AU/AF FELLOWS/NNN/2004-00

AIR FORCE FELLOWS (SDE)

AIR UNIVERSITY

TRANSNATIONAL CRIME AND THE CRIMINAL-TERRORIST NEXUS:

SYNERGIES AND CORPORATE TRENDS

by

Jennifer L. Hesterman, Lt Col, USAF

A Research Report Submitted to Air Force Fellows, CADRE/AR

In Partial Fulfillment of the Graduation Requirements

Maxwell Air Force Base, Alabama

April 2004

Distribution A: Approved for public release; distribution unlimited.
Disclaimer

The views expressed in this academic research paper are those of the author and do

not reflect the official policy or position of the US Government or the Department of

Defense. In accordance with Air Force Instruction 51-303, it is not copyrighted, but is

the property of the U.S. Government.

iii
Contents

Page

DISCLAIMER................................................................................................................... iii

PREFACE.......................................................................................................................... vi

ABSTRACT...................................................................................................................... vii

A POISONOUS BREW ...................................................................................................1

TRANSNATIONAL CRIME..............................................................................................4

Multinational Corporate Sophistication.........................................................................5

Transnational Organized Crime on the Rise..................................................................6

Eurasian Transnational Crime Most Worrisome .....................................................7

Italian Transnational Crime ...................................................................................10

Baltic Transnational Crime....................................................................................11

Asian Transnational Crime....................................................................................12

Columbia: a Sophisticated, Transnational Narco-State.........................................15

Emerging Area of Concern: North Korea..............................................................16

Fighting Transnational Crime......................................................................................16

Agencies and Methods...........................................................................................17

Progress and Lessons Learned...............................................................................20

Lessons Learned ....................................................................................................24

THE CRIMINAL-TERRORIST NEXUS: FUNDING TERROR....................................27

Funding Terror.............................................................................................................28

International Charities and Zakat.......................................................................30

Narco-Terror..........................................................................................................35

Commodities Smuggling .......................................................................................39

Identity Theft and Fraud........................................................................................39

Money Laundering ................................................................................................43

Bulk Cash Smuggling............................................................................................47

Hawalas .................................................................................................................48

Diamonds: Earning, Moving and Storing? ............................................................50

Emerging Area of Concern: Intellectual Property Crime...........................................52

TERRORIST GROUPS: CORPORATE TRENDS .........................................................58

Decline in State-Sponsored Terrorism ..................................................................58

Move to Loosely Affiliated Groups: Franchising .............................................60

iv
Shifting Tactics......................................................................................................62

Alliance with Transnational Crime........................................................................62

Would Terrorists and Organized Crime Partner? ..................................................63

CONCLUSION: THE BATTLE AT THE CROSSROADS .............................................66

INTERNATIONAL MNC TERRORIST GROUPS: A PRIMER.....................................71

GLOSSARY ......................................................................................................................78

BIBLIOGRAPHY..............................................................................................................79

v
Preface

Like all Americans, the September 11, 2001 terrorist attacks were a crystallizing

event in my life. I found myself in the unexpected position of trying to secure a major

military installation and its panicked residents from an unknown enemy, with unknown

intentions and unknown capability. Along with my stunned colleagues, I watched the

DEFCON change, indicating that our country was under attack. Information from the

staff came at a blinding pace: unknown persons on the base perimeter, an unidentifiable

inbound helicopter, suspicious packages, a man of Middle Eastern appearance at the gate

without ID. In the midst of the confusion, we received word that the President was

airborne--our base in North Carolina was his second landing choice-were we ready?

The following day, federal law enforcement officials informed us they had infiltrated

a local cell of Hezbollah sympathizers who were smuggling cigarettes, and for unknown

reasons, purchased night vision goggles and stun guns. The proximity of the terrorist

threat to my base and its populace was chilling. As the case unfolded, I learned first hand

of the emerging, deadly connections between organized crime and terrorism. This body

of research for INSS was a continuation of my interest and self-study of this subject.

To add a voice to my research, I spoke off the record with many law enforcement

agents involved in the unglamorous work of chasing the terrorist money trail. Under

resourced and over tasked, they work with unbelievable dedication, hoping to prevent

further attacks. This paper is dedicated to them, the unsung heroes of the war on terror.

vi
Abstract

Modernized transnational crime is on the rise and threatens our national security like

never before. Globalization, technological advances and anarchy resulting from the end

of the Cold War has made transnational crime much easier to perpetrate and given

criminals flexibility to change tactics to continually evade law enforcement.

Exacerbating the growing problem is the fact that the groups involved in transnational

crime operate with a level of sophistication previously only found in multinational

corporations. Eurasian transnational crime is considered by government agencies as the

most worrisome and the largest threat to the United States due to its size, wealth and

global reach. The problem of human trafficking is expanding throughout Eurasia and the

Baltic nations, and has now reached our shores. An emerging area of concern is the

region surrounding a corrupt North Korea, as it expands its influence beyond its borders.

Many agencies are involved in the fight against transnational crime and cite progress

in capacity building efforts with other nations to establish and enforce the rule of law.

These engagement activities will also help stem corruption, which aggravates

transnational crime.

Factoring terrorist groups into the mix complicates the problem. In fact, the

prospects of the potential synergy and mere seductive nature of this liaison are

frightening and have dire implications. The criminal-terrorist nexus exists in many ways,

whether through direct liaison or in copying business operations and tactics. Terrorist

vii
fundraising methods can be as sophisticated as those found in multinational corporations

as they seek to earn, move and store their assets. Narco-terror is a good example of the

partnering of organized crime with terrorists, and Afghanistan and Columbia corner the

global market on drugs (and terror). Criminals and terrorists both engage in money

laundering activities, although the tactics and goals vary. An emerging area of concern is

intellectual property crime or the counterfeiting and pirating of goods that are then

manufactured and sold for profit without the consent of the patent or trademark holder.

This activity is more lucrative than drug trafficking, is less pursued by law enforcement

agencies and the penalties if caught and prosecuted far less than those for other criminal

activities.

The State Department has issued 4 trends in international terrorist groups: decline in

state-sponsored terror, move to loosely affiliated groups, a shift in tactics and alliance

with transnational crime. These trends can be studied through the lens of terror financing

to predict future business activities and the corporate trend in terrorism.

Much research has been done on transnational crime and terrorist financing, however

the intersection of the two requires more study, as this battle at the crossroads requires

new approaches. Asymmetric engagement and use of soft instruments of power are

essential. The use of containment and deterrence, strategies that policymakers typically

do not find appealing, are necessary in this new realm as we try to marginalize the threat

and decrease the playing field. Scholarly study regarding the lifecycle of modern terrorist

groups may yield clues as to when and why, despite their religious ideology, they partner

with organized crime.

viii
More expertise in the field of financial forensics is crucial, with practitioners

educated on both organized crime and terrorist funding tactics. Powers bestowed on

federal law enforcement agencies through the Patriot Act must be upheld to help fight

modern organized crime and terrorism in the global environment and agents require

expanded training on proactive, investigative approaches to stop crime/terrorist acts

before they happen, not to merely analyze the outcome, as is the traditional procedure.

Government agencies are effectively sharing information at the tactical level, however

strategic level interaction is weak and requires attention. Finally, with greater education

and training on these issues, the U.S. military could be a powerful force multiplier.

This paper academically frames the issue, providing policymakers a fresh

perspective on existing and emerging threats to use in their future planning and modeling

efforts.

ix
Chapter 1

A Poisonous Brew

While organized crime is not a new phenomenon today, some governments find

their authority besieged at home and their foreign policy interests imperiled

abroad. Drug trafficking, links between drug traffickers and terrorists, smuggling

of illegal aliens, massive financial and bank fraud, arms smuggling, potential

involvement in the theft and sale of nuclear material, political intimidation, and

corruption all constitute a poisonous brew--a mixture potentially as deadly as

what we faced during the cold war.1

- R. James Woolsey

Former Director, CIA

Mr. Woolseys quote should serve as a wake up call not only to the U.S., but also to

countries around the world--transnational organized crime is escalating and the

synergistic potential of the alliance between organized crime and terrorists is alarming.

The 21st century is just four years old, but already the world has experienced

extreme acts of terror resulting in death and destruction exceeding those witnessed in the

previous 20 years. Besides fanatical ideology, what is fueling these terrorist groups?

And how can they continue to operate with such abandon despite an all out effort to fight

the global war on terror?

One answer may be the corresponding rise in transnational crime. Globally, drug

trafficking routes are robust and plenty; the ghastly business of human trafficking is

flourishing; and money is laundered in amounts and ways never before imagined. Many

resource-constrained countries struggle to deal with their role in this epidemic and are

1
attempting to contain it. Others are corrupt and choose to look the other way, or worse,

benefit from illicit activity. Our government continues to spend a staggering $1 billion

annually to help other countries identify and battle their transnational crimes issues.

Why?

Transnational crime is an emerging and growing U.S. national security threat and it

threatens us in new, provoking ways. For example, drug use in the United States was

formerly viewed as a law enforcement or health issue. Only recently has drug trafficking

been established as a global crime with a corresponding national security threat. A

lesser-known and understood example of a growing transnational threat reaching our

borders is human trafficking. Unbeknownst to many, our U.S. National Security Strategy

contains a goal labeled Champion Aspirations for Human Dignity.

2 When a boat filled

with women and children leaves the shores of a distant country delivering them to a life

of enslavement and unimaginable abuse, we obviously feel compelled to engage out of

moral obligation and belief that human dignity must be upheld and supported. When

18,000-20,000 of those human beings are delivered annually by criminals to the U.S. and

are forced into prostitution, pornography and sweatshop labor, it becomes an obvious and

direct threat to the fabric of our society.3 Add terrorists to the equation, using established

and often-unchallenged trafficking routes as a logistics trail, and the issue takes on new

significance.

Transnational crime also threatens our allies that weve vowed to assist and protect;

certainly, a challenge to their security and strength directly impacts the U.S. Finally,

many nation states are on the brink of thriving or failing, and their fate depends either on

usor the help of organized crime and terrorists. History has shown that failing

2
countries are like dominos. They lead to failing regions, an even greater threat to our

national security.

To fully grasp this complex issue, it is first necessary to understand the multinational

corporate sophistication of the criminal groups involved in transnational crime, and then

review regions by scope and variety of criminal activity. Adding further context is an

overview of U.S. agencies involved, methods used and lessons learned in the fight against

transnational crime, all of which could similarly be applied to the global war on terror.

Factoring the terrorist element into the issue and explaining the resulting nexus will

clarify the urgency of this threat. A discussion of known and emerging methods of

financing terror that have equivalent transnational, corporate aspects to organized

transnational crime allows visibility into ongoing or potential alliances. Finally, there are

trends in international terrorist groups that affect their corporateness as they evolve and

change in light of the global war on terror.

3
Chapter 2

Transnational Crime

Transnational organized crime has been likened to a cancer, spreading across

the world. It can undermine democracy, disrupt free markets, drain national

assets, and inhibit the development of stable societies. In doing so, national and

international criminal groups threaten the security of all nations.

4

-U.S. Department of State

The concept of transnational crime is not new. Money, drugs and commodities

have always been smuggled across borders and oceans as criminals circumvented laws to

enhance their illicit activity. However, modern transnational crime is a recent

phenomenon and is far deadlier, expansive and difficult to infiltrate. According to the

U.N., the threat posed by transnational organized crime to the political, economic and

social fabric of societies came to light in the mid-1990s. Aggravating factors include

globalization of business networks, lowered trade barriers, technological advances and

anarchy encountered due the end of the Cold War. These dynamics have also contributed

to rise of a new class of actors who operate outside the traditional nation-state system,

making detection, intervention and prevention even more difficult.

Transnational crime is penetrating our society in new, dangerous ways. Grant D.

Ashley, the assistant director of the Criminal Investigative Division at the FBI recently

testified, it is our belief that the international growth of these very dangerous, criminally

diverse and organized groups and their emergence in the United States has caused a

4
significant expansion of our crime problem.

5

This expansion could obviously be used

as a vehicle by terrorists to move resources, recruit or simply spread their sphere of

influence. In order to successfully engage this enemy abroad and at home, agencies must

understand how, where and why these criminals operate in order to effectively dismantle

their operations.

Multinational Corporate Sophistication

Although routinely underestimated in terms of sophistication, transnational

criminal organizations act as networks, pursuing the same types of joint ventures and

strategic alliances as legitimate multinational corporations. A multinational corporation

is often defined as one that operates on a worldwide scale, without ties to any specific

nation or region. The global business environment is unique and multifaceted, requiring

extra considerations. Due to the complexity of international operations, the right people

must be on the payroll such as lawyers, accountants and subject area experts. Analysis of

the international customer base, product demand and then proper positioning of the

product is necessary to maximize profit. The company must assess the cost of doing

business, and streamline staff and operational activities, cutting costs as much as

possible. Any business must have good supply chain management, from procurement, to

storage to delivery of the product; this takes extra planning and sophistication when

applied to a global market. Understanding of international commerce laws and issues

related to the operation of offshore businesses are a necessity. The culture of the of the

countries involved in the transactions must be understood, including languages,

currencies and business practices; the corporate strategy must be in sync with these

cultural nuances. All savvy business ventures are low risk/high return and most are able

5
to extract profits throughout the process. Finally, a good international business is able to

leverage rapidly changing communication and transportation technology to stay viable.6

The above could have easily been a description of the Cali Cartel drug syndicate

at its peak in late 1980s. Successful international criminal enterprises follow exactly the

same business plan and often they work in parallel with unsuspecting legitimate

corporations, using their business practices as a model. They have the right people on the

payroll, know how to maximize profits and can shift strategies with as technology

evolves of when detected by law enforcement. They are well resourced; many

organizations own and operate a variety of aircrafts and boats, with skilled operators at

the helm. Sophisticated satellite phones and use of Global Positioning System equipment

keeps the criminals on the run and investigators in the dark. Unfortunately for

governments battling this issue, not only are transnational criminal networks harder to

detect and infiltrate than ever, despite their best efforts, business is booming.

Transnational Organized Crime on the Rise

There are several categories of crime and criminals. Organized crime is defined

by the FBI as a continuing criminal conspiracy having a firm organizational structure, a

conspiracy fed by fear and corruption.

7 Although organized crime is typically

associated with the mafia or drug trafficking, it extends to any continuing criminal

enterprise such as money laundering or white-collar crimes. Reactive crimes are violent

or nonviolent crimes perpetrated by an individual or a small group, such as burglaries,

internet crime and crimes of hate. There are also crimes of opportunity in which the

criminal targets the easiest mark or only takes actions because of the carelessness of the

target. Examples would be pick pocketing or a lone carjacking. Although any of the

6
above methods could generate resources, transnational criminal and global terrorist

organizations are more likely to affiliate with the continuing criminal enterprise.

Therefore, our focus will be on organized crime.

Several factors contribute to the existence and proliferation of transnational

organized crime originating, traversing or committed in a country. One major

consideration are available resources, whether a shared ideology, a desperate populace, a

weak economy, geographical or geological features. Border security and strength of the

rule of law are both critical and will either repel or attract transnational criminal activity.

A weak government invites penetration by organized crime and the resulting corruption

further delegitimizes the countrys government. Finally, terrorists are also thriving in

several regions, exacerbating existing crime problems.

The extent and global impact of transnational crime came to light in 2003 when

State Department and FBI officials were called to testify to Congress regarding its

increase. Using their testimony along with that of other experts, we will explore the

hotbeds of existing and emerging transnational crime.

Eurasian Transnational Crime Most Worrisome

According to the FBI, Eurasian organized crime poses some of the greatest threats

due to its size, wealth and global reach. Eurasian organized crime is associated with

Russia, Eastern and Central European countries, and the independent states formed after

the fall of the Soviet Union. Although a victory for democracy, the demise of

communism and the resulting leadership void caused great economic and social chaos

that allowed for the rise of many organized crime groups. Civil wars are still unresolved,

and corruption is widespread.

