Financial Crime World

Fear of Retaliation: The Hidden Source of Funding for Terrorist Groups

Terrorist groups have long relied on state support to sustain their operations. However, in the absence of such backing, they have turned to alternative sources of funding. A new study reveals that these groups are increasingly reliant on criminal activities, including drug trafficking, kidnapping, extortion, robbery, and smuggling.

Case Studies

  • In the UK, three individuals were sentenced to prison for funding family members who joined ISIS in Raqqa, Syria. They sold a BMW car, jewelry, and obtained credit cards to raise over £10,000, which was sent through a high street remittance service to Syria.
  • Salman Abedi, a Libyan student living in Manchester, used a student loan of £7,000 and housing benefit payments to fund a terrorist attack at a pop concert. He purchased the materials and constructed the bomb himself.

Terrorist Groups Flourish in Lawless Areas

Terrorist groups thrive in areas with little or no law and order, where they become the de facto government. They establish training camps for operatives, tax local businesses, and exploit natural resources such as oil and mineral wealth.

Criminal Activities

  • Drug Trafficking: Afghanistan is the world’s largest producer of heroin, with a significant share going to Pakistan. Terrorist groups protect the opium crop, manufacturing process, and supply routes, generating vast sums of cash that require laundering.

    • Example: In Karachi, Pakistan, three Daesh suspects were arrested for kidnapping a young man from Gulistan and demanding a ransom. The CTD believes these demands are from groups based in Afghanistan.

  • Kidnapping: Many terrorist groups rely on kidnapping journalists, aid workers, and affluent locals for ransom demands. Large sums of cash are often handed over, requiring laundering and dispersal among sympathizers.

    • Example: Chiquita, a banana company, admitted to paying extortion demands of $1.7 million to the AUC, a Colombian terrorist group.

Extortion

In areas where law and order has broken down, terrorist groups exert influence over local communities by taxing businesses through direct demands or payments for goods transported through checkpoints. Failure to comply can result in violent punishments.

Case Studies

  • In Peshawar, Pakistan, many businesses received extortion demands from phones with Afghan SIM cards. Some failed to pay and suffered attacks with grenades and small IEDs.
  • Chiquita admitted to paying extortion demands to the AUC, FARC, and ELN, Colombian terrorist groups.

Robbery and Theft

Armed groups have increased the likelihood of robberies, including bank robberies and car-jackings. These offenses are made easy by access to weapons and operatives prepared to use them.

Smuggling

The Pakistan-Afghanistan border is over 2,000 kilometers long, with the Northern territories reaching up to China. It’s estimated that the Pakistani government loses $2.6 billion in revenue through smuggling of legitimate goods such as TVs, phones, car parts, diesel, and cigarettes. These routes will almost certainly pass through areas controlled by terrorist groups who demand payment for safe passage or simply take over the smuggling routes.

Conclusion

The study highlights the need for governments to address these criminal activities and disrupt the funding streams of terrorist groups. Failure to do so can result in continued support for these groups, perpetuating violence and instability.