tag:theconversation.com,2011:/ca/topics/terrorist-financing-13630/articlesTerrorist financing – The Conversation2020-12-08T13:12:28Ztag:theconversation.com,2011:article/1474112020-12-08T13:12:28Z2020-12-08T13:12:28ZThe Taliban are megarich – here’s where they get the money they use to wage war in Afghanistan<figure><img src="https://images.theconversation.com/files/373398/original/file-20201207-23-1rkoaiq.jpg?ixlib=rb-1.1.0&rect=0%2C81%2C4928%2C3194&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Taliban militants and Afghan civilians celebrate the signing of a peace deal with the United States on March 2.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/afghan-taliban-militants-and-villagers-attend-a-gathering-news-photo/1204647996?adppopup=true">Noorullah Shirzada/AFP via Getty Images)</a></span></figcaption></figure><p><em>This article was published on Dec. 8, 2020.</em></p>
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<img alt="" src="https://images.theconversation.com/files/373401/original/file-20201207-13-1nz93x4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373401/original/file-20201207-13-1nz93x4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=255&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373401/original/file-20201207-13-1nz93x4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=255&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373401/original/file-20201207-13-1nz93x4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=255&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373401/original/file-20201207-13-1nz93x4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=321&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373401/original/file-20201207-13-1nz93x4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=321&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373401/original/file-20201207-13-1nz93x4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=321&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p>The Taliban militants of Afghanistan have <a href="https://www.rferl.org/a/exclusive-taliban-s-expanding-financial-power-could-make-it-impervious-to-pressure-secret-nato-report-warns/30842570.html">grown richer and more powerful</a> since their fundamentalist Islamic regime was toppled by U.S. forces in 2001. </p>
<p>In the fiscal year that ended in March 2020, the Taliban reportedly brought in US$1.6 billion, according to Mullah Yaqoob, son of the late Taliban spiritual leader Mullah Mohammad Omar, who revealed the Taliban’s income sources in a confidential report commissioned by NATO and later obtained by <a href="https://www.rferl.org/a/exclusive-taliban-s-expanding-financial-power-could-make-it-impervious-to-pressure-secret-nato-report-warns/30842570.html">Radio Free Europe/Radio Liberty</a>.</p>
<p>In comparison, the Afghan government brought in <a href="http://www.xinhuanet.com/english/2020-01/22/c_138726699.htm">$5.55 billion</a> during the same period.</p>
<h2>Who funds the Taliban?</h2>
<p>I study the Taliban’s finances as an <a href="https://www.unomaha.edu/international-studies-and-programs/center-for-afghanistan-studies/about-us/hanif-sufizada.php">economic policy analyst at the Center for Afghanistan Studies</a>. Here’s where their money comes from. </p>
<h2>1. Drugs – $416 million</h2>
<p>Afghanistan accounted for approximately 84% of global opium production over the five years ending in 2020, according to the <a href="https://wdr.unodc.org/wdr2020/field/WDR20_Booklet_3.pdf">United Nation’s World Drug Report 2020</a>. </p>
<p>Much of those illicit drug profits go to the Taliban, which <a href="https://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2019_481.pdf">manage opium</a> in areas under their control. The group imposes a 10% tax on every link in the drug production chain, according to a 2008 report from the <a href="https://www.ecoi.net/en/file/local/1064797/1002_1229784757_counter-narcotics-areu.pdf">Afghanistan Research and Evaluation Unit</a>, an independent research organization in Kabul. That includes the Afghan farmers who <a href="https://www.usip.org/sites/default/files/resources/taliban_opium_1.pdf">cultivate poppy</a>, the main ingredient in opium, the labs that convert it into a drug and the traders who move the final product out of country.</p>
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<img alt="Two men in a very green field." src="https://images.theconversation.com/files/373397/original/file-20201207-23-3rzian.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373397/original/file-20201207-23-3rzian.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373397/original/file-20201207-23-3rzian.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373397/original/file-20201207-23-3rzian.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373397/original/file-20201207-23-3rzian.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373397/original/file-20201207-23-3rzian.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373397/original/file-20201207-23-3rzian.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Afghan farmers harvest opium sap from a poppy field in the Darra-i-Nur District of Nangarhar province May 10.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/farmers-harvest-opium-sap-from-a-poppy-field-in-the-darra-i-news-photo/1212451272?adppopup=true">Noorullah Shirzada/AFP via Getty Images</a></span>
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<h2>2. Mining – $400 million to $464 million</h2>
<p>Mining <a href="https://momp.gov.af/sites/default/files/2019-06/02%20-%20MoMP%20Roadmap%20%2B%20Reform%20Strategy_reduce_0.pdf">iron ore, marble, copper, gold, zinc and other metals and rare-earth minerals</a> in mountainous Afghanistan is an <a href="https://foreignpolicy.com/2020/09/22/taliban-afghanistan-mining-peace-talks/">increasingly lucrative business for the Taliban</a>. Both small-scale mineral-extraction operations and big <a href="https://mines.pajhwok.com/introduction-mining-companies-workingafghanistan">Afghan mining companies</a> pay Taliban militants to allow them to keep their businesses running. Those who don’t pay <a href="http://hdr.undp.org/sites/default/files/2020_nhdr_afganistan_en.pdf">have faced death threats</a>.</p>
<p>According to the Taliban’s Stones and Mines Commission, or Da Dabaro Comisyoon, the group earns $400 million a year from mining. <a href="https://www.rferl.org/a/exclusive-taliban-s-expanding-financial-power-could-make-it-impervious-to-pressure-secret-nato-report-warns/30842570.html">NATO estimates that figure higher, at $464 million</a> – up from just $35 million in 2016. </p>
<h2>3. Extortion and taxes – $160 million</h2>
<p>Like a government, the Taliban tax people and industries in the <a href="https://8am.af/ghazni-has-become-the-talibans-tax-area/">growing swath of Afghanistan under their control</a>. They even issue official receipts of tax payment.</p>
<p>“Taxed” industries include mining operations, media, <a href="https://tolonews.com/node/12610">telecommunications</a> and development projects funded by international aid. <a href="https://foreignpolicy.com/2020/10/23/taliban-coal-tax-highway-toll-afghanistan/">Drivers</a> are also charged for using highways in Taliban-controlled regions, and shopkeepers pay the Taliban for the right to do business. </p>
<p>The group also imposes a traditional Islamic form of taxation called “ushr” – which is a 10% tax on a farmer’s harvest – and “zakat,” a 2.5% wealth tax. </p>
<p>According to <a href="https://www.rferl.org/a/exclusive-taliban-s-expanding-financial-power-could-make-it-impervious-to-pressure-secret-nato-report-warns/30842570.html">Mullah Yaqoob</a>, tax revenues – which may also be considered extortion – bring in around <a href="https://foreignpolicy.com/2020/10/23/taliban-coal-tax-highway-toll-afghanistan/">$160 million annually</a>. </p>
<p>Since some of those taxed are poppy growers, there could be some financial overlap between tax revenue and drug revenue.</p>