7
According to a recent GAO report that studied interagency programs that fight

transnational crime, the U.S. Government is concerned about the unique blend of

circumstances in Eurasia. Terrorism, international organized crime, trafficking in

persons and drugs, ethnic separatism, religious extremism, and corruption are all present

and thriving.8

Corruption of government officials in the Eurasian countries is a key concern and

certainly contributes to the proliferation of transnational crime in this region. In

testimony to the Senate last year, Steven Pifer, Deputy Assistant Secretary Bureau of

European & Eurasian Affairs at the State Department, expertly described how a

vacuum in institutions leads to corruption:

The process of privatization of vast state resources often took place in the

absence of any effective legal or regulatory structure, and many valuable

state assets were privatized in "insider transactions." As a result, property

rights were unclear, and disputes over property rights often could not be

resolved in courts of law. Insiders and organized crime took advantage of

this situation to take control of major assets, often having to pay no more

than a small fraction of their true value. Privatization took place roughly

simultaneously with the development of small-scale private businesses.

Again, because of the absence of an effective legal and regulatory system

governing the activity of private enterprises, these businesses were ripe for

extortion by street gangs. In order to protect themselves, small businesses

often had to turn to other gangsters to provide a "krysha" (roof) of

protection. Consequently, gangsters gained control of many small

businesses and accumulated capital, which they frequently used to acquire

larger businesses during the privatization process. They often then used

these businesses to make more money and to acquire public status, which

they then used to obtain political office.9

Unfortunately, this exact scenario is playing out in numerous countries around the world

and use of this historical example should be incorporated in both post-conflict

reconstruction and democratization planning. Rapidly establishing and enforcing the rule

of law following governmental upheaval is essential to prevent a haven for criminals and

terrorists.

8
In terms of individual countries, the organized crime problem in Russia is perhaps

the most pressing. According to Steve Schrage, Deputy Assistant Secretary, Bureau of

International Narcotics and Law Enforcement Affairs (INL) at the State Department, the

Russian interior ministry recently estimated that over half of the Russian economy,

including significant portions of its vast energy and metallurgical sectors, is controlled by

organized crime. In a country where by some accounts over half the population earns

less than $70 a month, he stated that this year alone, criminal groups in Russia have used

Russian banks to illegally transfer $9 billion out of the country. In fact, the FBI believes

that the wide range of criminal activity engaged in by Russian organized crime groups

likely exceeds in scale and economic impact that of the Cali Cartel at the height of its

power.

10

According to the UN, all Eurasian countries are rife with human trafficking

violations. Human trafficking occurs when men, women and children are procured,

transported and then enslaved. This form of slavery involves forced labor and sexual

exploitation. Trafficking is aggravated by poverty and desire for a better life; lack of

education as to the consequences by families and individuals; and disruption of societal

values or in other words, greed. Trafficking is a high profit and low risk industry and

according to the State Department, many Eurasian countries are lagging in instituting and

enforcing laws to punish perpetrators of trafficking.11

Another criminal activity prolific in the region includes significant money

laundering consortiums and schemes. Finally, the proximity of the "golden crescent" of

Pakistan and Afghanistan put Tajikistan, Uzbekistan, Kazakhstan, Turkmenistan, and

9
Kyrgyzstan at the crossroads of the opiate trade to Europe and Russia, where narcotics

consumption is increasing.12

Eurasian organized crime spread to the United States in the 1970s and 1980s with the

arrival of over 100,000 soviet émigrés. Mixed in with law-abiding people were a very

small group of criminals that became the base U.S. domestic Eurasian organized crime.

The dissolution of the Soviet Union in 1991 brought thousands more émigrés fleeing

strife and dismal economic conditions. This exodus added to the existing Eurasian

criminal enterprise in the United States. According to the FBI, there are 245 ongoing

cases dealing with Eurasian organized crime, with fraud constituting 60% of all cases.

Other criminal activities attributed to Eurasian organized crime in the United States

include transnational money laundering, extortion, drug trafficking and auto theft, white

slave trafficking/prostitution, hostage taking, extortion of immigrant celebrities and sport

figures, transportation of stolen property for export, insurance (staged auto accidents) and

medical fraud (false medical claims), counterfeiting, credit card forgery, and murder.13

No crime is off limits to these groups, and the breadth and depth of their criminal activity

is frustratingly astounding.

Italian Transnational Crime

Italian Organized Crime (IOC) groups are becoming transnational in nature. The

best known of these groups is the Sicilian mafia, but other significant up-and-coming

IOC groups include the Neapolitan camorra, the Calabrian 'ndrangheta and the Puglian

sacra corona unita. There is now open source reporting regarding new connections

between the U.S.' domestic la cosa nostra (LCN) families and the Sicilian mafia including

international travel of members to meet. IOC factions continue to traffic drugs and

10
launder money using the US as a conduit. According to INL, the Calabrian 'ndrangheta

has transitioned from kidnappings to drug trafficking and corruption of public officials to

gain lucrative municipal contracts. The Neapolitan camorra is possibly expanding its

criminal activity beyond its traditional extortion rackets to the business of smuggling

counterfeit goods and non-taxed cigarettes. The camorra is attempting to interject itself

into the legitimate economies of Eastern Europe and the Puglian sacra corona unita is

allegedly taking advantage of its geographic proximity to the Balkans to align itself with

Balkan organized criminal groups engaged in arms and cigarette smuggling, trafficking in

humans.

14 Therefore, once regionalized in scope, the IOCs are now employing their

unique form of criminal activity transnationally and their expansion is cause for concern.

Baltic Transnational Crime

Balkan Organized Crime (BOC) describes activity emanating from Slovenia,

Croatia, Serbia-Montenegro, Bosnia-Herzegovina, Albania, Kosovo, the former Yugoslav

republic of Macedonia, and Greece. BOC is an emerging organized crime problem with

significant transnational ramifications, and European nations now recognize that BOC is

one of the greatest criminal threats they face. BOC controls upwards of 70% of the

heroin market in some of the larger European nations and they are rapidly taking over

human smuggling, prostitution and car theft rings.

According to the State Department, terrorists and Islamic extremist groups have

already exploited inadequate border security and institutional weaknesses in the Balkans.

Middle Eastern nongovernmental organizations identified as supporting terrorist activities

are currently providing assistance to Islamic extremist groups in the region. Terrorists

also exploit some European countries' liberal asylum laws, open land borders, and

11
weaknesses in their investigative, prosecutorial, and procedural processes while using

these countries as operational staging areas for international terrorist attacks.15 Finally,

Albania and Kosovo lie at the heart of the "Balkan Route" that links the already discussed

"Golden Crescent"; this route is worth an estimated $400 billion a year and handles 80%

of heroin destined for Europe.

16

According to INL, BOC groups, particularly those composed of ethnic Albanians,

have expanded rapidly over the last decade throughout Europe and are gaining a foothold

in the United States In the U.S., Albanian organized crime groups have been involved in

murders, bank and ATM burglaries, passport and visa fraud, illegal gambling, weapons &

narcotics trafficking, and extortion.17 The FBI believes the Albanians have challenged

the LCN for control of some traditional criminal activities in New York City. Albanian

OC groups have also formed partnerships with certain mafia families to facilitate crimes

and are known for acts of extreme violence.18

Asian Transnational Crime

In the early 1900s, signs of Asian Criminal Enterprises emerged in the United

States with the onset of criminally influenced Chinese groups. These groups thrived in

the U.S., and new enterprises have developed with globalization, communications

technology, and international travel. In the U.S., Asian Criminal Enterprises have been

identified in more than 50 metropolitan areas.

According to the FBI, traditional Asian Criminal Enterprises impacting the United

States are groups organized by criminals predominantly from East and Southeast Asia,

including members of Chinese, Korean, Japanese, Thai, Filipino, Cambodian, Laotian,

and Vietnamese descent. However, other Asian Criminal Enterprises are now emerging

12
as domestic and international threats, including groups from the South Pacific Island

nations as well as organizations from Southwest Asia such as Pakistan, India,

Afghanistan, Nepal, and Iran. These groups are described as very fluid and extremely

mobile, easily adapting to changes and thus able to evade law enforcement. They have

multilingual skills, can be highly sophisticated in their criminal operations, and are wellfinanced. Some groups have commercialized their criminal activities into business firms

of various sizes, from small family-run operations to large corporations.

The FBI also believes the criminal conduct engaged in by Asian Criminal

Enterprises include not only traditional racketeering activities normally associated with

organized crime such as extortion, murder, kidnapping, illegal gambling, prostitution, and

loan sharking, but also international organized crime problems like alien smuggling,

heroin and methamphetamine drug trafficking, financial frauds such as illegal credit

cards, theft of automobiles and computer chips, counterfeiting of computer and clothing

products, and money laundering.19

Trends in Asian Criminal Enterprises include the cooperation of other criminal

groups that cross ethnic and racial heritage lines. Also, maturing groups are now

structuring their groups hierarchically to be more competitive, and the criminal activities

they engage in are global in nature. More enterprises are engaging in white-collar crimes

and are now co-mingling these illegal activities with legitimate business ventures. 20

An emerging area of concern in the region is The Malaysian Straits, an area of

considerable established and uncontrolled organized crime. The Indonesian archipelago

is a series of 17,000 islands, a vast amount of territory to govern, patrol and enforce the

13
rule of law. Human trafficking is rampant in Indonesia, largely due to the tens of

millions of people mired in poverty, corrupt governments and no related law

enforcement. The region has been disturbed by sporadic violence created by a handful of

separatists grouping with gangsters engaged in weapons smuggling, money laundering

and drug trafficking.

According to the State Department, these activities are also fueling terrorist

activity. Previously, most terrorist activity in East Asia was related to domestic political

disputes but now the area is home to several lethal international terrorist groups.

Organizations with direct links to al Qaeda were discovered in 2001 in Malaysia and

Singapore and their activities, movements, and connections now traverse the entire

region. The al Qaeda offshoot, Jemaah Islamiyah (JI) has been responsible for many

large bombings in the last few years, impacting the tourist market and affecting the

economy of the region. The Abu Sayyaf Group (ASG), an Islamic extremist organization

in the Philippines, kidnapped two Americans and killed one of them in 2002. Recently,

an ASG subsidiary, the Abu Haf al-Masri Brigades, has emerged as lethal new group

initiating hotel bombings in Malaysia and possibly executing the train bombings in

Madrid. Finally, the U.S. remains concerned about Islamic extremists operating in and

around western China who have received training, equipment, and inspiration from al

Qaeda, the Taliban, and others in Afghanistan.21

It appears that multinational terrorist organizations and networks are thriving in

the Malaysian Straits region and operate unchallenged. Fortunately, regional powers

have recognized these emerging threats; in January 2004, an ASEAN meeting was held to

discuss fighting transnational crimes and terrorism.

14
Columbia: a Sophisticated, Transnational Narco-State

Just to the south of the United States lies the country of FARCLANDIA. This

term is widely used to define the area controlled by The Revolutionary Armed Forces of

Colombia, or FARC. FARC was established in 1966 as a communist insurgency group

with the goal of overthrowing the Colombian government. As the revenue from the drug

trade has expanded, so has the power and influence of FARC, which now controls an

estimated 40% of Colombia thanks to a negotiated agreement with the government. This

area includes FARCs "safe haven," which is used for the cultivation of narcotics and as

training and staging grounds for assaults on the Colombian military. Experts estimate

that FARC's illegal activities net $200-400 million annually, half from drug cultivation

and trafficking, with the rest coming from kidnapping, extortion, and other criminal

activities.22

By the sheer nature of their business, FARC has always been a regional

transnational criminal organization. However, the government is concerned with

FARCs recent global transnational activities, including increased cooperation with the

Russian mafia, a relationship cultivated over the last decade. In the late 1990s, the

Russians built an arms pipeline to Colombia, bringing in thousands of weapons, and tons

of other supplies to help FARC fight their war against the Colombian government. In

return the planes were loaded with 40,000 kilograms of cocaine that the Russian mafia

then distributed for profit. The liaison between these two entities is increasingly

troublesome, as Russian organized crime flourishes and government corruption grows.

FARC has also been linked to a Tijuana, Mexico cartel; the State Department believes

they supplied cocaine to the Tijuana cartel in return for cash and weapons. Finally,

15
authorities believe that FARC is now extending its cooperation to the borders of the

U.S..23 FARC is a perfect example of a growing transnational threat that has evolved

from being state-sponsored to sponsoring the state, to becoming its own entity.

Emerging Area of Concern: North Korea

A region worth watching is the area surrounding North Korea. Unlike other cases

discussed where organized crime attempts to infiltrate a country and its government, the

government of North Korea is infiltrating organized crime. As the economy continues to

decline, the government of North Korea has turned to drug trafficking

(methamphetamines, opium and heroin), human trafficking and organized crime for

funding. According to experts, members of the armed forces, the diplomatic corps, and

the intelligence service are engaging in trafficking of narcotics and there is evidence of

printing plants used to produce high-quality counterfeit currency. There are also

indicators that North Korean crime is set to expand beyond the nations borders,

becoming a transnational threat in the region. Japan has already expressed concern that

members of its local Korean population have ties to North Korea organized crime

factions.24

Fighting Transnational Crime

In December 2000, United Nations Secretary-General Kofi Annan stated: If

crime crosses all borders, so must law enforcement. If the rule of law is undermined not

only in one country, but in many, then those who defend it cannot limit themselves to

purely national means. If the enemies of progress and human rights seek to exploit the

openness and opportunities of globalization for their purposes, then we must exploit those

16
very same factors to defend human rights, and defeat the forces of crime, corruption, and

trafficking in human beings.

25 Our national strategy of international engagement to

fight transnational crime falls directly in line with Mr. Annans prescient guidance.

Certainly the burden of squelching government corruption, establishing and

enforcing the rule of law and fighting crime lies with the countries themselves. However,

as cited before, much of this transnational criminal activity is spreading to the U.S., and

with the emerging possibility of terrorist ties, our government has stepped up engagement

with other nations to address the problem. To most effectively confront international

crime, we must pursue international laws and programs. Therefore U.S. agencies are

working to help nations identify loopholes in their laws, strengthen borders and build

capacity to deal with the expanding transnational crime epidemic. According to Mr.

Schrage from INL, targeted intelligence and operations may remove specific terrorist,

drug trafficking, or organized crime groups, but unless we address the environments that

allow them to thrive, we will have at best created a void that can be filled by others.

26

To better understand how our government is battling transnational crime, it is imperative

to review agencies, methods, progress and lessons learned.

Agencies and Methods

According to the State Department, INL is responsible for the development of

policies and the management of over one billion dollars in programs globally to combat

transnational criminal threats and strengthen the rule of law and relevant institutions in

emerging democracies. INL programs support two of the State Department's strategic

goals: to reduce the entry of illegal drugs into the United States and to minimize the

impact of international crime on the United States and its citizens.27

17
It is important to understand that each government agency has different statutory

responsibilities, specialized skill sets and unique culture. The State Department is in

the diplomacy and relationship building business, thus INL is involved in myriad of

training, negotiating and coordinating activities. Areas of focus include counternarcotics, demand reduction, money laundering, financial crime, terrorist financing,

smuggling of goods, illegal migration, trafficking in persons, domestic violence, border

controls, document security, corruption, cyber-crime, intellectual property rights, law

enforcement, police academy development, and assistance to judiciaries and prosecutors.

This work crosses into the jurisdiction of many other government agencies and is

accomplished with the help of the investigators (FBI), the prosecutors (DOJ), the money

experts (Treasury), the intelligence gatherers (CIA) and myriad of other U.S. agencies.

