COVER STORY: by Mervyn Bendle (reviewer)News Weekly
Financing of terrorism in Australia
, June 12, 2010
The financing of global terrorism has been transformed over the past two decades; so the publication by the Australian Institute of Criminology of its report, Financing of Terrorism: Risks for Australia, by Russell G. Smith, Rob McCusker and Julie Walters, is to be welcomed.
There are three main reasons for this transformation.First
, the end of the Cold War greatly reduced the previously massive flow of funds from the Soviet Union and the communist bloc to guerrilla and terrorist groups pursuing left-wing and separatist political objectives. Many of these groups have subsequently attempted to become self-financing, chiefly through large-scale illegal activities, including drug production and trafficking, arms-smuggling, people-smuggling, extortion, robbery, kidnapping, prostitution, piracy, identity theft, fraud and counterfeiting.Second
, the immense global drug-trade has become central to this flourishing criminal activity, giving rise to the alarming threat of "narco-terrorism". The report points out that the US Drug Enforcement Administration has found that 19 of 43 designated foreign terrorist organisations are directly linked to the global drug trade, while some 60 per cent are connected to the illegal trade in some way.
It also emphasises that the various illegal activities are often highly integrated, e.g., with drugs being exchanged for weapons. The same smuggling routes are also used for different illicit purposes, and similar methods are used to hide profits, to raise funds, to launder money and to corrupt police, officials and politicians. It also points out that the drug trade is increasingly used by Muslim terrorist groups to finance their activities.Third
, another change in the terrorism landscape since the end of the Cold War has been the emergence of so-called "home-grown" terrorists as a primary threat. While these may seek advice, training and direction from foreign terrorist organisations, they are self-radicalising and need comparatively small levels of funding, which they can obtain through the illegal activities mentioned above or through apparently legitimate sources, e.g., charities.
Also, unlike large-scale groups, they are likely to be mission-specific and dissolve upon the commission of a terrorist attack. Such groups have become a major problem in the European Union (EU), as the report points out, with their numbers increasing in 2008 due to political instability and increasing levels of radicalisation within Muslim communities. Consequently, "seven EU member states reported a total of 515 failed, foiled or successfully perpetrated terrorist attacks in 2008" alone.
As far as Australia is concerned, the Counter-Terrorism White Paper
(2010), prepared by the Department of the Prime Minister and Cabinet, indicates that Australia continues to be a terrorist target and, "although al-Qa'ida has not itself launched a direct attack on Australia, it has shown an operational interest in doing so", with numerous attacks being thwarted in Australia. Since 2001, 20 people have been convicted of terrorism offences and 38 have been or are presently being prosecuted, while at least 40 Australians have had their passports revoked or applications denied for terrorism-related reasons.
As a case study, the report highlights the Melbourne-based terrorist organisation led by Abdul Nacer Benbrika. It describes how 10 men were arrested in November 2005 and charged with terrorism offences, with a further three men being arrested in March 2006 on similar and related charges. It says: "It was alleged that the group was committed to preparing, planning, assisting in, or fostering the commission of terrorist acts in an effort to influence the Australian Government to withdraw its troops from Iraq and Afghanistan."
While four were acquitted, the rest were convicted, with three found guilty of attempting to make funds available to a terrorist organisation.
The report points out that more than 100 Australians have been killed in overseas terrorist attacks since 2001, and also emphasises that Australia's "proximity to a number of Muslim countries may enhance its vulnerability", specifically identifying Jemaah Islamiyah (JI) and the Abu Sayyaf Group (ASG), amongst the major terrorist networks in Southeast Asia.
It is believed that the criminal enterprises of groups like ASG may have assumed priority over their ideological agendas as they become increasingly involved in the drug trade.
Computer-based crime is also an increasing source of funding for terrorism. The report cites an American study of 100 US federal criminal cases launched since 2001 that found that credit card and other types of financial fraud were directly implicated in terrorist funding, with computer-facilitated crimes likely to play a major part in the future.
To counter such activity, an effective counter-terrorism strategy must include an effective financial transaction reporting and monitoring system. Properly applied, this can severely constrain the activities of those who may seek to acquire and transfer funds for terrorist purposes through the regulated financial sector. It also allows police, security and intelligence agencies to trace the path of relevant financial transactions through the sector, to detect and prevent attacks, and to identify the perpetrators of successful or attempted attacks.