<h2>4. Charitable donations – $240 million</h2>
<p>The Taliban receive covert <a href="https://www.dw.com/en/how-the-taliban-get-their-money/a-18995315">financial contributions</a> from private donors and international institutions across the globe. </p>
<p>Many Taliban donations are from <a href="https://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2019_481.pdf">charities and private trusts located in Persian Gulf countries</a>, a region historically sympathetic to the group’s religious insurgency. Those donations add up to about $150 million to $200 million each year, according to the <a href="https://www.npr.org/templates/story/story.php?storyId=124821049">Afghanistan Center for Research and Policy Studies</a>. These charities are on the <a href="https://www.treasury.gov/resource-center/terrorist-illicit-finance/Pages/protecting-charities_execorder_13224-a.aspx">U.S. Treasury Department’s list of groups that finance terrorism</a>. </p>
<p>Private citizens from <a href="https://www.nytimes.com/2016/12/06/world/asia/saudi-arabia-afghanistan.html">Saudi Arabia</a>, Pakistan, Iran and some Persian Gulf nations also help finance the Taliban, contributing another $60 million annually to the Taliban-affiliated Haqqani Network, according to American counterterrorism agencies. </p>
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<a href="https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Soldiers walk in front of burnt out ruins." src="https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373402/original/file-20201207-17-14cogys.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">The Taliban’s insurgency has destabilized Afghanistan for nearly 20 years.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/photos/taliban-city-soldiers?agreements=pa:91269&family=editorial&phrase=taliban%20city%20soldiers&sort=newest#license">Norrullah Shirzada/AFP via Getty Images</a></span>
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<h2>5. Exports – $240 million</h2>
<p>In part to launder illicit money, the Taliban import and export various everyday consumer goods, according to the <a href="https://undocs.org/en/S/2012/683">United Nations Security Council</a>. Known business affiliates include the multinational <a href="https://www.un.org/securitycouncil/sanctions/1988/materials/summaries/individual/malik-noorzai">Noorzai Brothers Limited</a>, which imports auto parts and <a href="https://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2019_481.pdf">sells reassembled vehicles and spare automobile parts</a>.</p>
<p>The Taliban’s net income from exports is thought to be around $240 million a year. This figure includes the export of poppy and <a href="https://www.usip.org/sites/default/files/2017-05/sr404-industrial-scale-looting-of-afghanistan-s-mineral-resources.pdf">looted minerals</a>, so there may be financial overlap with drug revenue and mining revenue.</p>
<h2>6. Real estate – $80 million</h2>
<p>The Taliban own real estate in Afghanistan, <a href="https://apnews.com/article/ap-top-news-united-nations-taliban-asia-pacific-af35125db20f2017fe7f06e625806965">Pakistan</a> and potentially other countries, according to Mullah Yaqoob and the <a href="https://www.samaa.tv/news/2020/02/dead-taliban-chiefs-karachi-properties-up-for-auction/">Pakistani TV Channel SAMAA</a>. Yaqoob told NATO annual real estate revenue is around $80 million.</p>
<h2>7. Specific countries</h2>
<p>According to <a href="https://www.bbc.com/news/world-46554097">BBC reporting</a>, a classified CIA report estimated in 2008 that the Taliban had received $106 million from foreign sources, in particular from the Gulf states.</p>
<p>Today, the governments of <a href="https://www.npr.org/sections/thetwo-way/2018/03/26/596933077/top-u-s-commander-in-afghanistan-accuses-russia-of-aiding-taliban">Russia</a>, <a href="https://www.rferl.org/a/exclusive-taliban-s-expanding-financial-power-could-make-it-impervious-to-pressure-secret-nato-report-warns/30842570.html">Iran, Pakistan and Saudi Arabia</a> are all believed to bankroll the Taliban, according to numerous U.S. and international sources. Experts say these funds could amount to <a href="https://www.bbc.com/news/world-46554097">as much as $500 million a year</a>, but it is difficult to put an exact figure on this income stream. </p>
<h2>Who funds the Afghan government?</h2>
<p>For nearly 20 years, the <a href="https://www.nytimes.com/2014/06/14/world/asia/for-the-taliban-modest-success-in-battle-but-opium-trade-and-illicit-businesses-boom.html">Taliban’s great wealth</a> has financed <a href="https://www.wsj.com/articles/americas-longest-war-a-visual-history-of-18-years-in-afghanistan-11583010024">mayhem, destruction and death</a> in Afghanistan. To battle its insurgency, the Afghan government also spends heavily on war, often at the expense of basic public services and economic development.</p>
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<p>A peace agreement in Afghanistan would allow the government to redirect its scarce resources. The government might also see substantial new revenue flow in from legal sectors now dominated by the Taliban, <a href="https://theconversation.com/after-us-and-taliban-sign-accord-afghanistan-must-prepare-for-peace-132303">such as mining</a>. </p>
<p>Stability is additionally expected to attract foreign investment in the country, helping the government end its dependence on donors like the <a href="https://www.sigar.mil/pdf/quarterlyreports/2019-10-30qr-section3-funding.pdf">United States</a> and the <a href="https://ec.europa.eu/commission/presscorner/detail/en/IP_20_2193">European Union</a>.</p>
<p>There are many reasons to root for peace in war-scarred Afghanistan. Its financial health is one of them.</p>
<p><em>This article was published on Dec. 8, 2020. Hanif Sufizada recently wrote for The Conversation about <a href="https://theconversation.com/an-afghan-american-scholar-describes-his-fear-filled-journey-from-the-chaos-at-kabul-airport-to-a-plane-bound-for-home-in-the-us-166387">his experience fleeing Afghanistan after the Taliban takeover</a>.</em></p><img src="https://counter.theconversation.com/content/147411/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hanif Sufizada does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Because the Taliban’s insurgency is so well financed, the Afghan government must spend enormous sums on war, too. A peace accord would free up funds for basic services, economic development and more.Hanif Sufizada, Education and Outreach Program Coordinator, University of Nebraska OmahaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1321072020-03-09T07:39:59Z2020-03-09T07:39:59ZHandling returning terrorist fighters is a big problem, monitoring their funds is another<p>The Indonesian government has <a href="https://www.straitstimes.com/asia/se-asia/indonesia-refuses-to-let-isis-fighters-and-their-families-to-return-home">decided to refuse to allow the return</a> of Indonesians who joined the Islamic State (IS) in Syria and Iraq.</p>
<p>After IS declared itself as a caliphate in 2014 – until its <a href="https://theconversation.com/the-islamic-state-is-on-its-knees-but-its-legacy-will-long-haunt-the-middle-east-80939">defeat by a multinational military coalition in 2017</a> – <a href="https://www.nber.org/digest/jun16/w22190.html">more than 30,000 fighters from 85 countries</a>, including Indonesia, who felt compelled to live under an Islamic caliphate travelled to IS-held territory. </p>
<p>Now that IS has been driven out of much of Syria and Iraq, some 689 Indonesians, including Indonesian foreign terrorist fighters, are stranded in several countries including Syria, Afghanistan and Turkey. </p>
<p>Whether or not stopping former IS members from returning is the right choice to counter violent extremism in Indonesia is <a href="https://www.eurasiareview.com/20022020-repatriating-militants-indonesias-dilemma-and-its-consequences-analysis/">being</a> <a href="https://theconversation.com/analisis-pemerintah-perlu-memulangkan-keluarga-eks-isis-132001">debated</a>. </p>