Under the umbrella of INLs program, DOJ has worked extensively to develop

foreign law enforcement institutions, build the rule of law and to provide Resident Legal

Advisors to countries to give them on-the-ground advice in how to establish appropriate

legal institutions for domestic security and to help confront transnational threats. INL has

established International Law Enforcement Academies (ILEAs); the ILEA program is

truly an interagency effort with 16 U.S. law enforcement agencies participating. Serving

as a global model for advancing our common fight against international crime and

promoting the rule of law, they build relationships between law enforcement officials,

support democracy in policing operations, and raise the professionalism of officers

involved in the fight against crime. The focus of instruction is not just technical in

nature, but more importantly includes the development of leadership and management

skills to deal with the modern challenges facing law enforcement.

18
DOJs Office of Overseas Prosecutorial Development, Assistance and Training

(OPDAT), specifically focuses on organized crime. It gives prosecutors and investigators

specialized tools and familiarization with unique aspects of pursuing organized crime.

OPDAT provides a money laundering seminar that is designed to familiarize law

enforcement personnel, policymakers, and legislators with international standards. It also

covers developing and using legislation, investigative techniques and prosecutorial tools

in fighting money laundering, bank fraud, terrorist financing, and other complex financial

crimes.28

Another tool that leverages our ability to fight transnational crime are Mutual

Legal Assistance Treaties (MLATs). An MLAT allows U.S. authorities to obtain

evidence and other types of law enforcement assistance from other countries and

conversely, foreign governments can use the MLAT to request assistance from the U.S..

This tool greatly helps when pursuing and extraditing international criminals and has

recently been effective in the pursuit of terrorists and their supporters.

An effective means to coordinate efforts to fight international crime is the Lyon

Group. Chaired by INL, the Lyon Group was formed in 1995 by the G-7/8 and has made

great progress in setting international standards and enhancing law enforcement

cooperation against transnational crime and terrorism, including identifying and

removing obstacles to cooperation and facilitating information sharing.29 Finally, the

FBIs Eurasian Organized Crime Unit was established to reduce the threat to American

society posed by related crime; they work extensively with the law enforcement subgroup of the G-7/8.

19
Progress and Lessons Learned

The State Department highlights three areas of major progress in the battle

against transnational crime: trafficking in persons, money laundering and

counternarcotics. These types of crimes are global, linked with organized crime,

continue to impact the United States and have the potential to be accessed or used as a

model by terrorist groups.

Trafficking in Persons: The State Department estimates that 800,000 to 900,000 men,

women and children are trafficked every year.30 This crime violates basic human rights,

introduces serious public health risks and unfortunately, fuels organized crime. Although

many countries have looked the other way, the United States is directly confronting this

form of modern day slavery, and through direct engagement, encouraging others to do the

same.

State Department efforts focus on prevention of trafficking, protection of the

victims (and potential victims), and criminal prosecution. Recently, the U.S. provided

assistance to Russia when drafting its aggressive anti-trafficking legislation to criminalize

human trafficking, provide protection for victims and witnesses in human trafficking

cases and mandate government-funded public awareness campaigns. Ukraine is another

large source country for trafficking victims to all parts of Europe and around the globe;

they now have a comprehensive action plan for each government ministry to support

public awareness, education, and prosecutions. The State Department now regularly

issues human trafficking reports, ranking countries by tiers and highlighting their

individual trafficking problem; the global distribution of this report certainly has put

pressure on governments to comply. Finally, the Trafficking Victims Protection Act

enforces the rule of law in the United States and allows pursuit of traffickers globally.

20
Money Laundering: Money laundering is an activity that goes hand-in-hand with most

profit-generating criminal activities; the individual or group has dirty money and must

find an opaque way to hide, move or transform it to protect operation. Killing sources

and identifying methods of money laundering can help eliminate criminal activity, and

tracing the money often opens the door to other criminal operations.

The Financial Action Task Force on Money Laundering (FATF) is an intergovernmental body of 31 member countries whose purpose is the development and

promotion of policies, both at national and international levels, to combat money

laundering and terrorist financing.31 Through participation in the FATF, INL plays an

important role in formulating global anti-money laundering training, programs and

policies. INL also funds and participates in the Council of Europe's anti-money

laundering organization, MoneyVal, which is comprised of 24 member states. MoneyVal

is a forum to discuss the implementation of international money-laundering standards and

to evaluate effectiveness in implementation.

Most notably, Russia has made substantial strides in combating money laundering

in the last few years. On February 1, 2002, Russia's new financial investigation unit, the

Financial Monitoring Committee began collecting suspicious activity reports from banks

and coordinating all of Russia's anti-money laundering and counterterrorist financing

efforts. In 2002, Russia was removed from the FATF Non-Cooperative Countries and

Territories list and in 2003, Russia was admitted to FATF--a major achievement.

The U.S. Government also engages with Ukraine regarding their sizeable money

laundering issues through FATF. In September 2001, FATF placed Ukraine on its NonCooperative Countries and Territories list, citing inadequacies in Ukraine's anti-money

21
laundering regime. In November 2002, Ukraine passed a comprehensive anti-money

laundering law, but FATF is still reviewing Ukraines efforts for possible removal from

the Non-Cooperative list.

Counternarcotics: The U.S. Government continues to expend resources fighting the

global drug cultivation and trafficking epidemic on many fronts.

The flow of Afghan heroin into and across Russia has increased tremendously

with the size of heroin seizures increasing to an average of 50 to 60 kilograms, this

despite Russia being party to the 1988 UN Drug Convention and other UN agreements to

combat drug trafficking. However, Russia now appears to be on the offensive in the war

on drugs. In 1998, the Russian government enacted the Law on Narcotics and

Psychotropic Substances, criminalizing the purchase and possession of drugs and

increasing trafficking penalties. In March 2003, President Putin transferred responsibility

for the investigation of narcotics trafficking from the Ministry of Internal Affairs to the

newly formed "State Committee for the Control of Narcotics and Psychotropic

Substances,"or GKN. There are also signs of new cooperation between Russian law

enforcement and a new counter-narcotics Special Investigative Unit created and vetted by

the DEA in Uzbekistan. The U.S. and Russia signed the first bilateral agreement on law

enforcement assistance with the US providing over $4 million in funds to provide

training and equipment to Russian units fighting drug trafficking along Russia's southern

border with Kazakhstan and training and equipment to improve narcotics searches and

seizures at key ports in the northwest and south of Russia.

The Ukrainian Government is working to address their poppy and hemp

cultivation issues. Ukraine is also party to the 1988 UN Drug Convention and although a

22
narcotic trafficking continues to be a national priority for law enforcement bodies, lack of

financial resources and interagency cooperation as well as weak regulatory constraints

seriously hinders their efforts. The U.S. is providing assistance and hopes to use any

Ukrainian progress as a model for other similar-challenged countries in the region.

Finally, the Balkans is an area of great success in terms of law enforcement and

ultimately drug abatement. INL funded a DOJ project to train Albanian police and

prosecutors in modern investigative and prosecutorial techniques focused on disrupting

and dismantling organized criminal enterprises and enhancing the capabilities of the

prosecution service, and establishing international standards of border security at three

major ports-of-entry.32 Through this effort, they hope to significantly reduce the amount

of drugs crossing Albanian borders.

Corruption: A corrupt government is one that is susceptible to organized crime and

potentially terrorists. INL plays a major role in efforts to assist countries in combating

corruption. In 1994, the European Ministers of Justice considered that corruption was a

serious threat to democracy, to the rule of law and to human rights. Several annual

conferences were held on the subject then, in response to the growing corruption in the

region, the Council of Europe's Group of States Against Corruption (GRECO) was

established in 1999. Members now include 37 European countries and the U.S.. GRECO

provides a forum to discuss evaluate anti-corruption efforts of member states. Along

with helping countries establish and enforce the rule of law, the formation of regional

groups such as GRECO is another type of capacity building that will fortify nations and

help them to repel corruption.

23
Lessons Learned

The State Departments lessons learned while combating transnational crime, as

related by Mr. Schrage to the Senate, could easily be applied to the new Global War on

Terror and are of key importance for policymakers.

1. Fighting transnational crime takes regional and international cooperation. Promoting

the rule of law and fostering international law enforcement cooperation is a preeminent objective of U.S. foreign policy and of the international community of

nations. The rule of law and effective law enforcement form a foundation on which

commerce and investment, economic development, and respect for human rights can

be built. This nation-building activity will also prevent corruption, which fuels

organized crime.

2. Interagency coordination is key. The US provides an excellent model to the world by

drawing from the strengths of our various government agencies to fight crime at

home. It is the State Departments experience that the most progress is seen in

countries when the various strengths of different agencies can be brought to bear as

part of a unified strategy, with a strong recognition and respect for the great expertise

brought to bear by U.S. law enforcement officials.

3. A project-based approach to programs focused on integrated country strategies is

critical. INL has moved aggressively to institute a project-based approach to

programs, signing Letters of Agreement with host governments that detail not only

the various projects and funding levels in assistance programs but also the obligations

of the host government. This activity reinforces that fighting transnational crime is a

shared fight, using shared resources and with shared responsibility.

24
4. Linking country strategies to crosscutting international strategies is essential. In

confronting transnational threats, efforts in different bilateral programs are

coordinated so that they are focused on areas that will have the greatest impact in

promoting U.S. objectives.33 For instance, methods of engagement may depend on

the type of actor, such as former enemy, rogue state, or unwilling participant. In this

sense, country or regional strategies to battle transnational crime must be coordinated

with U.S. overarching goals and objectives.

Despite the resources expended by the U.S. and countries around the world,

transnational organized crime is thrivingand so are terrorist groups. Is there a

connection?

Notes

1 R. James Woolsey, (2002).

2

http://www.whitehouse.gov/nsc/nss2.html.

3

http://www.state.gov/g/tip/rls/tiprpt/2003/21262.htm#tiers.

4

"U.S. Department of State: Arresting Transnational Crime."

5 Grant D. Ashley, "Transnational Organized Crime," in Subcommittee on European

Affairs, U.S. Senate Committee on Foreign Relations, U.S. Senate (2003).

6 www.gbci.net.

7 Ashley.

8 GAO, "Combating Terrorism: Interagency Framework and Agency Program to

Address the Overseas Threat," May 2003.

9

Steven Pifer, "Combating Transnational Crime and Corruption in Europe," in U.S.

Senate Foreign Relations Committee, U.S. Senate.

10 Steve Schrage, "Combating Transnational Crime and Corruption in Europe," in

Subcommittee on European Affairs, U.S. Senate Committee on Foreign Relations.

11 U.S. State Department, "Victims of Trafficking and Violence Protection Act of

2000: Trafficking in Persons Report," (2003).

25
Notes

12 Frank Cilluffo, "The Threat Posed from the Convergence of Organized Crime,

Drug Trafficking, and Terrorism," U.S. House Committee on the Judiciary, December 13,

2000.

13 Ashley.

14 Schrage.

15 GAO.

16 Cilluffo.

17 Schrage.

18 Ashley.

19

www.fbi.gov.

20 Ibid.

21 GAO.

22 http://www.terrorismanswers.com/groups/farc.html#Q2.

23 Cilluffo.

24 Ibid.

25 Kofi Annan, "U.N. Statement on Convention against Organized Crime," (Palermo,

Italy: 2000).

26 Schrage.

27 http://www.state.gov/g/inl/.

28 Schrage.

29 Ibid.

30 http://www.state.gov/g/tip/rls/tiprpt/2003/21262.htm#tiers.

31 http://www1.oecd.org/fatf/index.htm.

32 Schrage.

33 Ibid.

26
Chapter 3

The Criminal-Terrorist Nexus: Funding Terror

the growing nexus between terrorists, narcotics traffickers, and other

international criminals that has been fostered by developments in international

communications, travel and information-sharing, and the end of the Cold War."

- President William J. Clinton

1995 Address to the UN

This quote was one of the first public references to an emerging nexus between

international criminals and terrorists. The word nexus is derived from the Latin word

nectere, which is also the source of the English word connect; therefore, the criminalterrorist nexus is the connection between criminal activity and terrorism.

The intersection of these lethal activities can be in the form of imitation of

operational tactics or in the actual sharing of resources. Similar to transnational

organized crime groups, terrorist organizations are benefiting from transnational

operations and access to advanced technologies, providing them with greater destructive

power, greater ease of movement and concealment, and the means to spread their

message globally.

1

Frank J. Cilluffo, an expert on the nexus, has been sounding the

alarm for several years, testifying to Congress in 2000 that the lines between organized

crime, drug trafficking, and terrorism are quickly becoming blurred.

2 Many experts

agree and add that as a terrorist group reaches a certain point in development, it can

27
easily turn into a criminal group. The Abu Sayyaf Groups recent exploitation of

marijuana plantations in the Philippines is commonly used as an example.3 As we close

down other routes of financing and pursue groups globally, terrorist cells may have no

alternative to organized crime. And just like other transnational organized crime groups,

the cells operate with the sophistication of multinational corporations to generate an

unbelievable amount of resources.

Funding Terror

Richard Clarke, former terrorism coordinator for the National Security Council,

recently testified: When I first asked the CIA in 1995, in that era, to look into terrorist

financing, they said: well, after all, you have to understand it doesn't take a lot of money

to do a terrorist act. What they failed to understand was that it took a lot of money to be

a terrorist organization.

4 An old soldiers axiom provides excellent context to the

importance of pursuing terror financing: amateurs study tactics, professionals study

logistics. I argue that the money trail is the key to unraveling future operations, more so

than any other aspect of terrorism investigative work.

Terrorist organizations need money and resources not only to carry out an

operation, but perhaps most importantly to recruit, maintain safe havens, train, travel,

take care of day-to-day expenses, and in some groups, provide for the families of dead

martyrs. The assets required to fund such extensive, global operations synonymous with

modern terrorist groups comes from a variety of licit and illicit sources--individuals,

organizations, and the criminal enterprise. One widely used estimate is that economic

activity related to terrorism accounts for a staggering $1.5 trillion, or 5% of annual global

output.5 Over a ten-year period, al Qaeda was estimated to receive between $300 million

28
and $500 million in cash, averaging $30 to $50 million a year.6 Approximately 10% of

spending went on operations while 90% was used to maintain the infrastructure of the

network, including payments to other groups to support them or to increase al Qaeda's

influence in these regions.

7 Much has been discussed in the media about the mere

$450,000 that was needed to directly finance 9/11 terrorist attacks; this has led to a false

impression in the public and among many policymakers I spoke with that the money trail

is not sizeable, worrisome, or integral to a terrorist operation. Not only is that faulty

logic, the cost of doing business may be rising for terrorists; similar to a business that

expands into franchises, splinter groups need resources to sustain themselves, driving the

cost of doing business higher. This requirement may lead them to previously untapped

sources for money, manpower and other support.

The GAO differentiates between methods terrorist groups employ to earn, move and

store assets.8 Although some terrorist funding raising activities are involved in more than

one aspect of resource management, this model is helpful when applied to transnational

crime organized crime.

Terrorists earn money through a variety of activities. Donations from wealthy

supporters and personal wealth of those involved in the group are two of the cleanest

sources. By nature, they are not business activities, and are thus untraceable,

impermeable ways to generate funds. International charities and use of tithing by

religious believers is the next desirable activity, mixing illicit and licit funds to

complicate the money trail. When necessary, terrorist groups move on to other activities

such as involvement in illegal drug trade, commodity smuggling such as cigarettes, and

identity theft and fraud.

29
Terrorists move assets either by laundering, concealing (smuggling or use of

hawala) or conversion to internationally traded commodities. The methods employed

seek nontransparent systems in which they are able to hide transactions and movement

across borders. Legitimate systems are sometimes used, although the means of

movement will be illicit in nature. Financial transactions may be also layered, adding

additional protection to the movement. The sophistication and international aspect of

such activity has long been underestimated; one expert believes that terrorist

organizations have shown the same skills as any Wall Street investor in channeling assets

into legal structures and businesses in pursuit of their broader goals. 9

Terrorists may store assets in commodities that maintain or increase value over time

diamonds or gold. Precious metals and stones are regarded as currency in many parts of

the world and are relatively easy to smuggle and untraceable. Bulk cash can also be

considered such a commodity.

