Connection between terrorism and criminal organizations in illicit finance

¶ … Terrorism and Illicit Finance

As a growing majority of middle class families fall victim to the economic devastation of the Great Recession, suffering from prolonged unemployment, depleted job markets and a rising cost of living, the threat of potential terrorist attacks striking America and its interests seems to have faded into the proverbial background of our collective consciousness. With a transfer of power from the hawkish Bush Administration to President Obama and his more diplomatic approach, major media outlets in print, on television and in the blogosphere, which just a few years ago regaled with patriotic fervor while espousing the possible peril awaiting the nation, have all but abandoned their coverage of terrorist activity. This reversal in focus by both individuals and institutions may simply be a natural response to the reduced capabilities of al-Qaeda and other terrorist networks, as confirmed by the leading authority on terrorism and its effects, and national security analyst for the CNN network, Peter Bergen, who observed recently that "the Obama administration has played a large role in reducing terrorist threats by continuing and scaling up many of former President George W. Bush's counter-terrorist methods."1 Nonetheless, the ability of terrorist organizations to sustain their operational structure despite the steady onslaught of American military power suggests that these religious zealots have taken

1 Bennetch, Paul, "Terrorism expert: al-Qaida's 9/11 tactics an 'abject failure,'" Cornell Chronicle, Mar 13, 2012.

advantage of the most reliable method of funding available to criminal organizations: the manipulation of illicit finance.

Although the industrialized West waged a Cold War to defeat the spread of communist economic policies throughout the world, with the Soviet Union's slow crumbling and eventual collapse firmly establishing capitalism as the preferred engine of global finance, alternative forms of banking and investment still exist among other cultures. As predominately Arab nations throughout the Middle East continue to explore and exploit their region's vast reserves of petroleum, an enormous amount of wealth is being generated by those unaccustomed to handling the intricacies of capital gains, interest rates, and other financial devices utilized by capitalist-based economies. The religion of Islam has always been conflicted between the tenets of moderation espoused by the prophet Allah, and the concept of Sharia law espoused by the most conservatively devout Muslims, and today that divide is demonstrated by the rising popularity of so-called Islamic banking. The notion of Islamic banking is predicated on the fundamental constraints of sharia law, and "The Dubai Financial Services Authority (DFSA), the chief regulator for all authorized firms conducting business in or from the Dubai International Financial Centre (DIFC), has drafted and issued a rulebook specific to Islamic business called the Islamic Financial Business module" which defines Islamic Financial Business as "any part of the financial business of an authorized person which is carried out in accordance with Shari'a."2 What makes Islamic banking adherent to sharia law is the prohibition on the collection of

2 Brian Holt, Islamic Wealth Management (Thomas Jefferson School of Law, 2010).

interest payments, which Islam regards as a riba, as well as a ban on investing in companies that create goods or services that do not comply with sharia law.

Despite the substantial progress made in the last two years to decapitate and destroy al-Qaeda and its offshoot terrorist organizations, which includes the successful capture and killing of Osama Bin Laden, lethal drone strikes on senior lieutenants Anwar al-Awlaki and Abu Yahya al-Libi, and the incitement of democratic insurrections across the region known as the Arab Spring, a significant and serious threat still exists to U.S. citizens both at home and abroad. The spread of Islamic banking predicated on sharia law has created significant populations of Muslims seeking to engage in usury, procure loans, and engage in modernized financial activities. This demand is currently being satisfied by Al-Qaeda and its affiliates around the world, as terrorist organizations have increasingly turned to illicit finance as a means of funding their globalized jihad against Western interests. Even as our nation's military continues to execute successful strikes on enemy combatants in a number of countries from Pakistan to Yemen, Director of National Intelligence Dennis C. Blair stressed in his 2010 Annual Threat Assessment Testimony to the Senate Select Committee on Intelligence that "we have been warning since 9/11 that al-Qaeda, al-Qaeda-associated groups, and al-Qaeda inspired terrorists remain committed to striking the United States and U.S. interests. What is different is that we have names and faces to go with that warning."3 This emphasis on recognizing the adaptability

3 Dennis C. Blair, Annual Threat Assessment of the U.S. Intelligence Community for the Senate Select Committee on Intelligence, (U.S. Senate Armed Services Committee, 2010).

of the terrorist is central to the government's overall response, in terms of both planning and execution, as evidenced by findings presented in the wealth of threat assessment material released to the public each year.

With the oft mentioned terrorist training camps and secret underground bases littered throughout the Middle East long since located and reduced to rubble, jihadists the world over have increasingly turned to the internet to lure potential borrowers and launder funds on a global scale.4 the last Homeland Security Threat Assessment, delivered to the Senate Select Committee on Intelligence in 2008 and covering the period from that date through 2013, stated unequivocally that "radicalization among some American Muslims is occurring via independent, decentralized networks that bring together extremists and susceptible youth attracted by virtual, ideological, and institutional factors. Increasingly, the Internet is transforming Islamic radicalization into a bottom-up phenomenon without linkages to state, regional, or national identity or group affiliation."5 the increasingly anonymous nature of terrorist networks and their global operations has allowed religious zealots to appeal directly to secular Muslims who do not adhere to the jihadi worldview, taking advantage of these individual's need to obtain loans despite the law of Islamic finance as a viable method of laundering money. Working under the guise of online secrecy, terrorist operatives are now operating as veritable loan sharks within the secular Muslim communities of many Middle Eastern nations, offering high-interest loans to

4 Donato Masciandaro. Global Financial Crime: Terrorism, Money Laundering, and Off Shore Centres, (Ashgate Publishing Ltd., 2004).