<p>But how did these Indonesian IS members got there in the first place? And what should governments do when ex-IS members manage (one way or the other) to return? </p>
<p>I <a href="https://crawford.anu.edu.au/people/phd/sylvia-laksmi">research</a> terrorism financing. I argue that a more robust strategy to monitor the financial flow of IS sympathisers is needed to diminish their ability to raise funds for their extremist cause. </p>
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<h2>Support to go to Syria</h2>
<p>I identified three types of financial support Indonesian IS sympathisers use to finance their travel abroad: self-funding, family support and group funding.</p>
<p>An example of a self-funded sympathiser is <a href="https://www.straitstimes.com/asia/se-asia/trial-of-batam-official-who-joined-isis-set-to-start-in-indonesia">Dwi Djoko Wiwoho</a>. The former public servant decided to join IS in 2015. He used his own money to fly himself and his family to Syria. </p>
<p><a href="https://putusan3.mahkamahagung.go.id/direktori/putusan/f90303b45b047cbe6029cc00003c3a81.html">Dwi sold his house for Rp 500 million (about US$36,000). He then handed over Rp 327 million to Iman Santosa</a>, alias Abu Umar, a preacher who pledged his allegiance to IS and managed connections with the group in Syria. He used the money for accommodation, travel documents and transportation during his journey to Syria in July 2015. </p>
<p>In Syria, Dwi joined the military training until he was deported to Indonesia in August 2017 and detained by authorities. A year later, the West Jakarta District Court sentenced him to three years in prison for financing terrorism. </p>
<p>Another example is <a href="https://putusan3.mahkamahagung.go.id/direktori/putusan/9e692bf917cd4ae9d6c99932d6c92bbb.html">Syahrul Munif</a>, who used proceeds from his book-selling business to finance his travel to Syria in March 2014. </p>
<p>He returned to Indonesia after spending six months in Syria. The police arrested him at a rental house in Malang, East Java, in early 2017. In March 2018, Syahrul was sentenced to three years in prison for producing propaganda videos and plotting attacks in Indonesia.</p>
<p>From 2017 to 2018, <a href="https://news.detik.com/berita/d-4747622/bantu-adiknya-jadi-anggota-teroris-isis-warga-ragunan-dibui-3-tahun">Mohammad Okasa</a> transferred up to Rp 60 million to his brothers Ade Rahmat and Mohamad Irsya who had already joined IS in Syria. By using Ade Rahmat’s identity, <a href="https://putusan3.mahkamahagung.go.id/direktori/putusan/3e88f7d000a62aba6bf86b4b158b9e58.html">Okasa managed to withdraw his brother’s social security insurance (Jamsostek) fund</a> and send the money through local intermediaries to Ade in Syria.</p>
<p>Some others made their trip to Syria with the help of domestic and foreign terrorist groups’ networks. </p>
<p>In 2015, <a href="https://www.rsis.edu.sg/wp-content/uploads/2014/07/CTTA-November-2016.pdf">Gigih Rahmat Dewa</a> and his group, Khatibah Gonggong Rebus, helped sent foreign terrorist fighters to Syria by providing a transit house, assisting in immigration, establishing a travel agent and acting as the intermediary between jihadists in Turkey and Syria. </p>
<p>Gigih was a subordinate of Indonesian militant Bahrun Naim, who has plotted several terrorist attacks in Indonesia. Gigih achieved notoriety for planning to mount a rocket attack against Singapore’s Marina Bay. </p>
<p>In 2017, <a href="https://www.tribunnews.com/nasional/2017/06/23/41-orang-ditangkap-densus-88-pasca-bom-kampung-melayu-ini-rincian-dugaan-keterlibatannya?page=4">Deny Hariansyah Putra</a> was arrested for supporting foreign fighters by organising their travels.</p>
<p>Another convicted fighter, Muhammad Iqbal Ramadhan, joined Jemaah Islamiyah – a Southeast Asian extremist rebel group aiming to establish an Islamic state in the region. He <a href="https://putusan3.mahkamahagung.go.id/direktori/putusan/d6086c76b19c4ebe2a98ac8dad5f3585.html">received money</a> in 2017 to fund his travel from Jakarta via Vietnam and Turkey. It was believed the money came from Jemaah Islamiyah members.</p>
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<h2>Monitoring their finances</h2>
<p>Indonesian <a href="https://www.rappler.com/world/regions/asia-pacific/247991-indonesian-husband-wife-behind-jolo-bombing">Rullie Rian Zeke and his wife Ulfah Handayani Saleh</a>, members of the Indonesian IS-linked terrorist group Jamaah Ansharut Daulah (JAD), returned from Syria in 2017 only to launch the bombing attack on a cathedral in Jolo, the Philippines, in January 2019.</p>
<p>The couple had tried to migrate to the caliphate in Syria, but were deported from Turkey in January 2017. They joined a one-month deradicalisation program conducted by the Indonesian National Counterterrorism Agency (BNPT) before returning to their home in South Sulawesi and worked as food vendors. </p>
<p>But in December the next year, they departed to the Philippines and met an Abu Sayyaf leader and IS-affiliated networks. <a href="https://www.counterextremism.com/threat/abu-sayyaf-group-asg">The Abu Sayyaf group</a> is a terrorist group based in southern Philippines which seeks to establish an Islamic state in that country.</p>
<p>No known supervisory program was conducted to monitor the couple’s financing. They were able to travel to the southern Philippines through Malaysia in 2019.</p>
<p>The case of <a href="https://www.wsj.com/articles/terrorism-case-highlights-risk-of-returning-fighters-funding-isis-1521624600">Ahmed Musto</a>, a Bulgarian man who returned from Syria in 2016, portrays another risk in the return of IS militants. </p>
<p>According to law-enforcement officials, he established a tobacco-processing business and wired substantial profits to IS in Syria through the <em>hawala</em> system – an undocumented money brokering often used in transnational crime schemes. </p>
<p><a href="https://www.tandfonline.com/doi/pdf/10.1080/19361610.2019.1695499?needAccess=true">There are risks</a> in repatriating ex-IS fighters and their families. They may become further radicalised after receiving combat training and indoctrination and forming strong social connections with other foreign fighters. </p>
<p>Trained in English language, indoctrination and information technology, they could reach a wider audience using propaganda through social media and the internet. </p>
<p>My analysis projects that ex-IS fighters could also raise money by using their social network power. They might raise funds either to support IS or to help local radical groups recruit more members and sympathisers, even funding attacks by other terrorist networks.</p>
<p>The government should prepare robust policies to tackle the threat and reduce the risks.</p>
<p>Besides improving the tools and measures employed in deradicalisation and disengagement programs for ex-fighters and families, it needs to develop a strategy to diminish terrorist financing. </p>
<p>In addition to stronger enforcement of <a href="http://dpr.go.id/dokjdih/document/uu/UU_2013_9.pdf">Anti-Terrorist Financing Law</a>, developing a watch-list database of former Indonesian IS fighters, families and terrorists would be a significant step in disrupting the flow of funding for terrorism purposes. </p>
<p>Considering the potential misuses of donations for terrorism purposes, the government should also conduct campaigns to enhance public awareness on giving donations to particular groups, especially involving people in conflict zones. It is very likely the money is not going to legitimate recipients or victims, but to radical groups instead. </p>
<p>Protecting borders and the financial integrity system are the most important sectors to be concerned about. </p>
<p>Thus, database sharing and strategic coordination among respective agencies –including investigators, financial regulators, the financial intelligence unit, private sectors and ministries that manage civil information database – are critical to counter the threats posed by returning foreign fighters.</p>
