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Money Laundering and Terrorist Financing Transcend Borders


Money laundering and terrorist financing are global problems that transcend borders. Terrorist supporters funnel money through charities and international criminal gangs constantly adapt their techniques, while law enforcement agencies try to stay one step ahead.

Terror groups are often fed by a rhetoric of hatred. But like many organizations, they rely on money to keep their operations going. Terrorists are financed by smuggled funds, criminal activities or any other number of ways -- even by governments themselves, according to U.S. officials.

Targeting that support is a key action for law enforcement, as top U.S. Treasury Department official Daniel Glaser explains: "By taking the steps that we're taking by disrupting, dismantling these financial networks that are supporting these activities, we are degrading the ability of these organizations to get to the stage where they only have a few more dollars to spend to complete a terrorist attack."

But it's impossible to say how much money goes into terrorism each year. And stopping that flow is extremely challenging, according to David Caruso, founder of the Virginia-based Dominion Advisory Group, an anti-money laundering consulting firm.

According to Caruso, "Governments and the private sector have really not been able to determine how much funds are used to finance terror. For example, the 9/11 [i.e., September 11, 2001] tragedy did not take relatively a lot of money. So it's very difficult for governments and financial institutions to detect."

New Methods of Financing

And terrorists are constantly looking for new methods to avoid detection and secure funding, says Jeffrey Breinholt, deputy counterterrorism chief at the U.S. Department of Justice.

"It's important to view terrorists as being organized criminals," says Breinholt. "Terrorists are nothing if not adaptable and opportunistic. And so if we accept that as a notion, that large terrorist groups that we are targeting -- al-Qaida, Hezbollah, Hamas -- they will be ones that will pay very much attention to things that arise that are new opportunistic crimes."

Financial support for terrorism can also come from charities, front companies or couriers who smuggle money across international borders. Other avenues include diverted aid money or exploiting informal, cash-based money exchanging venues, which are popular in the Middle East and South Asia.

Treasury Under-Secretary Stuart Levey recently told a U.S. Senate committee that individual donors in Saudi Arabia are funding terrorists outside of that country. In an exchange with committee Chairman Richard Shelby, Levey said, "Is money leaving Saudi Arabia to fund terrorism abroad? Yes." Senator Shelby asked, "Some of that money going to Iraq?" Levey replied, "Undoubtedly, some of that money is going to Iraq. And it's going to Southeast Asia and it's going to any other place where there are terrorists."

Vincent Cannistraro, a former CIA counterterrorism officer explains the appeal to individuals. "The kinds of operations that are conducted mostly by al-Qaida but by similar groups, whether in Morocco, Algeria, whether they do it through affiliates in Europe, they are not terribly expensive operations to conduct. Where do they get the money? Contributions from people who believe in them. There is certainly a tendency for some wealthy Islamic businessmen to write checks," says Cannistraro.

Tracking Money

But while many governments are working hard to fight terrorism and stop terror financing, Under-Secretary Levey says some are doing just the opposite. He says, "State sponsors of terrorism, like Iran and Syria, present a difficult problem because they provide not only money and safe haven to terrorists, but also a financial infrastructure through which terrorists can move, store and launder their funds."

Treasury official Daniel Glaser says Iraq is one country where the United States is working to build a transparent system that is safe from exploitation. He says, "When you have a modern payment system, it decreases the reliance on cash. And cash, for obvious reasons, facilitates anonymous transactions."

Money laundering expert Caruso describes the enormous challenges in tracking the illicit flow of money. "Simply the size and complexity of the global financial system, just what occurs on a daily basis, legitimately, it's 24 hours a day, when you look at Asia, Europe, Latin America, the U.S. And to track all that, it's an impossibility," says Caruso.

Patrick O'Sullivan, a money laundering advisor at the United Nations Office on Drugs and Crime in Vienna, says money launderers have used new technologies to their benefit and have evolved their techniques. He says, "Over the last 10, 15 years, really, a lot has been done worldwide to put systems in place to prevent and detect money laundering. So that has made it more difficult to launder money in traditional ways. So methods have tended to become more sophisticated."

Though stopping those bent on terrorism and wrongdoing poses a huge challenge, Justice Department official Breinholt says law enforcement must evolve with the changes. "The trick is not necessarily having laws in place to eliminate all of that, but being flexible enough to enact new laws in response to what we see from our experience," says Breinholt.

He also notes that as progress is made and officials close one channel, terrorists and other criminals open new ones in every corner of the globe. And success in closing those avenues depends on how quickly authorities adapt to the new challenges.

In our next report on terrorism, we'll examine how terrorists use the Internet to spread their beliefs and coordinate their operations.

This story was first broadcast on the English news program,VOA News Now. For other Focus reports click here.

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