Combating terrorist financing through American financial institutions and privacy

Financing Terrorism: America's Unique Position In Blocking Such Efforts

Aside from issues in foreign policy and tense international relations, arguments about oil, and other factors which contributed to 9/11, the destruction of the World Trade Center would not have occurred if there hadn't been entities to back such an attack. While most civilians don't consider the practical and financial issues in connection to terrorism, they are incredibly real and incredibly immediate. Without proper funding, there would be no terrorism. Financial institutions in the United States play a major role in the government's ability to combat these actions.

Harnessing the power of financial institutions has been one tactic that the government has taken to thwart terrorist operatives and the people who back them; in fact the government has lauded these institutions and the concerted efforts they have made time and again in actively seeking to help stop terrorist projects from being funded. However, one of the major issues with the current regulatory system was that it was designed to catch criminal in the realms of money laundering and drug trafficking -- as these criminals are generally trying to move a great deal of cash through the financial system (unt.edu). Banks can easily report red-flag information of this nature on to the government. "For terrorist financial transactions, the amount of money is often small or consistent with the customer's profile (such as a charity raising money for humanitarian aid) and the transactions seemingly innocuous. As a consequence, banks generally are unable to separate suspicious from legitimate transactions" (unt.edu). This quote demonstrates the inherent difficulty in flagging such transactions; terrorist organizations don't make transactions that offer up the telltale signs that the government is used to seeing.

Thesis: Finding viable ways to stop or prevent terrorist funding is a crucial but flawed endeavor. This endeavor often means a sacrifice of personal privacy of Americans through the co-partnering of financial institutions. This is an absolute necessity, but it comes at a high price. At the same time, the predictability of this maneuver has led terrorist groups to aptly adapt, finding ways to fund their attacks that are largely untraceable. Thus, the task of thwarting terrorist operatives is a constant game of cat and mouse, with the U.S. government being forced to repeatedly adapt to the changing tactics and strategies of terrorist organizations.

Targeting Financial Institutions

This means that in order for financial institutions to most effectively help governments, they need to be able to offer up the most useful information, information that is different from that of organized crime. Banks are thus most helpful to the government by collecting accurate info about potential clients who aid terrorist and giving it to the government. "At the same time, the government should strive to provide as much unclassified information to financial institutions as possible" (unt.edu).

Soon after September 11th, the Bush administration began a secret program to gain access to financial records from a range of sources such as vast international databases, scrutinizing banking transactions involving hundreds and thousands of Americans in the nation. Naturally, this program is exclusive to individuals who have ties to Al Qaeda or who are thought to have ties to Al Qaeda. This intelligence was found "by reviewing records from the nerve center of the global banking industry, a Belgian cooperative that routes about $6 trillion daily between banks, brokerages, stock exchanges and other institutions. The records mostly involve wire transfers and other methods of moving money overseas and into and out of the United States. Most routine financial transactions confined to this country are not in the database (Lichtblau & Risen, 2006). This program was part of the "new normal" in protecting homeland security, and worked as a strategic tool in countering domestic and foreign terrorism, and was also a valuable tool in capturing a major player in Al Qaeda in Southeast Asia (Lichtblau & Risen, 2006). This organization was extremely lauded, in spite of its short-comings. The program was run out of the Central Intelligence Agency and was looked over by the treasury department, offering a pertinent snapshot into the inner workings of all terrorist networks, particularly how they're funded (Lichtblau & Risen, 2006).

While it's necessary to take aggressive actions in blocking terrorist organizations from having their projects set into motion, there's still note that the program marked an extremely bold (and some say brazen) use of the President's economic powers. With that said, there are still safeguards in place to prevent an unfair search of the records of average Americans. "The program, however, is a significant departure from typical practice in how the government acquires Americans' financial records. Treasury officials did not seek individual court-approved warrants or subpoenas to examine specific transactions, instead relying on broad administrative subpoenas for millions of records from the cooperative, known as Swift" (Lichtblau & Risen, 2006).

With such aggressive action comes a need to address certain pertinent concerns about legal and privacy issues, in spite of the necessity to take aggressive actions against terrorism. As experts acknowledge, there is a pretty enormous capability to use this information for good and to preempt terrorist efforts before they start; at the same time such actions are incredibly disturbing as the potential for abuse is so high (Lichtblau & Risen, 2006). This agency is distinct even from the National Security Agency's efforts to listen in on domestic phone calls without warrants -- a fact which is highly controversial in and of itself. This demonstrates a constant criticism (or as some say, a "necessary evil") of the effort to thwart terrorist financing. The government may feel compelled to step on certain civil rights of Americans in the name of keeping the country safe. This theme will be explored again in the need to vet passengers during air travel.

