be held accountable. Transparency must be enhanced in the global financial system and in supply chains. Reporting requirements must be improved to limit the ability of individuals and corporations to hide funds in offshore locales. A key element is the establishment of requirements to disclose beneficial ownership for financial accounts, companies, and real property, making it possible to determine the actual owners. Bankers and the real estate sector must enhance mechanisms to guard against money laundering by criminals, terrorists and corrupt officials, the frequency and extent of which was revealed by the
* We need a whole of society perspective not just a whole of government. The financing of terrorism involves consumers who buy the products and businesses who wittingly and unwittingly facilitate the dark commerce that is at the heart of terrorist financing. More attention needs to be paid to the financial side of counter-terrorism and it needs to be prioritized with resources and greater community awareness."
* * *
Footnotes:
1
2
3
4
5 "Drug Trafficking and the Financing of Terrorism." Accessed
6
7
8
9
10
11 Ahmed AL -Imam et. al, "Captagon: Use and Trade in the
12 Fundacion Ideas para
13
14
15
16 Ibid. 10.
17 Ibid, 34.
18 Ibid., 36.
19Ahmed Majidyar, Ahmed. "Quds Force Reportedly Uses Regional Shiite Militias for Drug Smuggling into
20
21 "Hasseltse Drugsbende 'Bevoorraadde Half Europa.'" Het Belang Van Limburg.
22 Ibid.
23 Franceco Strazzari, "Azawad and the Rights of Passage: The Role of Illicit Trade in the Logic of Armed Group Formation in
24 "The Afghan Opiate Trade and
25
26
27
28
29 Shelley, Dirty Entanglements: Corruption, Crime and Terrorism, 178-79.
30Warren Strobel,
31 An illicit kidney trade also functions in the Indian subcontinent, and
32
33
34 Research being done under
35 Rajan Basra,
36 Mincheva and Gurr, Crime-Terror Alliances and the State" Ethnonationalist and Islamist Challenges to Regional Security 95-6;
37 Shelley, Dirty Entanglements: Corruption, Crime and Terrorism;
38
39 Ibid.
40
41 "The Global Illicit Trade in Tobacco: A Threat to National Security,"
42 Ibid.
43 This section is drawn from
44
45
Volume 25, Issue 6 (
46 "Multi-billion euro carbon-trading fraud trial opens in
47
http://www.corriere.it/cronache/14_settembre_24/grande-truffa-dell-iva-italia-finanziare-gruppi-islamici-ec394336-43a5-11e4-bbc2-282fa2f68a02.shtml?refresh_ce-cp. Interviews have also been conducted with European law enforcement on this topic who investigated and prosecuted these cases.
48 Joan Tiloine, "Nigera Maiduguri tient tete a
49 Said Ismail, "Charcoal Trade Stripping Somalia of Trees,
50
51 Nellemann, et.al., The Environmental Crime Crisis - Threats to
52 Global Initiative against Transnational Organized Crime, "The Charcoal Conundrum: ending the Somali illegal Charcoal Trade."
53 Nellemann, et.al., The Environmental Crime Crisis - Threats to
54
55 Ledio Cakaj, Tusk Wars Inside the LRA and the Bloody Business of Ivory,"
56
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