International Charities and Zakat

The use of charities to raise funds for terrorist groups has been widely covered in

the media and is the focal effort of several government agencies. Modern charities are

global in nature and many are the equivalent of large-scale corporations. The use of

charities to raise funds is desirable primarily because of the ability to the co-mingle illicit

funds with licit funds. Also, deliberate contributors wishing to finance the terrorist group

are protected due to lack of paper trail and the co-mingling of funds. The process of

designating a charity as a source of terrorist funding is complex and lengthy; the burden

of proof is extensive and upon designation, all funds are frozen as it is impossible to

separate the good money from the bad. However, despite the nontransparency

30
inherent in charitable giving, governments are making progress in identifying and closing

off this source of terrorist financing.

Since the 9/11 attacks, the U.S. and other governments working to staunch the

flow of money to terrorist groups have frozen more than $136 million in monetary assets

they claim assisted al Qaeda or other terrorist groups. This includes 1,439 blocked

accounts.10 However, it is very important that this data be scrutinized and fully

understood before declaring a victory; since licit funds are intermingled with illicit funds,

it is unknown how much money was actually withheld from terrorists.

In 2003, The Treasury Department revoked the tax-exempt status of three

Muslim charities that the U.S. Government has accused of diverting contributions to help

bankroll terrorist activities: Benevolence International Foundation of Palos Hills, Ill.,

Global Relief Foundation of Bridgeview, Ill., and Holy Land Foundation for Relief and

Development of Richardson, Texas. The three charities were designated under

Presidential Executive Order 13324, meaning that financial assets and incoming

donations were frozen. Also, their tax-exempt status revoked, so donors cannot deduct

any contributions made to the group, and the organization must pay federal income tax.11

Enaam Arnaout, who ran Benevolence International Foundation recently pled guilty to

aiding Islamic fighters in Chechnya. His operation had offices worldwide, allowing it to

easily move and hide assets.12 The Holy Land Foundation, which the administration said

raised $13 million in 2000, is the largest Muslim charity in the U.S. Although claiming

that donations went to aid Palestinians, it was singled out for its alleged support of

HAMAS, mainly to support the families of bombers.13 The Global Relief Fund, another

multi-million dollar business, sent more than 90% of donations overseas and at the very

31
least, lied to the U.S. Government about the scope and destination of these funds.14

Court filings and testimony regarding designated charities provides a good education on

the difficulties unraveling the paper trail, identifying licit from illicit funds, and

determining legal and illegal recipients of the money.

On January 22, 2004, the U.S. and Saudi Arabia jointly announced the addition of

four branches of the Al-Haramain Islamic Foundation to its consolidated list of terrorists

tied to al Qaeda. According to the Treasury Department, in 2003, the Saudi government

ordered Al-Haramain to close all of its overseas branches however they continued to

operate; the branch in Bosnia-Herzegovina was simply renamed 'Vazir' and continued

business.15 This example illustrates the ease of designated charities to reorganize, evade

authorities, and continue fundraising.

The U.S. Government also may target individual businessmen for their charityrelated dealings. The case of Abdurahman Alamoudi, a very popular and charismatic

Muslim imam who is facing several felony convictions, recently received great publicity.

Alamoudi was born in Ethiopian-occupied Eritrea and immigrated to the United States in

1979, becoming a naturalized U.S. citizen in 1996. He holds a Yemeni passport is allied

with the group Muslim Brotherhood. While visiting in London in 2003, Alamoudi

received $340,000 in cash from a Libyan and a few days later, officials at London's

Heathrow Airport detained Alamoudi with the cash as he attempted to board a flight to

Syria. During his detention with British authorities, Alamoudi said specifically that he

intended to launder the Libyan money back into the U.S. through Saudi banks. He

intended to deposit the money in banks located in Saudi Arabia, from where he would

feed it back in smaller sums into accounts in the U.S. U.S. law sets no limits on cash

32
entering the country, but does require the bearer to report amounts of $10,000 or more via

customs declaration forms, thus forcing Almoudi to devise a plan for transferring the

money in smaller sums. British authorities allowed him to return to the U.S., and he was

subsequently arrested at Dulles International Airport on September 29, 2003. Notably,

Alamoudi lied on his U.S. customs form, notably leaving out his recent travels to Libya,

Lebanon, Yemen and Egypt. He is faced with the following federal charges: illegal

transactions with a terrorist regime; passport fraud; conspiracy to fund terrorists directed

against U.S. forces in Iraq; material support for terrorists in the U.S.

Alamoudi ran, directed, founded or funded at least 15 Muslim political-action and

charitable groups that represented the public voice of Islamic Americans. The FBI

submitted evidence showing that Alamoudi's American Muslim Foundation [AMF], a

charitable offshoot of his American Muslim Council [AMC], funded two suspected

terrorists in Oregon who were arrested a year ago. Also worrisome is Alamoudis

involvement with the certification of Muslim chaplains for the Department of Defense.

Notably, through AMC, he spun off the American Muslim Armed Forces and Veterans

Affairs Council, one of three Islamic organizations to certify chaplains for the military.

Alamoudi has political savvy; he and a group of Muslim leaders met with President Bush

in Austin in July 2002. The explanation for his actions? Since the Libyan regime had by

then renounced terrorism, he felt obliged to 'bridge the gulf' between his adopted country

and an Islamic state.16 Alamoudis case is disturbing, particularly when his power,

connections and possible motives are taken into account.

The case of the al Taqwa financial empire, which operated in the Middle East,

Turkey, Italy, Switzerland, Lichtenstein and the Bahamas, underscores the difficulty of

33
disrupting the shadowy world of terrorist financing without strong international

assistance. U.S. investigators believe that al Taqwa, which means "Fear of God",

funneled tens of millions of dollars to al Qaeda, HAMAS, and other terrorist groups

through charities and informal banking arrangements. The two central figures in al

Taqwa, who live abroad, were placed on an international list of terrorist financiers, which

requires member nations to seize their assets and ban them from traveling internationally.

However, a UN Security Council committee report says both are evading the spirit of the

antiterrorism sanctions against them by traveling and continuing to operate a hotel and

several pieces of real estate.17 Unfortunately, there is no formal mechanism to reprimand

countries that do not assist with the enforcement of sanctions or reward them for their

efforts.

Designation of a charity is an action that can lead to a loss of goodwill and

damage U.S. relationships with countries that legitimately receive aid, which is probably

why the State Department is heavily involved in the process. For example, among the

accounts blocked since 9/11 are 23 belonging to Islamic charities that collect and donate

money for medical, educational, housing and other needs to impoverished Muslims in the

Middle East and elsewhere. However, U.S. law enforcement agencies contend that all 23

are fronts for financing terrorist organizations and all assets remain frozen.18

Zakat is another fundraising mechanism that has received far less attention but

might be of more significance. A little known report prepared by French financing

expert, Jean-Charles Brisard for the UN Security Council entitled Terrorism Financing:

Roots and Trends of Saudi Terrorism Financing provides the most insight into this

complex cultural issue. Mr. Brisard believes that Zakat is the most important source of

34
terrorism funding, and that most of it is moved through the legal banking system. Zakat

is charitable giving that is part of every devout Muslim's obligations, and typically peaks

during the season of Ramadan. According to his estimate, Saudis contribute

approximately $10 billion per year in Zakat donations, which then usually take the form

of bank transfers to approximately 240 charities. The lack of bookkeeping for Zakat and

other charitable giving makes intervening difficult and countries are extremely sensitive

about monitoring religious giving. It was widely publicized when Saudi authorities

started removing collection boxes outside of their mosques and businesses, but the

amount of money collected in those boxes only represented only $60,000 a year.19 This

amount pales in comparison to the amount donated through Zakat, a system certainly

requires more scrutiny by our international partners in the fight against terrorist funding.

Narco-Terror

Immediately after the terrorist attacks on 9/11, President Bush stated that "it is so

important for Americans to know that the traffic in drugs finances the work of terror,

sustaining terrorists, that terrorists use drug profits to fund their cells to commit acts of

murder. If you quit drugs, you join the fight against terror in America."20 DEA used his

words, along with a unique television advertising campaign to alert U.S. citizens that

their illegal drug use may be directly connected to terrorism. Although the campaign is

over, this important message must be driven home: drug cultivation, trafficking and use

is a threat to our national security.

Narco-terrorism is a worldwide threat. It knows no ideological or traditional

territorial boundaries. Groups from the far right to the far left and every group in between

is susceptible to the lure of drug money. In fact, the vast majority of major terrorist

35
organizations rely, at least in part, on the drug trade as a source funding.21 A decline in

state-sponsorship of terrorism, one of the major diplomatic goals of the U.S. Government,

may in fact further drive terrorists into the drug trade. Whether terrorists actively

cultivate and traffic drugs or "tax" those who do, the financial windfall that the narcotics

industry guarantees has filled the void left by state sponsors.22 The terrorist and criminal

drug industry continues to thrive globally, despite most nation states stating that they are

fundamentally opposed to its existence on their soil.

Terrorists and drug traffickers have a symbiotic association. According to the

DEA, terror and drug groups are linked in this mutually beneficial relationship by money,

tactics, geography and politics. Drug traffickers and terrorists use similar methods to

achieve their criminal ends and most importantly, they share a common disregard for

human life. Many drug trafficking organizations engage in acts that most people would

consider terrorist in nature such as the public killing of innocents, large-scale bombings

intended to intimidate governments, kidnapping and torture.23 Although one might

believe that religious fundamentalists wouldnt involve themselves with criminals such as

drug traffickers, consider the quote by Muslim radical Abu-Hamza Al-Masri when

discussing the use of nuclear war to defend Muslims: "Islam permits it, as it permits a

man to eat pork if he is starving."24 Moral righteousness is thus situational and is applied

when it best serves the needs of the terrorists.

According to Mr. Cilluffo, drug traffickers and terrorist organizations both attack

the underpinnings of legitimate government institutions to achieve their objectives, or

enjoy the protection of governments that condone terror or drug trafficking. Drug

traffickers and terror groups are both drawn to regions where central government

36
authority is weak. If a terror group already controls a region and has excluded or

neutralized legitimate government institutions, drug production only requires a business

deal.25 In fact drug trafficking is particularly alluring to terrorists; organized crime

groups run the overall business operations, while the terrorists collect enormous taxes

along the distribution route. For example, the Taliban gets funding from taxing all

aspects of the drug trade. Opium harvests are taxed at around 12%, and next the heroin

manufacturing labs are taxed at $70 per kilogram of heroin. In the final stage, the

Taliban gives transporters a permit for $250 per kilo of heroin to carry for presentation to

Taliban checkpoints throughout the country. The Observatoire Geopolitique des Drouges

estimates that this adds up to $75 million per year in taxes for the Taliban.

26 The Taliban

was a major source of funding for al Qaeda in Afghanistan prior to U.S. operations.

However, al Qaeda continues to traffic drugs, with or without the support of the

Taliban. The extent of al Qaeda's ongoing drug operations was realized in December

2003, when the U.S. Navy seized three al Qaeda-linked boats. In the first operation, a

Navy destroyer stopped a 40-foot boat, arrested three men and confiscated two tons of

hashish worth $10 million in the Persian Gulf near the Strait of Hormuz. A day after the

announcement, Navy ships on interdiction duty in the Arabian Sea captured two sailboats

carrying 85 pounds of heroin valued at $3 million. Again, the crew was suspected of

links to al Qaeda. The Navy also found 150 pounds of methamphetamines worth $1.5

million. The defense official said all the drugs likely came from Afghanistan.27

Many believe that business model for al Qaedas drug trafficking quest is FARC;

as stated earlier, FARC is self-contained and has no need for financial allies or state

sponsorship. In fact, Afghanistan and Colombia command the market share of the opiate

37
and cocaine production in the world and as one expert stated, they are the blue chips of

the narcotics industry.

28 An area of deep concern for al Qaeda experts is the potential or

existing relationship between these two cartels: two days before 9/11, the DEA seized 53

kilograms of Afghan heroin in New York. It was being distributed by Colombians."29

Pharmaceutical sales in the U.S. may be the next drug-related frontier for

terrorists, who have possibly already used them to funnel money to Middle Eastern

terrorist groups, including Hezbollah. Four Detroit men with ties to Jordan, Yemen,

Lebanon and other Middle Eastern countries smuggled pseudoephedrine, from Canada to

locations in the Midwest -- primarily Detroit and Chicago. Pseudoephedrine, which is

used in cold and allergy medications, is an essential ingredient in methamphetamine, a

powerful and popular drug also known as ice or crystal meth. The chemical was sold to

Mexican-run methamphetamine operations in the western U.S., with some of the

proceeds of the resulting drug sales diverted to Middle East accounts linked to terrorist

groups. The drug ring was broken up January. 10 as part of a massive DEA investigation

called Operation Mountain Express.30 DEA agents told the author that although seizures

of this amount are fairly routine, the connection to an international terrorist group was

unexpected and extremely worrisome.

International drug trafficking rings are certainly multinational corporations and

exhibit all of the same characteristics. Importantly, they may possibly exhibit some of

the same weaknesses; these must be identified and exploited to unravel the enormous

narco-terror syndicate.

38
Commodities Smuggling

Unlike other methods employed by terrorists, commodities smuggling is not about

moving money, but value. For example, a multimillion-dollar interstate cigarette

smuggling ring contributed some of its proceeds to the terrorist organization Hezbollah.

Twelve people were people indicted in this scheme for purchasing low-tax cigarettes in

North Carolina (5 cent tax per pack) and reselling them in Michigan (75 cent tax per

pack), causing at least a $2 million tax loss for the state of Michigan between 1997 and

1999. The leader stated some of the proceeds were to Hezbollah for the orphans of

martyrs program to benefit the families of those killed in the groups operations or by

Hezbollahs enemies.31 This case is a perfect example of the market savvy exhibited by

terrorist groups: focus on the highest possible profit margin, and move a product with

high, consistent demand. Similar commodities are at risk and bear watching.

Identity Theft and Fraud

The sophisticated white-collar crimes of identity theft and credit card fraud are no

longer just a consumer issue. When federal investigators unraveled the 9/11 money trail,

it suddenly became an issue related to global terrorism. The hijackers used phony

identification, Social Security numbers and birth dates to establish bank accounts and

create their lives in the U.S. Landlords, flight schools, banks and other institutions fell

prey. Seven of the hijackers got identification cards through the Virginia Department of

Motor Vehicles even though none lived in the state. They took advantage of rules

allowing individuals to meet residency requirements with a simple notarized letter, a

system long been abused by immigrants, immigration lawyers and local notaries. Despite

39
previous warnings from the FBI and DMV investigators, the department maintained the

system.

32

Identity crimes and related credit card fraud also can be source of terrorist

fundraising. In its simplest form, the theft of a credit card enables the criminal to

purchase goods (often for resale) or withdraw money, at least until the theft is detected

and the owner cancels the card. Credit applications abound and it is simple for criminals

to open multiple accounts in the name of other individuals or an alias, and then simply

disappear before being caught. In more complex schemes, bogus credit cards are

manufactured, distributed and used by the terrorists. However, transactions made with a

stolen or manufactured credit card leave the unappealing paper trail and images captured

on video cameras. More attractive because of its transparency and ability to access

subjects credit for a longer period is a growing criminal act called skimming, a tactic

employed by a master counterfeiter and terrorist supporter, Youssef Hmimssa.