The Last Five Years

One of the things that the United States government has learned to do with a greater level of dexterity has been to adapt to the changing technologies which allow terrorist organizations to fund their operations. For instance, with the advancing technologies, vulnerabilities still persist in arenas such as digital currencies and alternative transfer network, also causing even more bitter battles over bureaucratic turf. As the technogical methodologies for moving money around the world improve and become more streamlined, or just more distinct, the U.S. government as an even more aggravated obligation to keep up with all these different ways (Reuters, 2011). Thus, with the increased screening of transactions within financial institutions, and the even stricter monitoring of suspicious activity, the American government has demonstrated that it's gotten better and better at pinpointing the funding of terrorist organizations. As a result of this improved skill, terrorists thus turned to alternative funding methods in order to support their criminal acts of terror. For example, kidnappings were a new tactic in terrorism financing. Ultimately, terrorists found that committing more crimes was a way to financially support the ultimate crime. "The nexus of crime, terror, and corruption is extremely worrisome, particularly for its capacity to generate new and substantial sources of funding that could fuel terrorist operations against the United States and our partners,' said John O. Brennan, assistant to the president for homeland security and counterterrorism" (Wolf, 2011).

To review, right after 9/11, the federal government did the following: it targeted financial networks that engaged with militant groups (allowing these groups to funnel their money around the globe to green-light operations (Wolf, 2011). Congress greenlit the U.S.A. Patriot Act of 2001 to block clandestine flows of money, new law-enforcement and intelligence units were allowed greater agency and freedom (Wolf, 2011). In the past, the government seldom engaged in consistent actions to stop terrorism by targeting financing; it was generally a shoddy effort. "Dennis Lormel, who created the Federal Bureau of Investigation's Terrorist Financing Operations Section after 9/11 and is now a consultant, said that prior to the attacks…'it was kind of a one-off process and agencies didn't have a dedicated group to combat it. They dealt with it on a case-by-case basis and a lot depended on the comfort level the investigating agents had with financial investigations,'" (Wolf, 2011). While it's good that regulatory actions have become more streamlined and more regimented, this means that terrorist groups will also begin to find them more predictable, and will use them as a guide -- knowing what to avoid and what not to avoid.

Improvement of General Homeland Security

Making the entire department of Homeland Security more streamlined and more prepared has been a fundamental aspect of the post-9/11 society. Once faction of this which directly relates to monitoring the bankroll of terrorist groups connects to the countrywide movement to monitor and report suspicious activity. For instance, this movement is referred to as the "nationwide suspicious activity reporting initiative." This is a truly comprehensive effort to train and educate "state and local law enforcement to recognize behaviors and indicators related to terrorism, crime and other threats; standardize how those observations are documented and analyzed; and enhance the sharing of those reports with law enforcement across the country" (dhs.gov). This is so essential, since combating the financing of terrorist groups is a nationwide effort that requires everyone's cooperation; it is not simply something that just occurs in Washington. Thus, all law enforcement groups require particular training on how to do this better as well as education on what suspicious behavior looks like and how it manifests in a variety of ways. Without this training, most law enforcement officers simply won't know what to look for. Furthermore, this movement creates action and awareness with law enforcement, and the knowledge that they are required to engage in this type surveillance and regulation.

Terrorist Travel

Sometimes for a terrorist operative to be bankrolled, the funds aren't reliant on a wire transfer between financial institutions. Sometimes terrorist organizations can receive funding through the presence or connection with another individual. This is why advanced passenger information and finding accurate passenger record data is so vital when it comes to keeping the skies and airlines safe. Most civilians think of "safe air travel" as preventing another 9/11. However, sometimes keeping air travel safe means not allowing passengers who intend to support terrorist organizations reach their destination. "To identify high-risk travelers and facilitate legitimate travel, DHS requires airlines flying to the United States to provide Advance Passenger Information and Passenger Name Record (PNR) Data prior to departure. During 2008 and 2009, PNR helped the United States identify individuals with potential ties to terrorism in more than 3,000 cases, and in fiscal year 2010, approximately one quarter of those individuals denied entry to the United States for having ties to terrorism were initially identified through the analysis of PNR" (Dhs.gov, 2013). This is indeed so significant because more often than not, the ties to terrorism that these individuals end up having are financial ones, in some way or another. Sometimes these individuals arrive to just mastermind the terrorist initiatives, to help organize or recruit them, or to otherwise provide some sort of support.

