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Research Report

The Globalization of Terror Funding

Gil Feiler
Copyright Date: Sep. 1, 2007
Pages: 68

Table of Contents

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  1. (pp. [i]-[ii])
  2. (pp. [iii]-[iii])
  3. (pp. [iv]-[iv])
  4. (pp. 1-5)

    Islamic terrorism¹ is financed by a global array of individuals, fronts, businesses, banks, criminal enterprises, nominally humanitarian organizations and states. Financial flows take a variety of routes – some complex, some simple, but all are evasive. The combined annual budget of Islamic terror groups between 1995-2005 hovers around the US $1 billion mark – the equivalent of $100 million per annum.² This represents a substantial increase from estimates for the years 1984-1994 of US $80 million.

    Execution of terrorist activities requires a reliable cash stream. After his capture in 1995, Ramzi Yusif, the convicted mastermind behind the 1993 World Trade...

  5. (pp. 6-27)

    Islamic charities play a central role in terror financing. The total annual amount of zakat (Islamic charity) collections from individual citizens is estimated at $20 billion for Saudi Arabia alone and well over $100 billion globally.15 The Financial Action Task Force on Money Laundering (FATF), an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing (refer to Chapter IV) dedicated much of its 2004 plenary session to discussing the implication of non-profit organizations in terror funding.

    The use of non-profit organizations to raise funds for controversial causes is...

  6. (pp. 28-42)

    Numerous mechanisms exist through which funds are transferred to terror organizations, with money laundering being one of the most effective and prominent. At least $500 billion of laundered money circulates through the financial system annually.99 Islamic terror accounts for $100 million of this money.100 Simple processes are the core operating principle of Islamic terror groups. The September 11th attacks were financed with routine financial transactions; investigations reconstructed how money was wired from Germany to the UAE to the US. No financial system was able to detect any strange movement.101

    However, there is a deep and sophisticated infrastructure underpinning these simple...

  7. (pp. 43-51)

    A host of regulations, including legislation against money laundering, have been implemented in an effort to curb the flow of funds to terrorist organizations. In the course of the last decade, legislation against money laundering has been felt across the world economy, from individuals wishing to open simple checking accounts or make standard remittances, to multinational companies' transactions. Before September 11th, the impetus to prevent money laundering was organized crime, corruption and fraud. As Rachel Ehrenfeld argues, “In most countries, September 11th caused the shift from control to prevention.”133 However, even today, the majority of legislation against money laundering extends...

  8. (pp. 52-56)

    This monograph has explained the main methods used by Islamic terror groups to fund their activities and to launder money, as well as offered an historical background and context of how funding methods developed. Two conclusions can be drawn from the analysis. First, the concerted international effort against money laundering is essential but is ironically hurting the international fight against terror financing. Terror financiers adapt to the international criminal system and make less use of ways that authorities can track, such as charities. Second, terrorism is a convenient proxy for the strategic ambitions of rogue states and this gives Islamic...

  9. (pp. 57-64)