No counterterrorism tactic, including stemming the flow of terrorist financing, will stamp out terrorism. Terrorism, in fact, cannot be eradicated like Polio or Small Pox. There will always be grievances, causes, and conditions that, coupled with a healthy dose of evil, will lead people to target civilian noncombatants for political purposes or even as a means in itself. The primary responsibility of all states, however, is to protect its citizenry, and to that end it is incumbent upon all states to employ the full range of protective, deterrent, and preventive counterterrorism measures available in an effort to provide for the security of its populace. The fact that terrorism cannot be eliminated does not absolve states of the responsibility to fight it as vociferously as possible.

In this regard, tackling terrorist financing represents a critical and effective tool both in reacting to terrorist attacks and engaging in pre-emptive efforts to prevent future attacks. Often, as was the case in the investigation of the September 11, 2002, attacks, financial transactions provide the first and most concrete leads for investigators seeking to flush out the full scope of a terrorist attack, including the identities of the perpetrators, their logistical and financial support networks, links to other terrorist groups, and accomplices. Since September 11, the US government has spearheaded a groundbreaking and comprehensive disruption operation to stem the flow of funds to and among terrorist groups. Combined with the unprecedented law enforcement and intelligence effort to apprehend terrorist operatives worldwide, cracking down on terrorist financing denies terrorists the means to travel, communicate, procure equipment, and conduct attacks.

Following the Trail of Terrorist Financing

The potential investigative value of following the trail of terrorist financing simply cannot be overstated. Then-FBI Director Louis Freeh testified before Congress in 1999 that a shortage of funds prevented the 1993 attack on the World Trade Center from being as devastating as it otherwise could have been. After his capture in 1995, Ramzi Yousef, the convicted mastermind behind the 1993 bombing and other attacks, admitted that the terrorists were unable purchase sufficient material to build as large a bomb as they had intended because they were strapped for cash. In fact, the operation itself was rushed and carried out earlier than planned because the cell simply ran out of money. In the end, the terrorists’ attempt to reclaim the deposit fee on the rental truck used to transport the bomb provided a key break in the case.

Early financial leads in the September 11 investigation established direct links between the hijackers of the four flights, identified co-conspirators, and led investigators to logistical and financial support cells in Germany and elsewhere in Europe as well as in the Gulf. Financial leads led investigators to key al Qaeda operatives and money-men such as Ramzi Bin al-Shibh in Germany and Mustafa Ahmed al-Hasnawi in the United Arab Emirates. Financial analysis provided some of the earliest evidence proving the synchronized suicide hijackings were an al Qaeda operation, and linked the German cell, the hijackers, and Zacarias Moussaoui. Wire transfers between Moussaoui and Bin al-Shibh played a crucial role leading to Moussaoui’s indictment for his role in the attacks. Financial investigation also established links between Moussaoui and members of the al Qaeda associated cell of Jama’ah al-Islamiah terrorists arrested in Malaysia.

Sometimes the money trail goes cold, as appears to have been the case with Richard Reid, the infamous “shoe-bomber.” Financial information may yet play an important role in this case too, but although Reid was carrying a significant amount of cash on his person when he was arrested, a dearth of banking transactions has made financial analysis difficult to date. However, as investigators continue to track e-mail and other means of communication used by Reid, identify his contacts in England, Belgium, and elsewhere, and glean further intelligence from the vast amounts of intelligence seized in Afghanistan, evidence of financial transactions are likely to emerge and provide some of the strongest evidence linking Reid to the rest of his as of yet unidentified co-conspirators.

Disrupting the Flow of Terrorist Financing

Through analysis of the financial information collected on the September 11 hijackers and their accomplices in Europe and the Gulf, the FBI quickly developed a financial profile from the hijackers’ bank accounts and financial activity. This included profiles of the domestic accounts, financial transactions, international financial activity and non-financial information gleaned from financial documents. Pattern analysis focused the direction of the ongoing international investigation toward specific countries, especially in Europe, and played a central role in the FBI’s predictive effort to foil the terrorist attacks intelligence information indicated were still being planned.

Since September 11, the Bush administration has issued a series of financial blocking orders targeting terrorist groups, including terrorist organizations, front companies, and individuals. In total, the US government has designated some 191 individuals, organizations, and financial supporters of terrorism as SDTGs from around the world, including over US$34 million in terrorist assets. Other nations have reportedly followed the US lead. The secretary of the treasury reported that 150 “countries and jurisdictions” have blocking orders in force, and have blocked more than US$70 million in assets. According to US officials, intelligence information indicates that terrorist operatives are finding it increasingly difficult to gain access to funds needed to escape the international dragnet targeting them, communicate effectively between cells in different parts of the world, and conduct further operations.

Cracking down on terrorist financing demands an all-encompassing approach to if there is to be any chance of successfully disrupting terrorist activity. This requires targeting the full array of groups, individuals, businesses, banks, criminal enterprises and humanitarian organizations that finance terrorism. At the most macro level, financial blocking orders must include the terrorist groups themselves in an effort to seize any funds they may have in their own name. Realistically, terrorist groups tend not to open bank accounts under their organization’s name, especially in the West. Nonetheless, the message is important, and there are in fact cases, such as Hizballah in Lebanon, where groups operate openly and have accounts in their own name. More significantly, listing the groups themselves subjects other entities that support them to scrutiny as well. Should the Islamic Action Front in Jordan or the Muslim Brotherhood in Egypt openly state their financial support for Hamas, for example, they could be subject to financial penalties themselves despite the fact that they are not listed in any of the terrorist lists published by the United States or others.