<hr>
<p><em>Aisha Amelia Yasmin contributed to the publication of this article.</em></p><img src="https://counter.theconversation.com/content/132107/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sylvia Laksmi tidak bekerja, menjadi konsultan, memiliki saham, atau menerima dana dari perusahaan atau organisasi mana pun yang akan mengambil untung dari artikel ini, dan telah mengungkapkan bahwa ia tidak memiliki afiliasi selain yang telah disebut di atas.</span></em></p>A more robust strategy is needed to manage terrorism funding, especially fund-raising by returning terrorist fighters.Sylvia Laksmi, PhD Candidate, National Security College, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/575392016-04-12T10:00:18Z2016-04-12T10:00:18ZPanama Papers show how easy it is to finance terror using U.S. shell companies<figure><img src="https://images.theconversation.com/files/118224/original/image-20160411-21983-e2xn67.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A good way to stash cash?</span> <span class="attribution"><span class="source">Russia dolls via www.shutterstock.com</span></span></figcaption></figure><p>The <a href="https://panamapapers.icij.org">Panama Papers</a> have exposed the largest financial crime scandal of our lifetimes. But what has been uncovered by the Panama Papers is much more dangerous than simply greed and corruption. </p>
<p>For those of you who have been hiding under a rock, the Panama Papers are over 11 million documents leaked from Mossack Fonseca, one of the largest law firms in the world specializing in offshore accounts and incorporation of shell companies. According to these papers, some of which I reviewed personally as a legal collaborator with Fusion Media, over 200,000 international shell companies were formed for over 14,000 clients. Among these were over 140 politicians and their families and over a dozen political leaders and celebrities, including soccer star <a href="http://www.ibtimes.com/lionel-messi-panama-papers-why-barcelona-star-could-be-trouble-2348819">Lionel Messi</a>. </p>
<p>The common link among these individuals is that they used shell companies and offshore accounts to shield their wealth from their home governments.</p>
<p>The media, politicians and the public are trying to make sense of what the Panama Papers means for (a lack of) regulation. There is grave concern about fairness, international tax schemes and shell companies. A <a href="http://www.npr.org/2016/04/06/473201896/panama-papers-shed-light-on-tax-havens-shell-corporations-and-corruption">particular focus</a> of the current investigation is the widespread use (and abuse) of anonymous shell companies. </p>
<p>Shell companies are “hollow,” meaning that they have no significant assets and may only be identifiable by a name and mailing address. <a href="http://www.globalshellgames.com/">Shell companies</a> can be set up to hide assets from prying eyes. While they have a number of legitimate uses – such as mergers, holding assets during complex transactions and protecting trade secrets – anonymous shell companies are often used for tax evasion, fraud, money laundering and even to fund terrorism. </p>
<p>Oddly missing from the Panama Papers are American individuals. Why is it that high net worth individuals from around the world went to Panama to hide their money and none of them are Americans? </p>
<p>One reason is that the U.S. has a lower tax burden than Europe for the high net worth individual. </p>
<p>But the biggest reason is that an American has no need to form a shell company in Panama because they can obtain one right here in the United States. And as my research shows, it’s incredibly easy to do. Unfortunately, that’s something terrorist organizations can take advantage of as well. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/118229/original/image-20160411-21989-1lgju57.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118229/original/image-20160411-21989-1lgju57.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=383&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118229/original/image-20160411-21989-1lgju57.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=383&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118229/original/image-20160411-21989-1lgju57.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=383&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118229/original/image-20160411-21989-1lgju57.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=481&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118229/original/image-20160411-21989-1lgju57.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=481&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118229/original/image-20160411-21989-1lgju57.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=481&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Ambitious cats need shell companies too.</span>
<span class="attribution"><span class="source">Smart cat via www.shutterstock.com</span></span>
</figcaption>
</figure>
<h2>How to make a shell company for your cat</h2>
<p>The fact is that shell companies are as easy to form in the U.S. as they are in Panama. </p>
<p>Panama has very few regulations on the formation of shell companies. But neither does the United States. <a href="http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html?_r=0">Nearly two million corporations</a> and limited liability companies are formed every year in the United States, and most jurisdictions do not require any identity documentation whatsoever. </p>
<p>In fact, Fusion – one of the <a href="https://theconversation.com/panama-papers-remarkable-global-media-operation-holds-rich-and-powerful-to-account-57196">media companies that had access</a> to Fonseca documents – demonstrated on <a href="http://fusion.net/story/287187/delaware-cats-shell-company/">video</a> that one of its collaborators was able to form a Delaware shell company for her cat. This took only a few minutes, US$249 (via credit card) and required no identification documents at all. </p>
<p>Similarly lax regulations exist in Montana, Nevada and Wyoming. These states compete for clients, so there has been a race to the bottom in states wanting to require even less than the others in order to form a shell corporation. </p>
<p>With the ease of incorporation, some may choose to form companies for their pets. Others may decide to create companies to hide assets in for tax evasion or money laundering purposes. However, even more alarming is that terrorists can easily disguise their true identities from law enforcement through shell companies. </p>
<p>A potential terrorist cannot take a flight to neighboring states without a passport or driver’s license, but they can form a shell company without any information in a matter of minutes. </p>
<p>In a high-profile instance of this, for many years Russian arms dealer Viktor Bout <a href="http://www.cnn.com/2011/10/26/opinion/ostfeld-shell-companies">used shell corporations to anonymously supply terrorist groups</a> around the globe with major weaponry like tanks and shoulder-file missiles.</p>
<h2>Terrorism and offshore financing</h2>
<p>The life-blood of an effective terrorist network is financing. And shell companies facilitate the easy distribution of money. </p>
<p><a href="http://www.cnn.com/2015/02/19/world/how-isis-makes-money/">ISIS makes</a> $1 million to $2 million a day in oil production, has obtained over $100 million in ransoms from kidnapping and collects “taxes” from the 6 million people it has gained control over. </p>
<p>And al-Qaida’s worldwide operations require <a href="http://www.cfr.org/terrorist-organizations/al-qaedas-financial-pressures/p21347">$30-50 million per year</a>. The September 11 attacks, for example, cost approximately $500,000. </p>
