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TERRORIST FINANCING
The Criminal Underpinnings

03/22/07

Cover of February 2007 Law Enforcement Bulletin

What is hawala…and how is it used to move terrorist monies around? Which petty crimes have terrorists gravitated toward in recent years to finance their attacks? And why does any of it matter to our nation’s law enforcement community?

You’ll find the answers—and more telling details on the ins and outs of terrorist financing—in two feature articles in a recent issue of our FBI Law Enforcement Bulletin.

As the articles make clear—and recent experience has shown—terrorists are willing to go to just about any criminal length to raise money: from hawking pirated software to smuggling cigarettes…from burglarizing hotel rooms to robbing gas stations…from engaging in garden variety frauds to trafficking in illegal drugs. The idea is to stay under the radar using relatively low-risk crimes.

For law enforcement, this propensity is troubling for two interrelated reasons:

  • Terrorist cells here and abroad still look to al Qaeda for inspiration, but less for direct funding. The more decentralized al Qaeda becomes, the more cells need to find their own revenue streams—legal or illegal.
  • We’ve seen again and again that terrorist attacks can be planned and executed on the cheap. A few dollars—criminally generated—can go a long way.

On the lookout. For the gamut of law enforcement—from local police to state troopers to FBI and other federal agents—these realities underscore the importance of staying alert to the possibilities of terrorist linkages in criminal cases.

  • Just one example: Investigations both before and after 9/11 reveal how members of terrorist organizations in the U.S. have stolen, repackaged, and bootlegged baby formula for cash. In one post-9/11 case, a Texas state trooper pulled over the driver of a rental van and found a large stash of stolen formula inside. The man was linked to a terrorist-based theft ring that operated across the nation, wiring profits back to the Middle East.

On Hawala. Though it’s an ancient, informal way of transferring money akin to wiring funds, hawala does leave clues that can tip investigators off to illegal activities and possible terrorist dealings.

For example, hawala brokers—or hawaladars—often do keep records, which are needed to settle accounts. One of the articles suggests investigators look for large transactions involving alternate forms of currency such as food stamps, phone cards, and even lottery tickets, since hawaladars typically barter without using cash. A detailed list of items common to illegal hawala operations—from a suspiciously high number of phone lines to multiple IDs—can be found on page 4 of the Bulletin.

We encourage you to read both articles in full. As one of the authors points out, “The more familiar officers are with the criminal enterprises used by these groups to raise money, the more effective they will be in finding ways to counter such activities.” And more to the point, in stopping terrorist bombs before they ever go off.

Resources:The FBI Law Enforcement Bulletin | FBI Counterterrorism