Hmimssa was arrested just days after 9/11 when he was caught furnishing fake

visas and other ID documents to a suspected terrorist cell in Detroit. His apartment

yielded documents including a day planner that the government says contained sketches

of an U.S. Air Base in Turkey and a videotape of potential future terrorist targets in Los

Angeles, New York and other locations. He confessed his crimes and has gone public to

explain how easy identity theft and fraud is to perpetrate and in 2003, he was called to

testify to Senate Finance Committee to enlighten lawmakers. His testimony is riveting

and troubling. In support of his efforts, Hmimssa recruited a fellow Moroccan, both a

taxi driver and waiter at a north suburban restaurant, to steal customers' credit card

numbers. He provided his co-defendant with a pocketsize device with a scanning slot,

40
which resembles a pager. With a single swipe, the skimming device copies encoded

information on the card's magnetic strip. The driver/waiter would swipe diners' credit

cards through the device, and then gave the skimmer to Hmimssa, who downloaded the

information using a laptop computer. In all, the pair skimmed about 250 credit card

account numbers and bilked customers of over $100,000.

Identity theft and related crimes have been detected in many terrorist cells in the

last five years. Ahmed Ressam, a member the Armed Islamic Group (with ties to bin

Laden) was caught in December 1999 at the U.S.-Canadian border with 100 pounds of

explosives stashed in the wheel bed of the trunk of his rental car. He had assumed the

name Benni Norris, which he used to obtain a passport and open bank accounts, obtain a

false birth certificate and a student ID. He told authorities that he relied on welfare and

petty crime, including credit card fraud and trafficking in identity documents, to support

himself. He was linked to a theft ring suspected stealing more than 5,000 items,

including computers, cellular phones, passports and credit cards, with the goal of

financing Muslim extremist groups.33 In his so-called millennium plot, Ressam

planned to set off an explosion at the Los Angeles International Airport. Others involved

with the operation told FBI agents they supported themselves through credit card fraud

and used proceeds from that scam and others to finance their mission. They used

countless stolen and fraudulent identities, including 13 stolen by a friend from the

membership computer of a Bally's fitness club in Boston. They also had plans to buy a

gas station and use that as an avenue to secretly obtain credit card numbers, placing a

camera in a location where it would be possible to watch people punching in their PIN

numbers.

41
Al Qaeda has used credit card scams and identity theft extensively. The 9/11

hijackers had a scheme in Spain to raise money for the attacks and according to

authorities, "The pattern was very clear within the North African contingent of al Qaeda

members operating in Europe. Every time you arrest one of them he has 20 different

identities and 20 different credit cards. Other suspected terrorist cells operating in the

U.S., Canada and Europe have employed a variety of scams to steal millions of dollars

from credit card companies. At a recent Senate hearing, the former deputy assistant

director of the Secret Service gave senators a glimpse of two groups of Middle Easterners

with ties to terrorist groups who allegedly were involved in massive credit card fraud in

the U.S., bilking financial institutions of $21 million. Dennis Lormel, chief of the FBI's

Financial Crimes Section, recently told the House Financial Services Committee that

"The ease with which these individuals can obtain false identification or assume the

identity of someone else, and then open bank accounts and obtain credit cards, make

these attractive ways to generate funds." 34

According to federal agents an emerging area of concern related to credit cards is

often referred to by law enforcement as a "bust-out" scam, involving the use of credit

card courtesy checks. Often, attached to the monthly credit card statement are several

checks that can be used by the consumer in any fashion, with charges going against the

credit card. The checks are widely accepted, so with just one extra piece of fabricated

identification, the criminal can use all three checks in short order, even exceeding the

consumers line of credit. A bust out scam was uncovered in 2001 when two groups of

Middle Easterners with extensive affiliations to known Islamic terrorist organizations

were arrested for various identity theft and fraud crimes.35

42
The links between terrorists and sophisticated white-collar crimes such as identity

theft and related fraud is irrefutable. Technological advances have only made this crime

easier to commit, and it remains a lucrative means of raising funds for terrorist groups.

Money Laundering

Money laundering is the practice of engaging in financial transactions in order to

conceal the identities, sources and destinations of the money in question.

36 Traditional

money laundering makes dirty money clean after the crime has been committed.

Criminal money laundering is as simple as putting a dirty one-dollar bill into a vending

machine, hitting change return and getting 4 clean quarters. Casinos are vulnerable to

money laundering; the patron exchanges the dirty money, exchanges it for chips, and then

cashes out. Laundering can be as complex as washing money through an international

corporation or a chain of businesses. The crime has been committed, and the resulting

money must be dealt with.

However, terrorist-related money laundering is a far different activity. The crime

(terrorist operation) has not yet occurred. The money is clean, such as donations from

unsuspecting charities or individuals or bulk cash, and it will be put to use to fuel the

terror operation in some manner. Therefore, the laundering operations are slightly

different in scope and activity, although no less complex and hard to detect. The

following table of comparison between traditional and terrorist money laundering is

based on discussions between the author and agents at the Treasury Department and the

FBI.

43
Table 1. Differences/Similarities Between Criminal and Terrorist Money

Laundering

Criminal Terrorist

Motivation Greed Ideology

How money is

obtained

Illicit Activity Licit activities

such as charities,

cash donations,

hawala

Purpose Money is already

dirty, crime has

occurred, attempting

to make clean

Money is clean,

then used for

terrorist ops

Cash Amount Large amounts, many

transactions

Small, less

frequent

transactions

Business Fronts and Shells Mostly fronts,

some shells

Scope Global; able to fund

ops from afar

Global; able to

fund ops from afar

Complexity Hard to tie to

operations

Hard to tie to

operations

A good example of small transactions used to fund terror came to light in the

governments indictment of Zacarias Moussaoui, the often-alleged 21

st hijacker. In this

document, the 9/11 money trail is explained in depth, along with details of numerous

money transfers between al Qaeda abroad (in the United Arab Emirates) and the hijackers

in the U.S. The amount transferred was usually small, a few thousand dollars at a time,

and deposited into a bank account. Oddly, the terrorists meticulously returned small

amounts of unused money to the UAE group in the days preceding the attacks. FBI

investigators told the author that these transactions, since most recent, were easily

detected and agents then backtracked, unraveling the entire 9/11 financing trail.

44
The use of fronts and shells is another way organized crime and terrorists both

launder money. Front operations are legitimate businesses whose books are used to wash

the money. Often, another operation is going on out the back door such as drug

trafficking or prostitution, and the dirt money is pushed back through the legitimate

business. It has been speculated that bin Laden made extensive use of the honey house

business in Yemen in this manner to store and move his clean money. An example of

how a US firm could possibly be used in this manner is the Boston software firm,

PTECH inc. In late 2002, employees alerted the FBI that a key investor was Yasin alQadi, who was on the Treasury Department's list of "Specially Designated Global

Terrorists." Mr. Al-Qadi is a Saudi businessmen suspected of diverting millions of

dollars to al Qaeda while at the helm of the charity Blessed Relief Foundation. The

case is ongoing, but it appears that his investment was a way to conceal money to be used

for terrorist operations. 37

A shell is a slightly more complicated business venture; it is a company that

doesnt exist. The simplest form of a shell would be a hotel room with a phone in it or an

empty office space with a fax machine. Criminals set up a toll free phone number, run an

ad in a newspaper or a magazine, and then collect money for a nonexistent service or

product; they close the business quickly, staying a step ahead of authorities. In the most

complicated form, it could also be an offshore venture or investment racket; in the

global environment, with communications technology, this is certainly an easy way to

raise funds without risk of detection. The Treasury Department has extensively

investigated reports of offshores that opened and closed just prior to 9/11 with

speculation in the travel and airline industries; such insider knowledge would mean the

45
offshores were run by al Qaeda network. However, they were unable to substantiate

these reports. The author spoke with the Compliance Officer for a major international

bank that stated that offshores are an area of emerging concern in terms of terrorist

moneymaking and laundering.

Worrisome is the scope of laundering in countries bordering the United States.

Following 9/11, Canada began to take a hard look at money laundering within its

countrys borders. The fledging financial transactions and reports analysis center of

Canada (FINTRAC) quickly uncovered $500 million in suspected dirty money stashed

away in mutual funds, Canadian banks, and other financial institutions. The Canadian

government now estimates that $17 billion worth of criminal proceeds are laundered

there each year and that organized crime costs their taxpayers over $100 billion

annually.38

The U.S. Government is working to identify and halt terrorist money laundering

efforts. The Treasury Departments 2003 money laundering strategy focused on

alternative ways terrorists may raise or move money stating, "as the banking system

comes under increasing scrutiny, terrorists may turn as well to other mechanisms to

transfer funds.

39 According to a Federal Reserve anti-money laundering examiner, due

to the Patriot Act there has been unprecedented cooperation between the domestic and

international financial community, law enforcement and regulators. In the U.S. this

cooperation has resulted in a rapid exchange of vital financial information between law

enforcement and banks. On an international scale, the efforts of many have caused severe

damage to laundering havens and resulted in significant forfeiture and freezing of

terrorist assets.40

46
Operation Green Quest was a multiagency task force of law enforcement agents

with financial expertise assembled to investigate how criminals (and terrorists) move

their money and where. With the move of Customs under Department of Homeland

Security, the team has been renamed Operation Cornerstone with the mission to identify

and assess the means and methods used by criminals to exploit financial systems in order

to transfer, launder and otherwise mask the true source of criminal proceeds. Their

combined investigations have led to at least 28 indictments and the seizure of about $27.4

million.41 This renewed focus on money laundering should yield more information

regarding similar ongoing terrorist laundering activities, and at the very least, serve as a

deterrent.

An area of emerging concern are pre-paid cards such as phone cards, gift cards,

credit cards that are pre-loaded and distributed with no paper trail to speak of. Use of

these cards by terrorist and criminal groups would certainly be a convenient, untraceable

way to launder money and move value.

Bulk Cash Smuggling

A less sophisticated way of moving cash is though smuggling. According to the

Treasury Department, bulk cash smuggling refers to moving currency, travelers checks,

or similar instruments across borders by means of a courier rather than through a formal

financial system.

42 Although risky in terms of mission failure if detected, bulk cash

smuggling is attractive to terrorists because it is easy to move large quantities of money,

there is no paper trail or third parties involved, and the group maintains total control over

movement. Also, in the Arab culture, it is not uncommon for individuals to carry a large

amount of currency on their person, so bulk cash may not draw attention.

47
As previously stated, tightened banking regulations will force terrorists elsewhere

to move cash. Juan Zarate, Treasury deputy assistant secretary for terrorist finance and

financial crime, recently stated that the U.S. has information that al Qaeda is relying more

on couriers because of the crackdown on the traditional banking sector.

43 On December

22, 2003 at least six Arabs believed to have links to al Qaeda and carrying what some

intelligence reports estimated was $23.5 million, were seized by Syria. It is believed to be

the first time in the global war on terrorism that couriers have been apprehended with

such a large amount of money, according to counterterrorism officials. While U.S.

authorities have also spotted couriers leaving Saudi Arabia and Kuwait, they have not

been able to stop them because U.S. officials have no jurisdiction.44

Finance ministers and central bank presidents from G-7/8 countries recently

discussed ways to deal with the emerging bulk cash smuggling problem. One possible

option under review is for countries to consider adopting some type of $10,000 reporting

requirement similar to the U.S. Of course, this did not stop potential terrorist Moussaoui-

-on February 23, 2001, upon landing in Chicago on a flight originating in London, he

simply declared his $35,000 in cash that he had on his person.45

Hawalas

Much has been written about the use of an informal banking system called hawala

by terrorists to move money. Attention was focused on the hawala method when it was

found that the al Barakaat informal banking system was used to move funds for al Qaeda.

Informal banking systems are ancient and known by many names reflecting cultural

origins. Hawala or hundi are terms commonly referred to when describing Indian,

Pakistani, and Middle Eastern systems. This system is quick (can send money

48
internationally in time it takes to place a phone call), easy and is based on trust. The

money is not physically moved across any borders; the sender gives the cash to an agent

in the States, who calls an agent at the forward location and has the sum delivered to the

recipient. Receipts are typically not given on either end of the transaction, no log is kept

regarding the identities of the sender and receiver; the amount of money transferred is the

only concern, thus a paper trail is non-existent. The agents work out the monetary issues

between themselves to balance their books--by transferring goods, paying off other debts,

etc. The system is unregulated, undocumented and provides the nontransparency that is

desirable to terrorists.

Recent actions have been taken to attempt to regulate this informal, nontraditional

transfer system. In the recent Abu Dhabi declaration on hawala, some Arab states

agreed to implement a reporting system. In the UAE, business applications are now

required and Hawaladars are given certificates. The U.S. Patriot Act has a provision

requesting that hawalas register, however there is no penalty for failing to register. Of

the hundreds located in New York City alone, only 15 hawalas have actually registered.

As we attempt to inject standards internationally, the cultural significance of this

ancient system cannot be overlooked. Islamic banking traditions appeal to Islamic

people--they are familiar and trustworthy. For instance, remitters know their money is

not being investing in pork, being used for gambling, or in other ways contrary to their

faith, concerns that keep them from using the U.S. banking system. Also, many of the

areas where relatives of expatriates live are inaccessible by other means, such as Western

Union. Western Union charges steep fees, whereas the hawalas are often run concurrent

with another business, and the transactions are often done at no cost to the customer. The

49
bottom line is hawalas are not going away; and as we attempt to regulate them, terrorists

most likely will find other ways to move their money.

Diamonds: Earning, Moving and Storing?

According to the GAO, the commodities that terrorists tend to exploit are of high

value, easy to conceal and hold their value over time.

46 The 2003 Money Laundering

Strategy further warns while maintaining our vigilance over traditional means of value

transfer, we must also focus on alternative means - trading in commodities such as gold,

gems and precious stones and metals."47

The precious stone and metal market is certainly an area susceptible for exploitation.

For example, golds shape can be altered into any form through smelting, an attribute that

would be desirable to smugglers. However, diamonds probably serve as the best example

of a traded, global commodity that could be exploited by terrorists to earn, move and

store their assets.

Douglas Farrah, a reporter for the Washington Post, broke a story that garnered

worldwide attention in December 2002 regarding purported links between al Qaeda and

the diamond market. This connection was widely reported in the press and caused

upheaval and concern among those in the diamond industry. Federal law enforcement

agencies have extensively investigated his claims, but will neither officially confirm nor

deny that his sources exist, that his information is reliable, or that there is an al Qaeda

connection to the diamond industry. However, it is an established fact that al Qaeda did

get involved in diamond mining and trading organizations in the early 1990s and

although these operations did not come to fruition, it speaks to their interest and prior

knowledge of the industry.48 There is also widespread, yet unsubstantiated reporting in

50
the press of a connection between Hezbollah in Lebanon and diamond smugglers in

Africa.

Diamonds are especially easy to smuggle because of their low weight. According to

the Congressional Research Service, a pound of diamonds in 2002 was worth $225,000

compared to a pound of cash ($45,000) and a pound of gold ($4,800).49 Diamonds are

untraceable, making them more attractive than serial numbered bills. They are odorless,

and thus can be smuggling past working dogs and equipment designed to identify

smuggled drugs and money. Diamonds have great value, and can easily be used in lieu

of cash in business transactions, and diamond mines are located in remote, often lawless

areas of Africa. The area of possible al Qaeda activity, according to Farrah, were the

diamond markets of Sierra Leone and Liberia which, although representing less than 2%

of the $7 billion global diamond market, have some of the best stones in the world.

Mr. Farrahs investigation into al Qaeda financing reported that they started pursuing

the diamond market after assets were frozen by the U.S. following the embassy bombings

in 1998. 50 If factual, this does support the theory that as we close traditional funding

sources, al Qaeda may move into nontraditional areas to earn, move and store assets.

Why wouldnt a terrorist group delve into the diamond world? Significant expertise

in gemology is an absolute necessity; diamonds exported from Africa are uncut and to the

untrained eye, simply appear to be dirty glass. Also, diamonds are not liquid and easily

launderable like money--they have to be purchased and sold. Even though paper trails

are mostly nonexistent in black market trade, multiple transactions create witnesses, an

undesirable to terrorist organizations. Finally, there are significant cultural issues to

overcome for the terrorists involved; the Antwerp diamond market is dominated by those

51
of the Jewish faith, thus business activities associated with unloading the diamonds for

cash might be very significant hurdle for a traditional Muslim terrorist group.