<p>But not every terrorist attack requires large sums of money. The <a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/08/23/AR2008082301962.html">London transit bombings cost a mere $15,000</a> and the Paris bombings <a href="http://www.nbcnews.com/storyline/paris-terror-attacks/terror-shoestring-paris-attacks-likely-cost-10-000-or-less-n465711">cost about $10,000 or less</a>. Funding a terrorism enterprise is easily done under the cover of shell companies. </p>
<p>In contrast, the <a href="https://www.fas.org/sgp/crs/natsec/RL33110.pdf">United States has spent</a> (as of 2014) over $1.6 trillion since September 11, 2001 on its major military operations abroad and $9 million a day <a href="http://www.newsweek.com/isis-islamic-state-us-fighting-isis-isil-obama-pentagon-air-force-airstirkes-342595">just on fighting ISIS</a>. </p>
<p>If we want to fight terrorism effectively, we should also be cracking down on terrorism financing. Given the ease and persistence of terrorist financing – particularly using shell companies – a shift in attention on financial regulations that would stop terrorism financing would be a good start.</p>
<p>International regulations do exist to limit the formation of shell companies without a passport or drivers license. The United States and over 180 countries have actually enacted a series of identity reporting requirements. Organizations such as the <a href="http://www.fatf-gafi.org">Financial Action Task Force</a>, the World Bank, the UN and the EU have also taken steps to “blacklist” countries that do not comply. The United States has implemented a host of measures, including the use of “terrorist designations” and Suspicious Activity Reports (SARs), to root out and eliminate risks in our financial institutions. </p>
<p>However, none of these regulations have been enacted by Congress, and so they are not binding to U.S. states. </p>
<p>And no one has studied how effective these international standards are on limiting financial crime. Until recently.</p>
<h2>A shell game</h2>
<p>My coauthors, Mike Findley, Dan Nielson, Jason Sharman and I conducted a <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2231344">study</a> in University of Pennsylvania Law Review to answer two central questions: first, how easy is it to form an anonymous shell company and, second, how effective are international and domestic regulations at curbing their illegitimate uses.</p>
<p>In the course of our study, we sent emails to thousands of firms around the world and asked for their assistance in forming an anonymous shell company. In some, we posed as low-risk businesses looking for guidance, in others, we posed as terrorists or offered premiums for secrecy. The results were startling.</p>
<p>Most surprising was the fact that some firms were more likely to offer their assistance when we posed as terrorists than when we posed as businesses from wealthy, industrialized nations such as the United States. </p>
<p>Countries like the British Virgin Islands, Cayman Islands and Isle of Man – though widely considered “tax havens” – were among the most compliant countries in the world. That is, they followed international rules and made it difficult to set up shell companies without following proper procedures. </p>
<p>The United States, however, ranked near the bottom. As did – unsurprisingly – Panama. It was easier to form a shell company in the United States than in any other country besides Kenya. Some of the worst offending states were also Delaware, Wyoming and Nevada, though compliance varied greatly as a number of states like Rhode Island and Utah had near-perfect compliance.</p>
<h2>Getting serious about terrorist financing</h2>
<p>These results demonstrate that we are far from safe from the dangers of tax evasion, money laundering and even terrorist financing. And, in particular, the United States is a key international player in competing to form shell companies for the shadiest of actors. </p>
<p>Indeed, I would argue we have fallen well short of the mark on one of the most important goals in the war on terror: eliminating the network of terrorist financing. </p>
<p>It is clear that current regulations are not particularly effective, as firms are more willing than ever to aid in forming anonymous shell companies.</p>
<p>In order to be effective, countries must get serious about requiring identity documentation when businesses or individuals wish to form shell companies. Senator Carl Levin, for example, has for a number of years worked to pass the <a href="http://thehill.com/blogs/congress-blog/economy-a-budget/265401-a-bill-to-end-secrecy-surrounding-shell-companies">Incorporation Transparency and Law Enforcement Assistance Act</a>, but to no avail. </p>
<p>More effective regulations are only a beginning. To be the most successful, the government will have to work with the financial sector to root out these lines of terrorist financing by enacting implementing regulations within the U.S. that require identifying documents when forming a shell company. Many European countries and even the tax havens have enacted these laws, and it is time for the U.S. to do the same.</p>
<p>As noted above, there are many legitimate business purposes for forming shell companies, so they should not be eliminated altogether. But we must become better at identifying clients, accounts and transactions that pose the greatest risk of international crime. </p>
<p>If the Panama Papers serve any purpose, it should be as a lesson to the world that there are worse things that can happen with shell companies than hiding money.</p><img src="https://counter.theconversation.com/content/57539/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Shima Baradaran Baughman was paid as a legal consultant by Fusion Media to review the Panama Papers and answer legal questions regarding the Papers to aid in their reporting. </span></em></p>Terrorist groups don’t need to go to Panama to create a shell company. They can easily hide their money in many U.S. states.Shima Baughman, Professor of Law, University of UtahLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/566982016-03-23T12:54:34Z2016-03-23T12:54:34ZHow local terrorist cells make a mockery of European security<p>In the aftermath of the explosions at the airport and in the metro station in <a href="https://theconversation.com/brussels-attacks-a-throwback-to-pre-9-11-terrorism-56705">Brussels</a> on the morning of March 22, 2016, the search for the bomb-making factory became increasingly urgent. Someone who knew what they were doing provided the explosives for this attack. </p>
<p>The suicide belts used at Stade de France and elsewhere during the Paris attacks in November were made with the “Mother of Satan”, TATP (<a href="http://www.ibtimes.com/what-tatp-paris-attackers-used-unstable-hydrogen-peroxide-based-explosive-detonations-2184934">triacetone triperoxide</a>). It is very unstable and made from ingredients found in the cosmetics area of most chemists’ shops. It is difficult to detect by the normal procedures developed for nitrate based explosives, such as sniffer dogs. </p>
<p>It was invented in 1895, and reappeared in the 1980s, used by West Bank Palestinian groups. It is easy to detonate but as likely to damage the user as the target, so some expertise is required to amalgamate the ingredients into an explosive. It can deteriorate quite quickly, so a bomb-making factory or factories needs to be within reasonable range of the point of delivery.</p>
<p>The ingredients cost very little to purchase and, as long as purchases are made at a number of different shops, would be unlikely to be noticed by the shopkeepers concerned.</p>
<h2>Self sufficient</h2>
<p>Local cells, whether they are groups owing allegiance to al-Qaeda or to so-called Islamic State can <a href="http://www.fatf-gafi.org/media/fatf/documents/reports/FATF%20Terrorist%20Financing%20Typologies%20Report.pdf">rely on self-funding</a>, which is mostly carried out via local petty criminal activities such as drug dealing and ATM fraud. The bar in the <a href="https://theconversation.com/what-is-it-about-molenbeek-the-bit-of-belgium-that-was-a-base-for-paris-terror-attacks-51007">Molenbeek</a> area of Brussels owned by one of the Abdesalam brothers allegedly involved in the Paris attacks in November was suspected by the police of being a place where <a href="http://uk.reuters.com/article/uk-france-shooting-belgium-bar-idUKKCN0T52RU20151117">drugs were sold</a>. </p>