Comparable programs which prevent terrorist financing via means of preventing terrorists from reaching their destinations is one known as the visa security program (VSP). This program works in conjunction with the department of state, training and deploying special agents to high-risk visa activity posts in order to identify potential terrorist and criminal threats before the American nation even encounters them (dhs.gov, 2013). One aspect of the work that VSP does is in finding ways to interrupt the financing of these organizations (dhs.gov, 2013). More than anything, a very real way of interrupting the financing of terrorist groups and intricate terrorist plots is still via pre-departure vetting. "DHS has strengthened its in-bound targeting operations to identify high-risk travelers who are likely to be inadmissible to the United States and to recommend to commercial carriers that those individuals not be permitted to board a commercial aircraft through its Pre-Departure program. Since 2010, CBP has identified over 2,800 passengers who would likely have been found inadmissible upon arrival to the United States" (dhs.gov, 2013). So much of the fiscal solvency of terrorist plans can regularly often depend on them having a cohesive unit and financed group. This endeavor goes hand in hand with the secure flight movement. Satisfying a key 9/11 commission, the DHS fully implemented "secure flight" in 2010, where the TSA was able to prescreen 100% of passengers on flights which flew anywhere starting or ending in America (dhs.gov, 2013). This is a clear example of how the government has been able to evolve, advancing their technology and making better decisions about how to screen passengers before they receive their boarding passes. Before Secure Flight, airlines had the involved and tedious (though necessary) task of checking passengers against watchlists. This was definitely an involved task and one which was also liable for mistakes and other inefficiencies. Secure Flight can vet 14 million passengers weekly (dhs.gov, 2013). However, with all these advances, it also just means that terrorist groups are finding new loopholes and new ways to finance their plans and attacks in ways that don't rely on banks or travel.

Several Sources of Funding

Realistically speaking, most terrorist groups stay afloat through the help of varied sources of income. For example, a few years after 9/11, the Saudi government reluctantly admitted to giving around $87 Billions dollars as a means of spreading Wahhabism (Ehrenfeld, 2003). "This money has been spent on the creation of Mosques, schools, and other institutions that have constituted the breeding grounds for the foot soldiers of the global Islamic terrorist movement. Political considerations, and oil, have prevented Washington from holding the Saudis accountable for their role in promoting terrorism" (Ehrenfeld, 2003). However, the fact remains, that when it comes to the fiscal support of terrorists, simply blaming the Saudi Arabian government, or really any government is just unacceptable. While many Arab states have had their hand in financing terrorists, chartiable organizations (as established) have played a big part as well. These are organizations like the Arab League and the International Islamic Relief Organization; 'legitimate' business fronts, such as travel agencies and cell phone distributors; the exploitation of the unregulated commodities market and other financial markets; and various forms of international trade that convert cash into diamonds and gold" (Ehrenfeld, 2003). These facts demonstrate how tough and challenging it is to regulate terrorist groups and to thwart or cut off their stream of financing: the reality is that their money generally comes from a variety of streams, making it truly difficult for them to be penniless.

Criminal Activities

As touched upon earlier, many terrorist cells have begun to engage in other crimes (like kidnapping and robberies) to fund their terrorist attacks. Not surprisingly, many terrorist cells have begun to engage in more rigorous criminal activities, such as extortion, prostitution rings, video pirating and drug trafficking. Many terrorirst organizations have begun to form alliances with other criminals, creating partnerships with "the Russian Mafia, Colombian drug cartel, and a number of other international criminal organizations. These links of politics, money, geography, and arms create a mutually beneficial relationship that allows both the terrorists and the criminal organizations to prosper. Drug trafficking, an estimated $2 trillion market per year, has become the best weapon for terrorists. Beyond helping terrorists to finance their wide range of illegal activities, the drug market has also allowed terrorist organizations to undermine targeted countries both politically and economically, while at the same time creating a crisis in the targeted country's public health system" (Ehrenfeld, 2003). This quote demonstrates just how invasive terrorist funding techniques have become and just how intrusive and strategic they truly are. In funding their terrorist activities, many of these criminals have thus found ways to compromise the integrity of the nation or nations they're targeting (via the drug trade) while continuing to finance their destructive and evil terrorist plans. The drug trade has afforded terrorist groups a great deal of power and possibility -- such as the ability to recruit new members (Ehrenfeld, 2003). Terrorist groups have used drug use as an example of Western degeneracy and an indicator that corrupt societies (like America) need to be eradicated (Ehrenfeld, 2003).

The madness and hypocrisy of this angle is obvious, since the terrorist groups are the ones who are peddling the drugs. Though the communion of terrorist groups with various other criminal entities and activities is evidence of the fact that it's becoming both harder and easier to thwart the financing of terrorism. Uniting with other criminals actually makes terrorist groups more visible and leaves a much more visible trace, making entities like the U.S. government more apt to find them. On the other hand, engaging in these criminal activities also makes these organizations more solvent and fluid, giving them more money to hide behind and more ways to evade the American government.

Summary

The bottom line that remains when it comes to stopping and thwarting the funding of terrorist groups is that the U.S. Government has an obligation to be as adaptable as possible. Terrorist groups constantly find new ways and new loopholes to bankroll their attacks; thus, the government needs to be as responsive as them. As the U.S. hones this adaptive response, it needs to continue to develop and hone a strong Homeland Security Department along with standard methods of blocking terrorism funding through banks, other financial institutions and the airlines.