Terrorist financing is the process by which terrorist organizations receive funding, often through illegal activities, fake charities, and hawalas. Governments have implemented stricter laws to combat this security concern, and those who knowingly participate in terrorist financing can be prosecuted.
Terrorist financing is the process by which terrorist organizations receive funding for operations. This important security concern has been at the heart of changes in domestic, banking and international law in the 21st century, mainly due to an increase in high-profile terrorist attacks since the turn of the century. There are many different ways that terrorist financing can occur, including through smuggling channels, charitable or non-profit groups, and the use of Middle Eastern and African money transfer systems known as hawalas.
One of the most common ways of financing terrorism is through money raised from illegal activities. Drug dealing, arms deals, and the smuggling of goods are common types of illegal trade that can be used to fund terrorist operations. Often, the origin of the money earned through illegal businesses is disguised as money laundering, which places illegal money into an account through a shell company or legitimate business. Since the origin is disguised as laundering activity, it can be difficult to trace this type of financing.
A somewhat unexpected source of terrorist financing involves charitable organizations. By exploiting the goodwill of unwitting donors, fake or falsely advertised charities can be set up in developing countries, asking for money to build infrastructure, schools, hospitals and even counter-terrorism initiatives. Instead, the money could be diverted to the accounts of terrorist groups to fund their operations. Since the link between charities and terrorist financing was first exposed in the early 21st century, many nations have created stricter laws regarding the formation and management of non-profit foundations. especially those with an international reach.
A third form of terrorist financing occurs through the use of an extensive money transfer transaction system known as hawalas. Centered in South Asia, Africa and the Middle East, this long-standing system allows for the transfer of money without the physical movement of funds from one location to another. A hawala allows a person in one city to deposit funds which can then be withdrawn by a contact at another hawala in the same network. Since hawalas are private enterprises, they are not subject to government financial restrictions and thus may be less subject to scrutiny by anti-terrorist initiatives.
Knowingly participating in terrorist financing of any kind is illegal in many countries. While donors to bogus charities may be considered victims, companies that assist in money laundering or individuals who knowingly donate to terrorist financing organizations may be prosecuted and severely convicted. Many nations continue to regularly review laws that can affect all forms of terrorist financing, in order to better search and disrupt financing operations and uncover terrorist cells around the world.
Protect your devices with Threat Protection by NordVPN