Ironically, it may be that legally obtained funds will prove to be the life-blood of home-grown terrorism, above all because the apparently legitimate façade enjoyed by charities, community groups and similar small-scale organisations can shield them from effective surveillance and investigation under existing laws.
As the report observes, "terrorist organisations are ... able to finance their activities through the use of a variety of ostensibly legal methods, including the collection of subscriptions or membership payments, the collection of fees in connection with events organised by the group (such as meetings or entry to cultural and social events), the sale of literature and publications of the organisation and solicitation of donations within ethnic communities ... particularly from wealthy members and supporting business groups".
It is vital also to realise that the types of deadly terrorist attacks supported by such apparently legitimate financial infrastructure can be very economically carried out, meaning that the charities, community and related groups underwriting the attacks can be quite small, with a low profile that helps them avoid detection and investigation.
Figures provided by the report show that most of the major terrorist attacks carried out over the past decade were mounted at very little cost, ranging from approximately $12,000 each for the Madrid train bombings and the attack on the USS Cole
; $20,000 for the London transport system attacks; up to $60,000 for the Bali bombings.
Al-Qa'ida has used various charitable organisations to raise, disguise, transfer and distribute funds on its behalf, as the report shows, and it is estimated that charities are the second most important source of funds for Southeast Asia's terrorist networks, exceeded only by illegally obtained finance. Ominously, both JI and al-Qa'ida operate in our region, with links to charitable organisations based in Saudi Arabia.
Two case-studies cited in the report illustrate this. In 2009, three men pleaded guilty of making money available to a proscribed entity, the Liberation Tigers of Tamil Eelam, with the prosecution claiming that $1,030,259 was involved, along with some $97,000 worth of electronic components.
In another case, in February 2010, five men were sentenced to lengthy prison terms for their participation in a terrorist conspiracy involving explosive devices and/or the use of firearms.
They were able to promote violent jihad against the government over policies concerning the Middle East and other Muslim lands using quite small sums of money. For example, one jihadi paid $2,100 as a deposit on 10,000 rounds of ammunition; another paid $200 as a deposit for chemicals; while another paid $433 for more ammunition.
As the report points out, Australia is a wealthy country that is a prime target for both terrorist attacks and fundraising activities by terrorist organisations based overseas and within Australia.
Unfortunately, it seems that reliable data on terrorism financing in Australia is limited, and is dependent on the systematic collection of financial intelligence.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) tracks financial transactions relating to money laundering or the financing of terrorism, and receives information from approximately 17,000 businesses. In 2008-09, 6,888 reports were made of suspicious transactions, of which only 29 related to terrorism financing.
As the report notes, "the most successful operations against terrorist financing have not come through large or suspect transaction reports but rather from sound intelligence work", and this is likely to continue to be the case.
One area of concern is the use by Muslim communities of the hawala
system, which uses a huge network of money-brokers located primarily in the Middle East, Africa and South Asia, to transfer value in Australia and internationally. Europol has found that such remittance systems, operating outside the conventional financial sector, greatly facilitate the secret transfer of terrorist funds. Consequently, remittance dealers must register their businesses with AUSTRAC.
The report concludes by suggesting that programs focusing on education and social inclusion are required for those groups "at risk" of becoming embroiled in terrorist-related financial activity.
This is possible, but such well-intentioned "soft" policies will prove ineffective in the absence of effective coordination by the various relevant agencies, sophisticated analysis, diligent surveillance and intelligence operations, comprehensive monitoring of financial transactions, rigorous application of the relevant laws, and harsh sentences for those convicted.
Terrorism must be anathematised and "at risk" groups brought to understand that whatever their real or perceived grievances may be, active or passive support for those seeking to murder innocent people and destroy property will not be tolerated in Australia.Mervyn F. Bendle PhD is senior lecturer in history and communications at Queensland's James Cook University. He is the author of "Secret Saudi funding of radical Islamic groups in Australia", National Observer, 72, Autumn 2007; "How to be a ‘useful idiot': Saudi funding in Australia: part II" National Observer, 77, Winter 2008; "Global jihad and the evolution of terrorist-training doctrines", National Observer, 78, Spring 2008; and numerous other articles on terrorism.REFERENCE:
Russell G. Smith, Rob McCusker and Julie Walters, Financing of Terrorism: Risks for Australia
(Canberra: Australian Institute of Criminology, May 2010). Available from:
URL: www.aic.gov.au/publications/current series/tandi/381-400/tandi394.aspx
URL: www.newsweekly.com.au/docs/2010/financing of terrorism_aic_2010.pdf