Extremists adapt as fight against terror financing heats up

Friday 29/05/2015
ISIS-controlled market in Raqqa, Syria

Washington - US Special Operations forces mounted a raid in eastern Syria on May 15th targeting a man known as Abu Sayyaf, described by military officials as the Islamic State’s “emir of oil and gas”. The choice of target brings forth the importance of combating terrorism by cracking down on the revenue streams of extremists who are increasingly relying on creative sources of income to bypass filters imposed by international security services.
Terror organisations typically rely on a combination of “black” and “grey” economic activities, ac­cording to a description by Colin Clarke, a researcher at RAND Cor­poration. As an example, the Is­lamic State (ISIS) relies for its fund­ing on criminal activities such as oil theft, extortion, armed robbery, kidnapping for ransom, among many others. This “dark economy” includes smuggling and trafficking illicit commodities (weapons, peo­ple, narcotics) as well as the illicit trade in licit commodities.
Time magazine recently quoted a Western intelligence report that ISIS has earned between $22 mil­lion and $55 million a year taxing antiquities smugglers trafficking looted objects out of Syria and Iraq and between $168 million and $228 million a month taxing small busi­nesses and residents in ISIS-con­trolled areas.
Grey economic activities are comprised of state sponsorship and money from charities and the Arab diaspora as well as from le­gal businesses or front companies used to launder money. As an ex­ample, Spain’s El-Pais newspaper reported in February that Spanish intelligence agencies uncovered a network of 250 phone call centres, butcher’s shops and neighbour­hood grocery stores where money was transferred through informal and virtually untraceable systems of the hawala to terror groups in the Middle East.
In this case these legal business­es, which generate a high volume of cash transactions, were ideally suited to be used to fund terrorism.
Al-Qaeda and ISIS are both show­ing a capacity to adapt as well as a knack for making money through innovative ways. In 2014, ISIS raised an average of $3 million a day from oil production in areas under its control in Iraq and Syria.
However, as coalition air strikes targeted its refineries and transpor­tation routes, against a backdrop of falling oil prices, ISIS started looking into alternative sources of funding, such as the smuggling of migrants. Time said the movement of migrants across the Middle East and Africa towards Europe has gen­erated up to $323 million for ISIS and other jihadist groups.
ISIS successes have been primari­ly built on its reliance on local fund­ing, unlike other terrorist groups, such as al-Qaeda, that rely on exter­nal state or private donor support. This relative autonomy makes ISIS less sensitive to increasing restric­tions, such as UN Security Council Resolution 2178, on money trans­fers. The resolution on policies and security measures was put in place to better track and deter terrorist travel activity, requiring member countries to implement improved border controls and to disrupt or prevent financial support to for­eign terrorist fighters. The Federal Bureau of Investigation (FBI) and international agencies have worked on preventing terror recruits from leaving the country, arresting and charging individuals suspected of wanting to join radical groups.
However, the fact that many of these militants are self-funded makes the business of tracking them more difficult. At a May 15th conference at the Washington In­stitute, Gerald Roberts of the FBI explained that ISIS was constantly adapting and “had learned from al- Qaeda’s lessons”.
Other difficulties are posed by the resistance of certain states to disrupting the cash flows of terror organisation. Illustrating this case in point is Turkey’s decision to lift limitation on cash transfers into the country. Turkey’s proximity to Syria and Iraq makes it an ideal route for money smugglers of ISIS and al-Nusra Front, al-Qaeda’s Syr­ian wing.
Countries such as Syria are con­tributing to the trend. According to counter-terrorism specialist Matthew Levitt of the Washington Institute, quoting a report on ISIS financing recently issued by the Financial Action Task Force (FATF) — the multinational body that de­velops and promotes policies to counter illicit financial activities — “more than 20 Syrian financial institutions with operations in ISIS-held territory” are still operating there.
The fight against terror is partly built around reducing terror or­ganisations’ sources of income. As pressure mounts on these organisa­tions, the more they are forced to fall back on easy revenue-generat­ing schemes such as racketeering, robbing and kidnapping, which will have an effect on their relations with the people in areas under their “governance”.
The endgame will depend, how­ever, on how much terror organi­sations such as ISIS and al-Qaeda will be able to evolve and adapt to a changing financial environment.