<p>The beauty of recruiting petty criminals to an organisation such as Islamic State is that they know people who know people who can move or launder money. Money for terrorist activities is moved in the same way as profits for other criminal activities – via suitcases full of cash, small volume, high-value commodities such as drugs and precious stones, and all the pieces of paper such as shares and bonds that can be exchanged. </p>
<p><a href="http://www.irishtimes.com/news/world/europe/paris-attacks-terrifyingly-fatal-layers-of-resources-and-tactics-1.2580749">Hawala</a> banking and money exchange bureaus have been alleged in newspaper reports to have been involved in funding the Paris attacks.</p>
<h2>What happens at borders</h2>
<p>The trouble is, controlling every land border crossing in Europe is more or less impossible because of the sheer volume of traffic. From my own research interviewing border guards in Eastern Europe in the early 1990s, I learned that at an external land border, if the police spend longer than 45 seconds checking a vehicle, a queue of more than five kilometres develops. </p>
<p>Businesses will resist such measures, despite the terror threat, because they don’t want to return to a situation where a lorry driving from Spain to Netherlands loses two hours on the French border, two hours at the Belgian border and two hours on the Dutch border.</p>
<p>Controls at internal European borders <a href="http://webarchive.nationalarchives.gov.uk/20100303205641/http:/www.ukba.homeoffice.gov.uk/sitecontent/documents/managingourborders/crime-strategy/protecting-border.pdf?view=Binary">are supposed to have been</a> replaced by offender profiling and offence profiling. There should be a mixture of random checks and profiled checks. But for that to happen, there has to be sharing of intelligence between countries. In addition, smuggling has to happen again and again before a pattern becomes noticeable. </p>
<p>Although borders don’t exist for criminals, terrorists and businesses, they still do for police – and there are still conflicts between different countries’ police forces. Nevertheless, the majority of terrorist activities no longer require cross-border activity. They are locally sourced and financed – and this is what makes them more difficult to detect.</p><img src="https://counter.theconversation.com/content/56698/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bill Tupman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Terrorist attacks that are locally sourced and financed are very hard to detect.Bill Tupman, Honorary Research Fellow, University of ExeterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/483152015-10-08T01:12:58Z2015-10-08T01:12:58ZReal lives, real risk: threats to small money remitters hit African families<figure><img src="https://images.theconversation.com/files/96904/original/image-20151001-5823-37ozrp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Limitations to the flow of money to countries like Eritrea has family members in Australia worried.</span> <span class="attribution"><span class="source">David Stanley/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>All Australia’s major banks <a href="https://theconversation.com/bankers-are-about-to-ensure-money-transfers-go-underground-34487">have largely stopped serving small money remitters</a>, amid concerns about money laundering and terrorist financing risk. The options for sending money overseas are becoming limited to commercial banks and large international companies, often the most expensive remittance channel.</p>
<p>Almost one year on, we have interviewed 40 people based in Melbourne from Somalia, South Sudan, Ethiopia and Eritrea, to record, rather than debate, their views. </p>
<p>All senders of money worry they will not be able to send money home, money that feeds their families still in Africa and pays school and university fees. Some worry that if the money stops their parents will starve. Young people will join terrorist groups or decide to flee hunger by joining the boats. One Eritrean community leader said his cousin fled to the Mediterranean shores and died in the attempt to reach Europe.</p>
<p>Regulators are aware of what is happening. They meet with industry representatives, mainly behind closed doors, and debate whether the closures have any real impact. In this process no government or bank official is speaking with the affected communities. Community leaders fear that this marginalisation of those needing to support their families, increases their social exclusion and may feed radicalisation in Melbourne.</p>
<h2>What they said</h2>
<p>Community reaction is a mixture of bewilderment and a feeling of being sidelined. Badra (all the participants’ names are pseudonyms), who supports her family in Somalia and Kenya, says she is “just outraged”.</p>
<blockquote>
<p>“It was put in place without consultation. For me, it is another form of colonialism. People who have gradually built their lives after fleeing war and trauma, are now being cut down… My connection to my country of birth, my parents’ and grandparents’ country of birth, has been cut off.”</p>
</blockquote>
<p>Community members rely on their community-based remittance providers. Banks and other large international providers are too expensive but most importantly they don’t have the reach in the recipient countries and are not located close to family members of many senders. </p>
<p>Ojala from Somalia says:</p>
<blockquote>
<p>“Western Union doesn’t live in a remote area. It can take two days for our people to walk to the city. Then they don’t know English. And the fee is higher.”</p>
</blockquote>
<p>Central to their comments is that sending remittances is not optional. </p>
<p>Faith from South Sudan says: </p>
<blockquote>
<p>“I cannot let my mother die.”</p>
</blockquote>
<p>She sends money every fortnight, turn by turn, to her mother and siblings in Uganda, her father and siblings in South Sudan. How do you manage? we ask. “I budget,” she says. </p>
<p>Helen from South Sudan says: </p>
<blockquote>
<p>“Women send more often. They see the situation. They understand what is happening to the family.”</p>
</blockquote>
<p>Dawood from South Sudan says his family is waiting for his support:</p>
<blockquote>
<p>“Even though I have no money, I have to send. I ask others in my community, here or in Queensland to help. We have to.”</p>
</blockquote>
<h2>Views of remittance providers</h2>
<p>Community-based remitters are stressed. Many who had lost bank accounts, moved to other smaller banks but are fearing that those accounts will be closed too. We interviewed one remitter who, with his last account eventually closed by a smaller bank, was in the process of closing his ten-year old business. </p>
<p>Fuad a small remittance provider from Somalia says:</p>
<blockquote>
<p>“I am worried not only for the business, but …I don’t know how my mother, my brothers and sisters will live. It is very painful. If they close down this business, they close down the life of the people.” </p>
<p>“The Australian government gives us a licence… but the banks say you are too risky for us.”</p>
</blockquote>
<p>These community-based remitters – like all formal remitters - are registered with AUSTRAC and have compliance programs. Most have a customer base of a few hundred customers drawn from their ethnic communities. They know their customers and often their families personally. Customers are registered and send on average A$100-$200 per month. The people who receive their money have to show their ID. Everybody agrees that if a provider is not following the rules, it should be closed.</p>