At the very least, diamonds are certainly traded on the black market and are used by

African warlords to fund some of their violent activity, giving advent to the term blood

diamonds. In 2002, forty-five nations (including the U.S.) met in Switzerland to discuss

illicit diamond sales and use of profit to pay for weapons in African wars. The State

Department appointed an official as special negotiator for issues regarding these conflict

diamonds and the group developed new regulations for governments of diamondproducing nations. Governments must not only license diamond miners, but also develop

tamper-proof ways to ship and move rough diamonds across borders. On the buying

end, cutting centers (such as those in Antwerp) must ascertain and certify the origin of the

rough diamonds. These cutters are the terrorists last wicket, since cut and polished

diamonds are practically untraceable.51

Emerging Area of Concern: Intellectual Property Crime

In July, 2003, an Interpol investigator testified at a Congressional hearing

regarding links between Intellectual Property Crime (IPC) and the financing of terrorism.

According to Interpol, Intellectual Property refers to the legal rights that correspond to

intellectual activity in the industrial, scientific, and artistic fields. These legal rights,

most commonly in the form of patents, trademarks, and copyright, protect the moral and

economic rights of the creators, in addition to the creativity and dissemination of their

work. Based on this understanding IPC refers to counterfeited and pirated goods,

manufactured and sold for profit without the consent of the patent or trademark holder.

IPC is a black market activity operating parallel to the formal economy and includes the

52
manufacturing, transporting, storing and sale of counterfeit or pirated goods. Examples

of pirated goods are CDs, DVDs, cigarettes, clothes, shoes, designer purses, and

computer software.

IPC is occurring throughout the world and generates unbelievable amount of

profits for perpetrators. Counterfeit good trade is estimated at $450 billion, representing

5 to 7% of the of global trade value. The FBI estimates losses to counterfeiting to U.S.

businesses alone at $200 to $250 billion annually. IPC is a lucrative criminal activity

with low initial investment and high financial returns, possibly even higher than drug

trafficking. A good example from Interpol is a Nintendo game that costs .20 to duplicate

is then re-sold for $40, recognizing unbelievable profit. IPC is also low risk activity; law

enforcement agencies do not have or chose to expend resources to pursue it and if caught,

the prison sentence for an offender is light. The link between organized crime groups and

counterfeit goods is well established but Interpols testimony sounds the alarm that IPC is

a global criminal activity on the rise and is becoming a lucrative method of funding for a

number of terrorist groups.

Kosovo: Large portions of consumer goods for sale in Kosovo are counterfeit. The sales

openly occur and there is limited enforcement of existing laws. In Kosovo, there is a

long-standing relationship between criminal organizations and ethnic-Albanian extremist

groups mentioned earlier; it is suspected that funds generated from IPC benefit both

criminal organizations and these extremist groups.

Chechen separatists: In 2000, a joint operation between Russian law-enforcement

agencies and private industry resulted in the break-up of a CD manufacturing plant that

was run by organized crime group, which was remitting funds to Chechen rebels.

53
North African radical fundamentalists terrorists in Europe: Radical groups receive

profits from IPC through charitable giving or Zakat via Mosques, Imams or non-profit

organizations sympathetic to radical fundamentalist causes. In this example, terrorists do

not engage in the actual IPC, just reap the profits, making this even a less risky venture.

Al Qaeda: In late 2000, a container of counterfeit perfume, creams, cologne and

shampoos was shipped by a member of al Qaeda from Dubai and intercepted by Danish

Customs in Copenhagen. Further investigation showed that al Qaeda sought to profit

from the sales of these counterfeit items.

Hezbollah: Hezbollah funding comes from as far away as South America. In February

2000, an individual was arrested in the tri-border region of South America selling pirated

music and game CDs and using profits to fund a Hezbollah-related organization in

Lebanon. In a true example of exploitation of the global market, the goods were

produced in Europe and sent to a free-trade zone in South America by Hezbollah

sympathizers, further identified as Lebanese criminals. Smuggling the goods to a third

country in South America avoided import duties and taxes, and sales were provided

through a network of Middle East militants and sympathizers.

52

Why might IPC become a more important source of illicit financing for terrorist

groups? According to Interpol, lacking sufficient resources or technical investigative

knowledge, law enforcement does not treat IPC as a high priority crime. If the crime is

acknowledged, the result is often seizure of goods or halting of production, with no

further investigation of the money trail. The money trail is complex, with cash-based

transactions, both of which make this desirable endeavor to terrorist groups. Trafficking

in counterfeit goods is a relatively easy criminal activity. A terrorist could make profit

54
solely from the sale of counterfeit or pirated goods, and does not need to be involved in

the actual production or fabrication. Thus, there are relatively low entry costs and the

illicit profit margins are high. It follows that the profit/risk ratio is attractive not only to

criminals, but also to loosely networked terrorist groups who do not have the capacity to

generate funds through sophisticated criminal activity. Finally, wide ranges of products

are vulnerable to IPC and demand is widespread due to public perception that purchasing

these goods is not criminal. Think of the numerous vendor stands found in big cities,

hawking knock-off designer purses, scarves and sunglasses that bear the same logos and

can only be identified as fakes by the trained eye.

This low risk/high return activity and others like it bear watching as we close down

other sources of terrorist funding.

Notes

1 CSIS, "Stand up of Transnational Threats Initiative," 2003.

2 Cilluffo.

3

Ibid.

4

"Richard Clark's Statement: The Financing of Terror Organizations," in Senate

Banking, Housing and Urban Affairs Committee, U.S. Senate (2003).

5 Alan Cowell, "Terrorism's Cost in a Global Economy," The New York Times,

November 9, 2003.

6 Ronald K. Noble, "The Links between Intellectual Property Crime and Terrorist

Financing," in U.S. House Committee on International Relations, U.S. Congress (2003).

7

Jean-Charles Brisard, Report to the UN: Terrorism Financing: Roots and Trends of

Saudi Terrorism Financing.

8 GAO.

55
Notes

9 Cowell.

10 Gregory Vistica, "Frozen Assets Going to Legal Bills; U.S. Has Linked

Confiscated Funds to Financing Terror," Washington Post, November 2, 2003.

11 "Treasury Revokes Tax-Exempt Status of 3 Muslim Charities," Associated Press,

November 14, 2003.

12 "U.S. V Enaam Arnaout," in U.S. District Court, Northern District of Illinois.

13 U.S. General Accounting Office, "Terrorist Financing: U.S. Agencies Should

Systematically Assess Terrorists' Use of Alternative Financing Mechanisms," November

2003.

14 "Global Relief Foundation, Inc. Vs Paul H. O'neill, Colin L. Powell, John

Ashcroft, R. Richard Newcomb, and Robert S. Mueller, III," (The U.S. District Court,

The Northern District Of Illinois, June 11, 2002).

15 "U.S. Saudi Arabia Target Four Branches of Al-Haramain in Fight against

Terrorist," in The White House Bulletin.

16 J. Michael Waller, "D.C. Islamist Agent Carried Libyan Cash," News World

Communications, Inc.

17 Ken Dilanian, "U.N. Report Finds 2 Terror Financiers Living, Doing Business

Freely," Knight-Ridder News Service, December 5, 2003.

18 Vistica.

19 CSIS, "Transnational Threats Initiative, September Update," 2003.

20 President George W. Bush, (2001).

21 Cilluffo.

22 Ibid.

23 DEA, "Link between Terror and Drugs," www.theantidrug.com.

24 http://www.ourjerusalem.com/arabpress/story/arabpress20020120.html.

25 Cilluffo.

26 Ibid.

27 Rowan Scarborough, "Drug Money Sustains Al Qaeda," Washington Times,

December 29, 2003.

28 Cilluffo.

29 David A. Denny, Terrorism, Drug Trafficking Inextricably Linked, U.S. Experts

Say (DEA, 2001).

30 " Drug Ring Linked to Terror," Detroit Free Press, September 2, 2002.

31 CSIS, "Transnational Threats Initiative, September Update."

32 Robert Jr O'Harrow, "Identity Crisis; Meet Michael Berry: Political Activist,

Cancer Survivor, Creditor's Dream. Meet Michael Berry: Scam Artist, Killer, the Real

Michael Berry's Worst Nightmare," Washington Post, August 10, 2003 2003.

33 Ibid.

34 "Fraud, ID Theft Finance Terror," Chicago Tribune, November 4, 2001.

35 Ibid.

36

www.wikipedia.org.

37 Jerry Seper, "U.S. Agents Raid Software Firm, Seeking Al Qaeda Money Link,"

Washington Times, December 7, 2002.

38 "Canadian Agency Finds Dirty Money," CSIS TNT September Update (2003).

56
Notes

39 Jeannine Aversa, "U.S. To Sharpen Focus on Terror Funding," Associated Press

Online, November 19, 2003.

40 "Federal Reserve Examiner Spreads Knowledge to Global Audience," Alert

Global Media, Inc. (2003).

41 Curt Anderson, "Terror Investigators Raid Mass. Company," Financial News,

December 6, 2002.

42 GAO, "Federal Agencies Face Continuing Challenges in Addressing Terrorist

Financing and Money Laundering," March 4, 2004.

43 Jeannine Aversa, "Nations to Discuss Ways to Cut Off Terrorists' Financing," The

Associated Press, February 4, 2004.

44 Douglas Farah, "Syria Seizes Six Arab Couriers, $23 Million," Washington Post,

December 20, 2003.

45 "Indictment: US Versus Zacarias Moussaoui."

46 U.S. General Accounting Office, "Federal Agencies Face Continuing Challenges

in Addressing Terrorist Financing and Money Laundering."

47 Departments of the Treasury and Justice, National Money Laundering Strategy

(2003).

48 Office, "Terrorist Financing: U.S. Agencies Should Systematically Assess

Terrorists' Use of Alternative Financing Mechanisms."

49 Ibid.

50 Douglas Farah, "Report Says Africans Harbored Al Qaeda; Terror Assets Hidden

in Gem-Buying Spree," Washington Post, December 29, 2002.

51 Alan Cowell, "45 Nations Set to Back Rules on Illicit Diamond Trading," New

York Times, November 3, 2002,.

52 Noble.

57
Chapter 4

Terrorist Groups: Corporate Trends

Surely, it is no coincidence that the threat to the stability and peace of the world has

coincided with the globalization of technology, transportation, commerce and

communication. The same benefits enjoyed by peace-loving people across the world are

available to terrorists as well."

Tom Ridge

Secretary, DHS

March 9, 2004

As the world changes, so will the ways terrorist groups organize, equip, plan, train and

execute their agendas. According to a November, 2003 GAO study, U.S. Intelligence agencies

have identified recent trends related to international terrorism.

1 By first stating these trends

from the report, then factoring in all of the elements previously discussed in this paper, it is

possible to speculate as to the corporate trend in international terrorist groups.

Decline in State-Sponsored Terrorism

Terrorists have become less dependent on sponsorship by sovereign states. Statesponsors in the past had provided terrorists with a safe haven and political, financial, and

logistical support. They provided intelligence, planning, and support for terrorist acts and may

have had prior knowledge of such attacks. However, the threats of sanctions and retaliation have

reduced the willingness of most states to sponsor terrorism. By the late 1990s, according to the

58
Director of Central Intelligence, a completely new phenomenon had emerged--terrorists

sponsoring a state.

The same factors that have given rise to transnational crime also fuel the terrorist agenda:

technology and globalization means that terrorists do not need support from a traditional nationstate, ideologically or logistically. In fighting the Global War on Terror, we engage at the nation

state level, asking them not to support terrorist activities on their soil; however, their course of

action when attempting to comply varies, as does their success. For example, rather than treat

the problem as a national crisis, previous state sponsor Columbia annexed FARC, giving them

their own territory and virtual autonomy. Therefore, any restraints previously imposed FARC by

Columbia have now disappeared, strengthening the group and allowing it to operate corporately

and expand transnationally. Afghanistan is not sponsoring terror, but seems unable to deal with

its ever-increasing poppy crop, which continues to fuel terrorist groups in and outside of its

borders. Therefore, as the US tries to thwart state-sponsored terror, traditional state-based

engagement alone may not deter or unravel terrorist operations and diplomatic efforts may be

fruitless unless applied in a non-traditional or asymmetric manner.

Engaging groups instead of nation states is a horrifying prospect to most diplomats, but it

may be an inevitable reality. One expert recently stated that al Qaeda is as much an ideology as

a structure.

2 As radical ideologies take hold and spread internationally, with parent groups

leveraging communications technology to reach nearly everyone on the globe who has the

Internet, a television, or even just a radio, the radical seed will be planted without nation state

support and possibly even without their knowledge. The nation state is completely irrelevant to

these groups; more important are the followers who adhere to the ideology. Communism was

59
neatly constrained by borders, and thus engagement with nation states was successful. Fighting

this battle, in the global realm, will not be so easy.

Move to Loosely Affiliated Groups: Franchising

As dependency on state-sponsored terrorism decreases, terrorist groups operating on

their own in loosely affiliated groups have increased. The resulting transnational and

decentralized structure facilitates terrorists' avoiding detection. In particular, Islamic terrorist

groups tend to be loosely organized, recruit their membership from many different countries, and

obtain support from an informal international network of like-minded extremists.

The decentralization and fracturing of al Qaeda as a result of operations in Afghanistan is

a good example of how an established, successful group can still be deadly despite state-based

operations to rid them. By definition, decimation means taking of the top 10%; in a typical

military campaign, it is believed that decimation leads to success. However, decimating al

Qaeda (which we have done, with the exception of bin Laden) has not prevented them operating

successfully. You cannot decimate an ideology.

The franchising of terror is an area requiring greater study. The splinter factions of al

Qaeda have leaders who were most like trained in al Qaeda camps and they have learned from

their master well. One senior U.S. official reportedly said al Qaeda's children were "growing up

and moving out into the world, loyal to their parents but no longer reliant on them."3

Communication between these groups as also increased, and U.S. and European intelligence

analysts said they also were seeing new similarities in the groups' communication techniques and

the use of explosives. Recent attacks for which al Qaeda groups took responsibility or have been

suspected of executing, the modus operandi continues to be synchronized, stealthy, deadly, low

60
budget attacks. These groups are all that remain of al Qaeda and bear the burden of continuing

the war against the infidels.

The regional aspect of these loosely affiliated groups is an important point when

discussing financial structure. Rather than facing a few defined, recognized targets and long

money trails, we now must face small, dispersed groups. Taking out one avenue of financing

will not have the same crippling effect it had before. One senior U.S. official stated that Now,

groups in Indonesia raise money there. Groups in Malaysia raise money there. There are many

more targets, and much harder to find." These groups are relying on petty crime, drug trafficking

and extortion to pay the bills. Complicating the problem are the softer targets in recent attacks

that require less sophistication and money to execute.4

The shift to human capital is an important point, according to officials. "Many of these

cells don't appear to be very well-funded, but what is more important than money is human

capital. And human capital doesn't seem to be in short supply." This human capital can certainly

be gained from a tie to organized crime.

5

Michael Pillsbury, a Pentagon terrorism consultant, argues that the evolution of the

terrorist groups is analogous to a process of corporate merger and acquisition, that regionally

focused terrorism groups with their own agendas join with al Qaeda to learn their operational

techniques or benefit from their contacts, but are not subordinate to al Qaeda. For example, he

said, Jemaah Islamiyah seeks to create a pan-Islamic state in Asia, an agenda that has little to do

with driving U.S. forces out of Saudi Arabia or other goals of bin Laden's. "They like to get

advice and equipment from al Qaeda but still have their own political agenda."

6

Perhaps

comparison can be drawn to Cubas relationship with the former USSR, the ideology has taken

61
hold so the fall of the business headquarters of al Qaeda will not lead to all of its franchises

closing shop.

