Financing of Terrorism: Risks to Australia
by Ernie Davitt, National Affairs Editor, ASM
Terrorism financing remains a significant security risk for Australia and the rest of the world, with evidence that many terror groups, including the Taliban and other insurgents in Afghanistan are now better organised and equipped than ever.
Despite a wealth of good work and progress by organisations like the Australian Federal Police and the Australian Transaction Reports and Analysis Centre (AUSTRAC), researchers believe efforts must continue to gather financial intelligence and to engage with communities to cut the flow of funds to terrorists.
Recent reports that some aid money for flood victims in Pakistan was coming from terrorists indicate the extent of the problem.
The money is believed to include a mix of legitimate aid funds as well as money obtained illegally by organisations with strong links to terrorist groups.
The UN has criticised the lack of aid forthcoming for the millions of flood victims and, according to Pakistani officials, some Islamist charities with ties to militants have been providing aid while promoting anti-government agendas and winning the hearts and minds of many victims.
Pakistan was among eight countries blacklisted by a key global anti-corruption and anti-money-laundering body earlier this year for alleged money laundering and terrorism financing.
European police investigations showed a strong link between serious and violent crime and terrorism, with illegal sources of funding for terrorism including fraud and counterfeiting, burglary, kidnapping and extortion.
A recent report from the Australian Institute of Criminology (AIC), entitled Financing of Terrorism: Risks for Australia, emphasises that since 2001, more than 100 Australians have been killed in terrorist attacks overseas and numerous other attacks have been thwarted in Australia.
The paper was prepared by Dr Russell G Smith, Principal Criminologist with the AIC, Julie Walters, an AIC research analyst, and Rob McCusker, Director of the Centre for Fraud and Financial Crime at the University of Teeside in the UK.
According to Dr Smith, terrorism can be financed through the diversion of funds gathered in legitimate activities such as the collection of membership fees or charitable donations, or through profits derived from illegal activities such as drug trafficking, extortion and financial crime.
“Since 2001, 20 people have been convicted of terrorism offences in Australia, while more than 40 Australians have had their passports revoked or applications denied for reasons related to terrorism,” he said.
“As is the case with anti money-laundering, financial intelligence has greatly contributed to successful prosecution outcomes and will continue to play an important role in counter-terrorism investigations in the future.
“In 2008-09, 28 reports were made to Australia’s Financial Intelligence Unit, AUSTRAC, of transactions thought to involve the financing of terrorism.
“By engaging with, and educating those at risk of intentionally or inadvertently funding terrorist organisations, we can also counteract radicalisation within the community and reduce the risks of terrorist attacks in Australia and overseas.”
The paper says that a number of developments have been identified in the international security landscape in recent years that have had an influence on global trends in terrorist activity.
First, since the end of the Cold War, guerrilla and terrorist groups have experienced a considerable decline in funding from state sponsors, due to greater international scrutiny and condemnation. As a result, they have become increasingly self-financed, mainly through the proceeds of drug trafficking.
Second, outside conflict zones, the ‘homegrown’ terrorist threat has emerged as the most dominant area of risk. It has been argued that some homegrown terrorist cells are likely to seek the assistance of foreign terrorist cells for the provision of training, finance and general inspiration in their efforts.
In Europe, seven EU member states reported a total of 515 failed, foiled or successfully perpetrated terrorist attacks in 2008. Europol reports that illegal sources of funding for terrorism included fraud and counterfeiting, burglary, kidnapping and extortion.
The report said that while the terrorist group al-Qa’ida had not itself launched a direct attack on Australia, it had shown an operational interest in doing so.
Australia’s proximity to a number of Muslim countries could enhance its vulnerability. southeast Asian countries had become home to loosely-affiliated terrorist networks, including those associated with Jemaah Islamiyah (JI) and the Abu Sayyaf Group,” it said.
Understanding how terrorist groups were financed remained an important means of preventing terrorist groups from functioning and thus minimising the risk of attack.
One of the main problems with terrorism funding was that in many cases a little money has gone a long way in terms of loss of life and destruction, with some attacks costing less than US$10,000.
The paper makes the strong point that actual evidence of how terrorism is financed in Australia is limited.
This article first appeared in Australian Security Magazine (ASM), Nov-Dec 2010, titled "Financial intelligence and community engagement: keys to countering terrorism funding" p.12