<p>Abbas from Ethiopia with a remittance business says he feels regulators see people like him as “aliens”. These policies are made without consultation and are further marginalising his community. He sees the move as banks wanting to increase their market share by closing competing businesses.</p>
<h2>Identifying real risk</h2>
<p>These providers and sending communities face a serious dilemma. Their families live in regions with conflict and so the families’ needs are acute. At the same time these regions carry a high terrorism risk, making it even riskier for banks to deal with them. Regulators’ concerns, however, do not resonate with the community. Kubira, a Somalian woman asks “Is sending $150 to your mother, terrorism?”</p>
<p>Senders all indicated that remittances will continue because the survival of their loved ones depend on it. If the formal sector provides no practical alternatives, money may be sent informally with friends or carried by hand. Some of the informal channels are managed by people who are viewed as radical. Community leaders fear the consequences of driving senders, angered by account and business closures, into the hands of radical elements. Regulatory processes aimed at preventing terrorism in the Horn of Africa, can perversely result in increasing radicalisation and risk in Melbourne.</p>
<p>Regulatory processes against money laundering and funding for terrorism require banks to adopt appropriate – and relatively expensive – measures to monitor these customers. This makes the retention of the business of smaller, community-based remitters <a href="http://theconversation.com/lack-of-real-action-on-remittances-increases-terrorist-financing-risk-34706">unviable</a>.</p>
<p>AUSTRAC, the relevant regulator, <a href="http://www.austrac.gov.au/news/austrac-statement">publicly</a> encouraged banks to consider these relationships and to engage remitters with a view to maintaining accounts. This is helpful but regulatory authorities need to be more creative to address compliance costs and the risks of increased international penalties for compliance failures – a key driver of many of the closure decisions. In addition they need to address the threats by other international banks to cease doing business with Australian banks if they continue to service these providers.</p>
<h2>Time to talk</h2>
<p>An important step forward would be to engage the affected communities in Australia. It will show them the Australian government is concerned about their plight and enable officials to explain their regulatory objectives to these communities. A constructive discussion may assist in identifying factors that may lower the perceived risks posed by small community-based remitters. </p>
<p>Funds sent by these providers could be capped at $300 per customer per month, to limit the risk of terrorist financing. Regulators could leverage off the personal relationships between providers and their customers, supported by communities that have a stake in ensuring that these channels are used responsibly. That could open the door to more cost-effective risk mitigation measures by banks and help ensure continued flows of these vital funds.</p><img src="https://counter.theconversation.com/content/48315/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Supriya Singh does not have any funding or affiliation that is relevant, or could be perceived to be relevant to this subject. Her academic affiliation is with RMIT University. </span></em></p><p class="fine-print"><em><span>Louis de Koker does not work for, own shares in or receive funding from any company or organisation that would benefit financially from this article. He does provide policy advice to international bodies and groups that advance financial inclusion.</span></em></p>With fewer options available to send much-needed money to their family overseas, migrant communities fear severe consequences.Supriya Singh, Professor, Sociology of Communications, Graduate School of Business & Law, RMIT UniversityLouis de Koker, Professor of Law, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/342212014-11-25T06:23:27Z2014-11-25T06:23:27ZThe UK and US are out of step on terror listings, and that’s probably fine<p>The UK government is planning one of the biggest shake-ups of counter-terrorism legislation in a decade. Home Secretary Theresa May is planning to prohibit insurers from reimbursing ransoms paid out to terrorists – and that’s just the first of many planned new measures. </p>
<p>What is not clear though, is what the UK will do about individuals already named by Europe or the UN as involved in terrorism. It has been <a href="http://www.telegraph.co.uk/news/worldnews/middleeast/qatar/11203134/Ministers-must-spell-out-why-our-sanctions-list-is-different-from-the-US.html">been suggested</a> by at least one commentator, Conservative MP Stephen Barclay, that Whitehall should align its approach with the US, rather than Brussels and the UN.</p>
<p>The UK and the US both publish what are called sanctions designations. Thousands of individuals and companies are named on these lists if they are <a href="http://hmt-sanctions.s3.amazonaws.com/sanctionsconlist.htm">suspected of being involved</a> in terrorism, arms trafficking, the proliferation of weapons of mass destruction, human rights abuses or other international crimes. Listed entities are subject to asset freezes, and sometimes travel bans and other restrictions.</p>
<p>But even though the US has long been the UK’s main ally and intelligence partner on counter-terrorism, the UK continues to take its lead from Europe and the UN when it compiles these lists. In fact, the UK’s sanctions lists for terrorists and WMD proliferators are not at all consistent with those of the US. This inconsistency is one of Barclay’s main grievances. </p>
<p>It’s a situation that warrants some explanation. The main reason the UK and US designation lists are different is that the UK has little or no say in who the US designates as a terrorist, WMD proliferator or human rights violator. EU and UN Security Council sanctions are built with British input at every stage. America’s designation measures, on the other hand, are unilateral. They are sometimes made in consultation with other governments, but most often not. </p>
<p>Partnering up with the US when compiling the lists is probably not even possible. Washington would be highly unlikely to invite another member into its already byzantine sanctions-making apparatus, even one with whom they have a special relationship.</p>
<p>Even if the UK sought to copy the US listings without trying to get involved in their formulation, the British courts – and EU legal eagles – would no doubt have something to say about it. Courts across the Atlantic have very different approaches to human rights and privacy so many of the people or companies listed in the US could not be published on UK lists.</p>
<h2>Blacklisting the blacklists</h2>
<p>Judges in London and on the continent are already applying intense pressure on sanctions designations made in Whitehall and Brussels. <a href="http://www.supremecourt.uk/decided-cases/docs/uksc_2009_0016_judgment.pdf">In 2010</a>, for example, the UK Supreme Court overturned a decision to freeze the assets of five suspected supporters of terrorism, describing the move as “draconian”. And in Europe, several <a href="http://curia.europa.eu/juris/document/document_print.jsf?doclang=EN&text=&pageIndex=0&part=1&mode=DOC&docid=157842&occ=first&dir=&cid=9093">Iranian companies</a> accused of being involved in Iran’s nuclear programme by the European Council successfully challenged their listings and won large pay-outs.</p>
<p>Cases are particularly vulnerable to scrutiny if they are based on secret intelligence. Courts have been understandably reluctant to accept assurances from governments that they have followed due process before imposing sanctions on suspects. And given that national authorities are reluctant to release the intelligence that frequently lies behind the decisions, sanctions often fall over.</p>
<h2>Flag it</h2>