Shifting Tactics

Tactics among international terrorists have shifted from aircraft hijackings and

hostage taking to indiscriminate terrorist attacks that yield maximum destruction, casualties, and

impact. Although the vast majority of terrorist attacks worldwide continue to be carried out with

conventional weapons, such as firearms and bombs, there is a concern among U.S. intelligence

community officials about terrorists using unconventional weapons, namely weapons of mass

destruction to include chemical, biological, radiological, or nuclear weapons.

As already stated, international terrorist groups are moving to loosely affiliated groups or

franchises. Shifting tactics may be a related phenomenon. Smaller cells may take less time to

plan, or have less patience than that exhibited in previous attacks; if they sense detection, it may

even lead to a dangerous desperation to go operational quickly.

A shift from long to short range planning may be worrisome; time is the major resource

needed by officials who track terrorists, as they unravel their complex funding and logistical

schemes and connect the dots. Alternatively, it could lead to carelessness and failure to cover

tracks, enabling quicker detection. Regardless, the trend is that tactics have shifted and it is the

difficult job of law enforcement and intelligence agencies to adjust their efforts accordingly.

Alliance with Transnational Crime

There has been a coalescence of terrorism with other transnational crimes, which provides

terrorists with various types of international crime to finance their operations. These include, for

example, illegal immigration, contraband smuggling, visa fraud, piracy, illegal trafficking in

human beings, diamond smuggling, and tobacco diversion and associated tax fraud.

62
Perhaps the State Department saved this trend for last because all of the previous trends

factored together point to this one conclusion: decline in state sponsorship, the franchising of

terrorist groups and shifting tactics will lead terrorists to increased partnering with organized

crime. Critics argue that the terrorists ideology prevents or prohibits them from such an

alliance, to which one could point out the numerous narco-terror connections that have been

major successes. Furthermore, although all criminals are not terrorists, all terrorists are

criminals; they already co-exist and operate in the same domain with similar methods. However,

the likelihood of their increased liaison is greatly debated within our government agencies.

Would Terrorists and Organized Crime Partner?

Although terrorist groups already have some ties with organized crime, will they

increasingly seek their assistance and form greater alliances? I posed this question in several offthe record interviews with federal agents involved in organized crime and/or tracking terrorist

financing. Their answers varied, and provide excellent context for the continued study of trends

and emerging funding sources for terrorists.

Why would terrorists and organized crime partner?

- Money talks. Criminals do not care what you are moving or the reason  if you can pay,

they will do the job for you.

- Terrorists have already shown that ideology will not prevent them from such an alliance.

Using the Mafia as an example helps illustrate this point; just a decade ago, Mafia leaders

publicly stated that they would never get into the drug business and they also said theyd

never do business with African Americans. Yet both of these activities are prevalent in

todays Italian Organized Crime syndicates. No method of earning, moving or storing

assets is off the table because of ideology.

63
- Manpower--they both need it, they both have it.

- Established networks have proven tough to crack, especially in the narcotics realm. This

makes continued alliance in drug trafficking likely and other alliances a possibility.

- Organized crime has established infrastructure; provides low overhead, which conserves

money for the terrorist attack itself

- The sheer seductiveness of the amount of resources and unlimited supply (particularly in

drugs and humans) is hard to resist. In fact, with ideology already distorted, terrorists

themselves may become users of these commodities. The Afghan president recently

expressed his concern over the emerging problem of a rise of heroin and opium use in the

country.7 An Afghani source with extensive experience in eradication efforts in country

told the author that cultivators, traffickers and profit-takers are now users and addicts--

alarming trend that will certainly negatively impact efforts to obliterate the poppy crop in

Afghanistan.

- Since we are effectively closing the door on methods like charities and hawala, terrorists

may soon have no alternative and must turn to organized crime.

Why Wont Terrorists and Organized Crime Partner?

- Too many people involved in transactions; terrorists prefer anonymity and the fewer

people involved, the less chance of mission failure

- Organized crime does not want to knowingly get in bed with terrorists for business

reasons. Brings unwanted attention. Why involve yourself with groups that the U.S.

Government is using extensive resources to pursue and possibly destroy your own

successful business.

64
- Some organized crime members are good Americans and were deeply affected by 9/11,

particularly in New York City. They do not want to be responsible or culpable for further

terrorist attacks.

- Organized crime doesnt need the terrorist business, they are doing quite well alone.

- Organized crime doesnt want to share their business.

- They are not natural allies; motivations differ. Organized crime is in the profit

taking/making business; after paying people and debts, profits are recycled into the

operation, criminal activity continues. For terrorists, especially local cells, the crime is a

means to an end. They are only in business until the attack is successfully executed, then

they are out.

As the debate continues, modern transnational criminals and terrorists are seeking new ways to

obtain resources to fuel their expensive operations. Their continued and expanded liaison

appears inevitable.

Notes

1 GAO, "Terrorist Financing: U.S. Agencies Should Systematically Assess Terrorists' Use of

Alternative Financing Mechanisms," November 2003.

2 Douglas Farah, "Terrorism Inc.; Al Qaeda Franchises Brand of Violence to Groups across

World," Washington Post, November 21, 2003.

3

Ibid.

4

Ibid.

5

Ibid.

6

Ibid.

7 Mark Berniker, "Afghanistan Stands on Brink of Becoming "Narco-State"," Eurasia

Insight, March 26, 2004.

65
Chapter 5

Conclusion: The Battle at the Crossroads

At 12:01 a.m. this morning, a major thrust of our war on terrorism began with the

stroke of a pen. Today, we have launched a strike on the financial foundation of

the global terror network. Money is the lifeblood of terrorist operations. Today,

we're asking the world to stop payment.

1

- President George Bush

Introducing Executive Order 13224

September 24, 2001

There are forces we cant change such as globalization, technological progress,

shifting demographics, geopolitical issues and religious ideology--we can only adapt and

learn to co-exist. Consequently, whether combating transnational crime or terrorism,

containment and deterrence strategies must be woven into the battle plan. Criminals and

terrorists operate in underworld that is opaque and often impenetrable; learning to live

with unresolved ambiguity in the face of such an enemy is requisite. These concepts may

be unpopular with policymakers and implementer, but reality deems them a necessity.

Much research has been done on transnational crime and terrorist financing, however

the criminal-terrorist nexus requires more analysis. Very few individuals have expertise

regarding the nexus and little subject matter is available to researchers. As such, it is

66
rarely acknowledged as an emerging issue that demands a fresh look and unique

solutions.

Regarding the nexus, Mr. Cilluffo accurately points out that only an integrated

strategy that synchronizes the various organizational efforts under a unifying concept can

address these problems. Such a strategy would integrate intelligence collection, linked to

the full range of consumers in support of a variety of operational actions -- not just

eradication, but also diplomatic efforts, law enforcement activities, covert action, and

military action.

2

The U.S. military, which operates in nearly every global region, can certainly be a

force multiplier in the fight against transnational organized crime and terrorist funding.

Military personnel do not receive adequate training on terrorism and terrorist groups.

Presently, training is targeted to those deploying, those attending professional military

education courses, and limited other audiences. I recommend that all military members

be provided basic information, such as the primer found at Appendix A, and annual

refresher training that provides updates as groups alter form and strategies. Forces on the

ground who already interact with the local populace can be taught to recognize

laundering, trafficking and smuggling tactics and must be educated on emerging

methods, as well as the aforementioned vacuum in institutions formed following a

government revolution and associated vulnerabilities. At the very least, commanders

must have greater knowledge of these activities in their Area of Operation, with robust

tie-in to federal agencies simultaneously conduction operations in the theater.

Integration between the organized crime and the terrorism fighters requires

information and resource sharing on a scale previously unseen. Government agencies

67
must put cultural differences aside, instead capitalizing on what each brings to the fight.

It appears that at the tactical level, post 9/11 integration has been effective, particularly

the FBIs Joint Terrorism Task Forces (JTTFs) which integrates federal agencies such as

DEA and ATF at the local level. However, at the strategic level, information sharing is

less frequent. In fact, several senior level, cross agency working groups formed after the

terrorist attacks are now defunct or only meet on an as-needed basis.

Federal agents must continue to have robust support for their law enforcement

activities. The Patriot Act granted expanded authority, delegated certain responsibilities

and streamlined bureaucratic procedures. Fighting modern organized crime and terrorism

in the global environment demands this type of investigative/operational support and

revoking or drastically altering the Patriot Act is a step in the wrong direction. Finally,

expanded training for agents in non-traditional proactive investigative procedures to

identify and prevent the crime or terrorist act before it occurs is also a necessity.

In a war where a bank teller may be the first line of defense in terror financing, this

battle requires new partnering between the private sector, the business world and the U.S.

Government. Fostering new interest and expertise in financial forensics is a must, and

if practitioners also have an understanding of organized crime and terrorist funding, they

will be a powerful weapon in the fight against the growing nexus. Scholarly study

regarding the lifecycle of modern terrorist groups may yields clues as to when and why,

despite their religious ideology, they partner with organized crime. Using mass media as

a vehicle to alerting the public of emerging ways terrorists may fund operations, such as

through Intellectual Property Crime, and associating their purchasing of related products

to the war on terror may proactively negate its viability as a financing source.

68
Finally, I argue that asymmetric engagement must be employed as a tool in the fight

against growing transnational crime and terrorism. The traditional nation state approach

will not be enough as groups assume the same characteristics as multinational

corporations--transcending borders, leveraging technology and changing tactics

effortlessly. Marginalizing their impact on the world and delegitimizing their activities

by negating the desired affects on the global audience are two ways to contain and deter.

Another option is to directly engage the silent majority of Muslims, asking for their

intervention and collaborating on solutions, instead of imposing our will and culture

similar to efforts to regulate hawalas. Addressing the concerns of the global Muslim

community, such as poverty, displacement, and ideological disillusionment may diminish

its value as a fertile recruiting ground for terror. Use of the soft instruments of power

such as a renewed appreciation of cultural differences and focus on similarities, a true

dialogue concerning religious ideologies and how to co-exist, and greater use of

respected institutions such as the UN may open the door to a new solution set that the

policymakers may presently overlook.

Although certainly no amount of effort can prevent a lone terrorist from strapping on

explosives and entering a busy marketplace, we must remember that in the case of al

Qaeda, the mission is not to simply disrupt our way of life or economy, it is to ultimately

destroy the Great Satan and its allies--an apocalyptic agenda that requires major

funding to execute. Therefore, as with all national security endeavors, the government

must be willing to execute a robust and aggressive strategy with the worse case scenario

omnipresent. Our nation deserves and expects no less.

69
Notes

1

President George W. Bush, "Executive Order on Terrorist Financing: Blocking

Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit,

or Support Terrorism," (2001).

2 Cilluffo.

70
Appendix A

International MNC Terrorist Groups: a Primer

Information derived from the Council on Foreign Relations Terrorism website:

http://www.cfrterrorism.org/groups.

Abu Sayyaf Group: Abu Sayyaf (the phrase means bearer of the sword in Arabic) is a

militant organization based in the southern Philippines seeking a separate Islamic state

for the country's Muslim minority. The White House says Abu Sayyaf is a terrorist

organization with ties to Osama bin Laden's al Qaeda network.

Abu Sayyaf operates mostly in the southern Philippines, where most of the country's

Muslims live and where the group has its base. But Abu Sayyaf has acted in other parts

of the Philippines, and in 2000, its members crossed the Sulu Sea to Malaysia for a

kidnapping.

Abu Sayyaf formed during a split from the Moro National Liberation Front, one of the

two major Muslim separatist movements in the southern Philippines, which were then

trying to come to terms with the central government in Manila. The group's first major

attack came in 1991, when an Abu Sayyaf grenade killed two American evangelists. Its

first leader was Abdurajak Janjalani, a Philippine Muslim who fought in the international

Islamist brigade in Afghanistan during the Soviet occupation. In 1998, Aburajak Janjalani

died in a confrontation with the Philippine police. His brother Khadafi Janjalani then

became the nominal leader of Abu Sayyaf, but the group has since split into several

factions.

Muhammad Jamal Khalifa, the Saudi who helped fund Abu Sayyaf, is also Osama bin

Ladens brother-in-law. In the late 1980s, Khalifa reportedly urged Abu Sayyaf founder

Janjalani to fight in Afghanistan and funneled money from Persian Gulf donors to Abu

Sayyaf through Islamic charities. Also, Abu Sayyaf claimed responsibility for a 1994

bomb that was planted under a passenger seat on a Philippine Airlines jet; this bombing,

which killed a Japanese businessman, was a test run for a 1995 plot to simultaneously

blow up 11 U.S. passenger jetliners over the Pacific Ocean. This scheme, which was

foiled before it could be carried out, has been traced to Ramzi Yousef, the mastermind of

the 1993 bombing of the World Trade Center, who reportedly had ties with Khalifa.

Abu Sayyafs crimes include bombings, assassinations, kidnappings, and extortion. In

May 2001, Abu Sayyaf kidnapped 20 people, including three Americans, at a Philippine

resort and demanded ransom payments. Abu Sayyaf beheaded one of the American

71
captives and held the other two Americansa Christian missionary couplehostage on

Basilan Island in the southern Philippines. In June 2002, U.S.-trained Philippine

commandos tried to rescue the couple and a Filipino nurse being held with them. Two of

the hostages were killed in the shootout, and one, the American missionary Gracia

Burnham, was freed. In August 2002, Abu Sayyaf kidnapped six Filipino Jehovahs

Witnesses and beheaded two of them. Abu Sayyaf targets Americans: We have been

trying hard to get an American because they may think we are afraid of them, a

spokesman for Abu Sayyaf said. We want to fight the American people. Abu Sayyaf

has also captured local businesspeople and Philippine schoolchildren, but Western

hostages make for larger ransom payments.

The governments of the U.S. and the Philippines suspect Abu Sayyaf is part of al Qaeda,

and the U.S. says Abu Sayyaf helps coordinate al Qaeda activity in Southeast Asia. But

longtime observers of the Philippines say that Abu Sayyaf's goals may not be identical

with those of bin Laden.

In the aftermath of the September 11 attacks, the U.S. sent about 650 troops to advise the

Philippine soldiers pursuing Abu Sayyaf and train them on new equipment and

intelligence techniques; that mission ended in July 2002. The Bush administration

proposed sending U.S. combat troops to the Philippines in March 2003 but downgraded

their assignment to training and intelligence work in the face of public widespread

opposition. Also, the State Department formally designated Abu Sayyaf a terrorist

organization in 1997, which allowed the U.S. Government to freeze any assets the group

had in the U.S.

Abu Haf al-Masri Brigades: An Abu Sayyaf Group offshoot named after Mohammed

Atef, a terrorist who was wanted for the 1998 Embassy bombings in Africa and killed by

the CIA on November 15th 2001 by a hellfire missile. The group claimed responsibility

for synagogue bombings in Islamabad November 15, 2003, killing 30. The same group

asserted responsibility for the car bombing at the U.N. headquarters in Baghdad August

19, 2003 in which 23 people died, and said it caused the August 14, 2003 power blackout

across the northeastern U.S. and Canada. They recently took credit for the March 11,

2004 bombings in Spain that killed more than 200 and injured over 2,000. They are

quick to take credit for bombings and have listed demands.

Al Qaeda: al Qaeda is an international terrorist network led by Osama bin Laden. It

seeks to rid Muslim countries of what it sees as the profane influence of the West and

replace their governments with fundamentalist Islamic regimes. After al Qaedas

September 11, 2001, attacks on America, the U.S. launched a war in Afghanistan to

destroy al Qaedas bases there and overthrow the Taliban, the countrys Muslim

fundamentalist rulers who harbored bin Laden and his followers. Al Qaeda is Arabic

for the base.

Al Qaeda grew out of the Services Office, a clearinghouse for the international Muslim

brigade opposed to the 1979 Soviet invasion of Afghanistan. In the 1980s, the Services

Officerun by bin Laden and the Palestinian religious scholar Abdullah Azzam

recruited, trained, and financed thousands of foreign mujahedeen, or holy warriors,

from more than 50 countries. Bin Laden wanted these fighters to continue the holy war

beyond Afghanistan. He formed al Qaeda around 1988.

72
According to a 1998 federal indictment, al Qaeda is administered by a council that

discussed and approved major undertakings, including terrorist operations. At the top is

bin Laden. Ayman al-Zawahiri, the head of Egyptian Islamic Jihad, is thought to be bin

Ladens top lieutenant and al Qaedas ideological adviser. At least one senior al Qaeda

commander, Muhammad Atef, died in the U.S. air strikes in Afghanistan, and another top

lieutenant, Abu Zubaydah, was captured in Pakistan in March 2002. In March 2003, the

alleged mastermind of the September 11 attacks, Khalid Shaikh Muhammad, and al

Qaedas treasurer, Mustafa Ahmed al-Hawsawi, were also captured in Pakistan.

From 1991 to 1996, al Qaeda worked out of Sudan. From 1996 until the collapse of the

Taliban in 2001, al Qaeda operated out of Afghanistan and maintained its training camps

there. U.S. intelligence officials now think al Qaedas senior leadership is trying to

regroup in lawless tribal regions just inside Pakistan, near the Afghan border, or inside

Pakistani cities. Al Qaeda has autonomous underground cells in some 100 countries,

including the U.S., officials say. Law enforcement has broken up al Qaeda cells in the

United Kingdom, the U.S., Italy, France, Spain, Germany, Albania, Uganda, and

elsewhere.

Al Qaeda is connected to the following terrorist groups: Egyptian Islamic Jihad, Jamaat

Islamiyya (Egypt), The Libyan Islamic Fighting Group, Islamic Army of Aden (Yemen),

Lashkar-e-Taiba and Jaish-e-Muhammad (Kashmir), Islamic Movement of Uzbekistan,

Salafist Group for Call and Combat and the Armed Islamic Group (Algeria), Abu Sayyaf

Group (Malaysia, Philippines).

These groups share al Qaedas Sunni Muslim fundamentalist views. Some terror experts

theorize that Al Qaeda, after the loss of it Afghanistan base, may be increasingly reliant

on sympathetic affiliates to carry out it agenda. Intelligence officials and terrorism

experts also say that al Qaeda has stepped up its cooperation on logistics and training

with Hezbollah, a radical, Iran-backed Lebanese militia drawn from the minority Shiite

strain of Islam.

Major attacks: The group has targeted American and other Western interests as well as

Jewish targets and Muslim governments it saw as corrupt or impious  above all, the

Saudi monarchy. Major al Qaeda linked attacks include:

The May 2003 car bomb attacks on three residential compounds in Riyadh, Saudi Arabia

The November 2002 car bomb attack and a failed attempt to shoot down an Israeli jetliner with

shoulder-fired missiles, both in Mombasa, Kenya

The October 2002 attack on a French tanker off the coast of Yemen Several spring 2002 bombings

in Pakistan

The April 2002 explosion of a fuel tanker outside a synagogue in Tunisia

The September 11, 2001, hijacking attacks on the World Trade Center and the Pentagon

The October 2000 U.S.S. Cole bombing and the August 1998 bombings of the U.S. embassies in

Nairobi, Kenya, and Dar es Salaam, Tanzania

Al Qaeda is suspected of carrying out or directing sympathetic groups to carry out the

March, 2004 train bombings in Spain; May 2003 suicide attacks on Western interests in

73
Casablanca, Morocco; the October 2002 nightclub bombing in Bali, Indonesia; and the

1993 World Trade Center bombing. Plots linked to al Qaeda that were disrupted or

prevented include: a 2001 attempt by Richard Reid to explode a shoe bomb on a

transatlantic flight; a 1999 plot to set off a bomb at Los Angeles International Airport; a

1995 plan to blow up 12 transpacific flights of U.S. commercial airliners; a 1995 plan to

kill President Bill Clinton on a visit to the Philippines; and a 1994 plot to kill Pope John

Paul II during a visit to Manila.

HAMAS: In Arabic, the word HAMAS means zeal. But its also an Arabic acronym

for Harakat al-Muqawama al-Islamiya, or Islamic Resistance Movement. HAMAS is

the Palestinians major Muslim fundamentalist movement. With an extensive social

service network and a terrorist wing that plots suicide bombings in Israel, it is the main

opposition to Yasir Arafats Palestinian Authority, a determined foe of Israeli-Palestinian

peace, and a major player in the current Middle East crisis.

HAMAS combines the ideas of Palestinian nationalism and religious fundamentalism. Its

founding charter pledges the group to carry out armed struggle, try to destroy Israel and

replace Arafats government with an Islamist state on the West Bank and Gaza, and raise

the banner of Allah over every inch of Palestine. HAMAS grew out of the Muslim

Brotherhood, a religious and political organization founded in Egypt and with branches

throughout the Arab world. When a Palestinian uprising against Israeli rule over the West

Bank and Gaza broke out in late 1987, HAMAS activists in the Gaza Strip quickly began

handing out leaflets and encouraging the newborn intifada.

The first HAMAS suicide bombing took place in April 1993, a few months before the

Oslo accordsthe main Israeli-Palestinian peace pactwere sealed with the famous

September 1993 handshake between Arafat and the then-Israeli prime minister, Yitzhak

Rabin, on the White House lawn. Since 1994, HAMAS and Islamic Jihad have

dispatched more than 80 suicide bombers. The terrorists have blown up buses in major

Israeli cities, as well as shopping malls, cafes, and other civilian targets. The bombings

have killed 377 Israeli civilians and wounded thousands, according to the Israeli

government. HAMAS bombers tend to target civilians within Israel proper, rather than

Israeli soldiers or settlers in the West Bank and Gaza. HAMAS has reportedly begun

using military-grade explosives in suicide bombings, making them more lethal.

HAMAS operates out of the Gaza Strip and the West Bank, two of the worlds most hotly

disputed pieces of land. Most of the population of these areas is governed by the

Palestinian Authority, an autonomous governmental body run by Arafat; most of the land,

however, is either partially or completely controlled by Israel, which took Gaza and the

West Bank during the Six Day War in 1967. Since 1993, when Israel and the PLO signed

a peace treaty, the major Palestinian cities in the West Bank and Gaza have been turned

over to the Arafat-run Palestinian Authority.

Its political leadership was headed by Sheik Ahmed Yassin, the groups founder; Yassin,

who was released from an Israeli jail in 1997 by the then prime minister, Benjamin

Netanyahu was killed in an Israeli air strike on March 22, 2004

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Much of HAMAS funding comes from Palestinian expatriates, as well as from private

donors in Saudi Arabia and other oil-rich Persian Gulf states. Iran also provides

significant support, which some diplomats say could amount to between $20-$30 million

per year. Moreover, some Muslim charities in the U.S., Canada, and Western Europe

funnel money into HAMAS-backed social service groups. In December 2001, the Bush

administration seized the assets of the Holy Land Foundation, the largest Muslim charity

in the U.S., for allegedly funding HAMAS.

Hezbollah: Hezbollah is a Lebanese group of Shiite militants that has evolved into a

major force in Lebanon's society and politics. It opposes the West, seeks to create a

Muslim fundamentalist state modeled on Iran, and is a bitter foe of Israel. The group's

name means party of God.

Hezbollah and its affiliates have planned or been linked to a lengthy series of terrorist

attacks against America, Israel, and other Western targets. These attacks include:

A series of kidnappings of Westerners, including several Americans, in the 1980s;

The suicide truck bombings that killed more than 200 U.S. Marines at their barracks in Beirut,

Lebanon, in 1983;

The 1985 hijacking of TWA flight 847, which featured the famous footage of the plane's pilot

leaning out of the cockpit with a gun to his head;

Two major 1990s attacks on Jewish targets in Argentinathe 1992 bombing of the Israeli

embassy (killing 29) and the 1994 bombing of a Jewish community center (killing 95).

Hezbollah is sponsored by Iran and Syria. The group receives substantial amounts of

financial, training, weapons, explosives, political, diplomatic, and organizational aid from

Iran and Syria, the State Department reports. Hezbollah was founded as a cats paw for

Iran, Middle East experts say. While Iran gave Hezbollah more funding and support in

the 1980s than in the 1990s, it still often gives Hezbollah its orders and its ideological

inspiration. And because Lebanon has been under Syrian control since 1990, Hezbollah

could not operate in Lebanon without Syria's approval, Middle East experts say. Experts

say Hezbollah is also an important player in Lebanon's politics, a key vehicle of Lebanese

Shiite empowerment, and a major provider of social services to thousands of Lebanese

Shiites.

Hezbollahs base is in Lebanons Shiite-dominated areas, including parts of Beirut,

southern Lebanon, and the Bekaa Valley. In addition, U.S. intelligence reports say that

Hezbollah cells operate in regions including Europe, Africa, South America, and North

America. Despite Israels 2000 withdrawal from Lebanon, Hezbollah continues to shell

Israeli forces at a disputed border area called Shebaa Farms.

Is Hezbollah a terrorist group of global reach? In his September 20, 2001, speech to

Congress, President Bush pledged that the U.S.-led war on terror will not end until every

terrorist group of global reach has been found, stopped and defeated. Hezbollahs cells

outside the Middle East, its reported involvement in the January 2002 attempt to smuggle

a boatload of arms to the Palestinian Authority, and its role in the 1992 and 1994 attacks

75
in Argentina imply that it might meet the presidents definition, terrorism experts say.

Moreover, in June 2002, Singapore accused Hezbollah of recruiting Singaporeans in a

failed 1990s plot to attack U.S. and Israeli ships in the Singapore Straits. In November

2001, the State Department placed Hezbollah on a formal list of foreign terrorist

organizations whose financial assets can be seized.

Does Hezbollah have any ties to al Qaeda? Yes, although the Shiite clerics who rule Iran

have a different radical religious outlook than those of the Sunni Muslims of both the al

Qaeda terrorist network and the Taliban, which targeted Shiites in Afghanistan. But

Mugniyah did reportedly meet at least once during the 1990s with bin Laden. Moreover,

Hezbollah and al Qaeda have reportedly been cooperating on logistics and training for

some operations, according to intelligence officials and some terrorism experts. How did

Hezbollah react to September 11? The group's spiritual leader, Sheikh Muhammad

Hussein Fadlallah, condemned the attacks as incompatible with Islamic law and

perversions of the true meaning of jihad. Fadlallah accuses bin Laden of heeding

personal psychological needs and calls the hijackers merely suicidesrather than

martyrsbecause they killed innocent civilians.

Hezbollah is active in politics and has 12 seats in Lebanon's 128-member parliament,

which is elected in a system that experts say tends to magnify the influence of Christian

and Sunni groups worried about Shiite influence over the country. The group entered the

Lebanese political arena after Lebanon's civil war ended in 1990 and the country fell

under Syrian influence.

Jemaah Islamiyah: J.I. is a militant Islamist group active in several Southeast Asian

countries thats seeking to establish a Muslim fundamentalist state in the region.

The name Jemaah Islamiyah dates to the late 1970s, but experts arent certain if the

name referred to a formal organization or an informal gathering of like-minded

Muslim radicalsor a government label for Islamist malcontents. The group has its

roots in Darul Islam, a violent radical movement that advocated the establishment of

Islamic law in Indonesia, the worlds most populous Muslim country and also home to

Christians, Hindus, and adherents of other faiths. Darul Islam sprang up as the country

emerged from Dutch colonial rule in the late 1940s, and it continued to resist the

postcolonial Indonesian republic, which it saw as too secular.

Abu Bakar Bashir, an Indonesian of Yemeni decent, is thought to be the groups spiritual

leaderand, some speculate, an operational leader as well. Bashir joined Darul Islam in

the 1970s and was imprisoned in Indonesia for Islamist activism. In 1985, after a court

ordered him back to prison, Bashir fled to Malaysia. There, he recruited volunteers to

fight in the anti-Soviet Muslim brigades in Afghanistan and sought funding from Saudi

Arabia while maintaining connections with former colleagues in Indonesia. Anti-terror

authorities struck a blow against J.I. when they arrested its operational chief, Nurjaman

Riduan Ismuddin (a.k.a Hambali) in Thailand in mid-August 2003.

J.I. operates across Southeast Asia, including Indonesia, Malaysia, Singapore, and

possibly the Philippines and Thailand. Weak central authority, lax or corrupt law

enforcement, and open maritime borders in some of these countries ease J.I.s ability to

76
operate throughout the region. The groupor individuals affiliated with itis thought to

be tied to several terrorist plots. Among them:

The August 2003 car bombing of the J.W. Marriott hotel in Jakarta that killed 12 people.

The October 2002 bombing of a nightclub on the predominantly Hindu island of Bali that killed 202

people, most of them foreign tourists from Australia and elsewhere. Amrozi bin Nurhasyim, a 41-yearold mechanic from east Java, was convicted on August 8 for buying the vehicle used in the main

explosion and buying and transporting most of the chemicals used for the explosives. He was the first

of 33 suspects arrested for the bombings to be convicted.

A December 2000 wave of church bombings in Indonesia that killed 18. Asian and U.S. officials say

Hambali had a hand in these attacks, and Indonesian officials arrested J.I. leader Bashir for questioning

in connection with this anti-Christian campaign.

A December 2000 series of bombings in Manila that killed 22. The State Department says Hambali

helped plan these attacks. Fathur Rahman al-Ghozi, a Bashir follower, reportedly confessed to a role in

the bombings. In April 2002, he was convicted in the Philippines on unrelated charges of possessing

explosives.

A 1995 plot to bomb 11 U.S. commercial airliners in Asia that, the State Department says, Hambali

helped plan.

After the Bali attack, the U.S.which suspects the group of having ties to Osama bin

Ladens al Qaeda networkdesignated J.I. a foreign terrorist organization. J.I. has also

been linked to aborted plans to attack U.S., British, and Australian embassies in

Singapore.

Does Jemaah Islamiyah have links to al Qaeda? Probably, but experts disagree on the

extent of them. Some U.S. officials and terrorism experts suspect that J.I. is a subdivision

of al Qaeda capable of opening a second front against U.S. interests in Southeast Asia.

Other experts argue that the two are not that closely linked and add that Jemaah

Islamiyahs regional goals do not fully match al Qaedas global aspirations. Bashir

denies the group has ties to al Qaeda, but he has expressed support for Osama bin Laden.

A Qaeda operative arrested in Indonesia reportedly told U.S. investigators that Bashir

was directly involved in al Qaeda plots. At the very least, a few individuals have been

linked to both groups. Hambali is the Jemaah Islamiyah leader thought to be most closely

linked to al Qaeda. He allegedly has been involved in several terrorist attacks and plots in

the region.

77
Glossary

ASEAN Association of South East Asian Nations

BOC Balkan Organized Crime

DEA Drug Enforcement Agency

DHS Department of Homeland Security

DOJ Department of Justice

FARC The Revolutionary Armed Forces of Colombia

FATF Financial Action Task Force

FBI Federal Bureau of Investigation

FinCEN Financial Crimes Enforcement Network

G-7/8 The G-7/8 countries are the U.S., Britain, Canada, Italy,

Germany, France and Japan; Russia is the 8th member

ICE Bureau of Immigration and Customs Enforcement, DHS

INL Bureau of International Narcotics and Law Enforcement

Affairs, State Department

INTERPOL International Criminal Police Organization

IOC Italian Organized Crime

IRS Internal Revenue Service

LCN La Cosa Nostra

OFAC Office of Foreign Assets Control

OGQ Operation Green Quest

TFOS Terrorist Financing Operations Section

USA PATRIOT Uniting and Strengthening America by Providing

Appropriate Tools Required to Intercept and Obstruct

Terrorism Act

78
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