<p>There is also nothing stopping UK security services or border agencies from adding US-designated suspects of terrorism or proliferation to their red-flag or watch lists, which are not made public.</p>
<p>Similarly, businesses – be they banks, exporters or shippers – working in areas where they might encounter individuals or companies involved in terrorism or proliferation should be screening their customers against all national and multilateral sanctions designation lists, regardless of which authority has issued them. </p>
<p>Ultimately, Barclay’s concerns reflect a longstanding problem. The lists used by various governments over the world are inconsistent. Our global patchwork of sanctions is flawed and often inconvenient to collate and parse. But when the alternative is massive reform to the law and political wranglings on an international scale, it is perhaps better to leave well alone.</p><img src="https://counter.theconversation.com/content/34221/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nick Gillard works for Project Alpha, a King's College London initiative to counter illicit, proliferation-related trade. Project Alpha receives funding from the UK Department of Energy and Climate Change, MacArthur Foundation, and Carnegie Corporation of New York. </span></em></p><p class="fine-print"><em><span>Ian J. Stewart works for Project Alpha, a King's College London initiative to counter illicit, proliferation-related trade. Project Alpha receives funding from the UK Department of Energy and Climate Change, MacArthur Foundation, and Carnegie Corporation of New York.</span></em></p>The UK government is planning one of the biggest shake-ups of counter-terrorism legislation in a decade. Home Secretary Theresa May is planning to prohibit insurers from reimbursing ransoms paid out to…Nick Gillard, Researcher and Analyst, Project Alpha, King's College LondonIan J Stewart, Head, Project Alpha, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/344872014-11-21T01:49:41Z2014-11-21T01:49:41ZBankers are about to ensure money transfers go underground<figure><img src="https://images.theconversation.com/files/65077/original/image-20141120-28654-15fv7j2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Millions of people around the world rely on money transfer operators to send funds to their families.</span> <span class="attribution"><span class="source">Gregory Wake/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>Next week, Australian bank Westpac will become the last of the big four banks to <a href="http://www.theage.com.au/business/banking-and-finance/westpac-closes-door-on-money-transfer-operators-as-terror-laws-bite-20141118-11p75z.html">stop serving money transfer operators</a>, amid concerns about breaching laws on money laundering and terrorist financing.</p>
<p>There is the whiff of the illicit about sending money overseas in Anglo-American countries. Sending money to parents and siblings does not feel natural, for it is not a cultural practice. Parents and grandparents give money to children and grandchildren, but money seldom flows back up the generations. Some of the regulatory practices to curb sending money overseas stem from this cultural presupposition.</p>
<p>These assumptions have also made it difficult for organisations to see the importance of remittances. In 2003 <a href="http://www.ted.com/talks/dilip_ratha_the_hidden_force_in_global_economics_sending_money_home?language=en">Dilip Ratha</a> put remittances on the map. He found that remittances to the Philippines were 51 times higher than the International Monetary Fund estimated. </p>
<p>Ratha is an Indian migrant to the United States and used to send money to his family in Orissa. He is now the lead economist and manager of the Migration and Remittances Development Prospects Group at the World Bank. </p>
<p>Despite the Anglo worldview, the global norm is to share money within the family. In most parts of Asia, Africa, Latin America and the Pacific, money is routinely shared both ways between parents and children. </p>
<p>When my mother was alive, I sent money home to India. I followed my sisters who had sent money home from Mumbai and New York. Their money helped put food on the table, for we were a refugee family. </p>
<p>By the time I began earning overseas, my mother had retired as a principal of a university college. She could manage. I sent money to show love and care. My mother would boast of receiving money, for it showed she had a filial child. </p>
<p>In 2014 remittances to developing countries are projected to reach $US435 billion, more than three times the amount of overseas aid. Remittances are greater than foreign direct investment in countries except for China. </p>
<p>In many countries, remittances can be up to 70% of the household income. They pay for food and housing, for the children’s education and the family’s health. </p>
<p>Remittances are important for the country too as they are more stable than private equity flows. They are an important percentage of Gross Domestic Product (GDP). In 2012, formal remittances accounted for 12.2% of GDP in Bangladesh, 23.2% in Samoa and 12.6% in Tonga, according to the World Bank. The figure for Vietnam in 2011 was 6.3%. </p>
<p>Money laundering and funding terrorism happens through all payment channels. Some of the most dramatic cases have happened through banks. Shutting down the remitting organisations’ bank accounts and hence shutting down their operations will only mean we lose transparency and the audit trail. </p>
<p>Ensuring transparency means that regulators, formal financial institutions and money transfer organisations can work together. They can devise signals that track and curtail money laundering and funding of terrorism. </p>
<h2>Bank self-interest?</h2>
<p>It is difficult not to suspect banks of a self-serving motive in withdrawing their services from registered remitting organisations. Commercial banks are often the most expensive remittance channels. </p>
<p>World Bank figures show the cost of sending money from Australia via banks, particularly to remittance-dependent countries in the Pacific, is more than twice the percentage charged by money transfer operatives (MTOs). The bank average cost for sending A$200 to Samoa is 18.38% compared to MTOs at 7.64%. For Tonga the average percentage costs are 18.26% versus 8.78%. </p>
<p>Closing down non-bank money remittance channels will leave families in Australia, Asia, Africa and the Pacific without the means of lending or receiving support. The money transfers will not stop, because they are deeply embedded in the role of money as a medium of relationship. Most likely the transfers will move to informal channels. </p>
<p>This is contrary to the agreed aims of G20. The struggle has been to lower the cost of remittances from the present average of 7.9% to 5%. There has also been a steady push to increase the percentage of formal remittances. At present informal channels are estimated to account for 45-80% of all remittances. </p>
<p>The high cost of remittances and onerous regulation are leading to speculation, particularly in Africa, that cryptocurrencies like Bitcoin will reduce the cost of remittances and increase access. Bitpesa in Kenya advertises a 3% transfer fee. Despite the promotion, there is little evidence or study of use on the ground. But alternatives that bypass the banking channels are looking increasingly attractive to those sending and receiving money across borders.</p>
<p>What then for money laundering and funding of terrorism?</p><img src="https://counter.theconversation.com/content/34487/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Supriya Singh does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Next week, Australian bank Westpac will become the last of the big four banks to stop serving money transfer operators, amid concerns about breaching laws on money laundering and terrorist financing. There…Supriya Singh, Professor, Sociology of Communications, Graduate School of Business & Law, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.