U.S. GOVERNMENT PUBLISHING OFFICE

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SURVEY OF TERRORIST GROUPS 

AND THEIR MEANS OF FINANCING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TERRORISM 

AND ILLICIT FINANCE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 7, 2018 

Printed for the use of the Committee on Financial Services 

Serial No. 115–116 

( 

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HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

STEVE STIVERS, Ohio 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

THOMAS MACARTHUR, New Jersey 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

CHARLIE CRIST, Florida 

RUBEN KIHUEN, Nevada 

SHANNON MCGAHN, Staff Director 

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SUBCOMMITTEE ON TERRORISM AND ILLICIT FINANCE

STEVAN PEARCE, New Mexico, Chairman 

ROBERT PITTENGER, North Carolina, Vice 

Chairman 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

ED PERLMUTTER, Colorado, Ranking 

Member 

CAROLYN B. MALONEY, New York 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

RUBEN KIHUEN, Nevada 

STEPHEN F. LYNCH, Massachusetts 

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C O N T E N T S 

Page 

Hearing held on: 

September 7, 2018 ............................................................................................ 1 

Appendix: 

September 7, 2018 ............................................................................................ 33 

WITNESSES 

FRIDAY, SEPTEMBER 7, 2018 

Bauer, Katherine, Blumenstein-Katz Family Fellow, Washington Institute 

for Near East Policy ............................................................................................. 4 

Clarke, Colin P., Senior Political Scientist, RAND Corporation .......................... 10 

Fanusie, Yaya J., Director of Analysis, Center on Sanctions and Illicit 

Finance, Foundation for Defense of Democracies .............................................. 6 

Segal, Oren, Director, Center on Extremism, Anti-Defamation League ............. 7 

Soufan, Ali H., Chairman and Chief Executive Officer, The Soufan Center ...... 9 

APPENDIX 

Prepared statements: 

Bauer, Katherine .............................................................................................. 34 

Clarke, Colin P. ................................................................................................ 57 

Fanusie, Yaya J. ............................................................................................... 66 

Segal, Oren ........................................................................................................ 77 

Soufan, Ali H. ................................................................................................... 118 

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SURVEY OF TERRORIST GROUPS 

AND THEIR MEANS OF FINANCING 

Friday, September 7, 2018 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TERRORISM

AND ILLICIT FINANCE, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 9:22 a.m., in room 

2128, Rayburn House Office Building, Hon. Stevan Pearce [chairman of the subcommittee] presiding. 

Present: Representatives Pearce, Pittenger, Rothfus, Tipton, Hill, 

Emmer, Zeldin, Davidson, Budd, Kustoff, Perlmutter, Maloney, 

Himes, Foster, Sinema, Vargas, Gottheimer, Kihuen, Lynch, and 

Waters. 

Chairman PEARCE. The subcommittee will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the subcommittee at any time. Members of the committee who are 

not members of the Subcommittee on Terrorism and Illicit Finance 

may participate in today’s hearing. All members will have 5 legislative days within which to submit extraneous materials to the Chair 

for inclusion in the record. 

This hearing is entitled, ‘‘Survey of Terrorist Groups and Their 

Means of Financing.’’ I will now recognize myself for 2 minutes to 

give an opening statement. 

I want to thank everyone for joining us today. Today’s hearing 

will examine the current landscape of terrorism around the world 

and the ways that these groups are financing their operations. 

Terrorist organizations cannot function without financial resources to organize and carry out violent actions. Congress must 

understand the full nature of the current threats facing our Nation 

and the globe. We must remain vigilant in identifying and cutting 

off the funding mechanism of these organizations that pose a 

threat to global safety. This vital piece of our Nation’s antiterrorist 

strategy cannot be overlooked. 

On April 22, 2015, the Terrorism Financial Task Force of the 

114th Congress held a similar hearing to examine which terrorist 

groups posed the greatest threats to global stability. In the 3 years 

since that initial hearing, terrorist organizations have adapted and 

changed their ways of managing their operations. 

I would like to bring up the example of the Islamic state, better 

known as ISIS, to highlight how the global landscape has changed 

since that hearing. At their peak in 2014, ISIS was generating 

around $81 million a month through taxes, oil sales, smuggling, 

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and extortion. Additionally, during this time, the group controlled 

41,000 square miles of territory in Iraq and Syria and ruled over 

8 million people. 

Currently, ISIS has lost 98 percent of their territory in these two 

countries, and more than 7.7 million people have been liberated 

from ISIS’ oppression. While the loss of this territory has caused 

their revenues to plummet greatly, the group still is able to pay 

terrorist cells and spread violence globally. 

While ISIS may be one of the most glaring examples of a terrorist organization being forced to change their operations as a result of global intervention, there are many more throughout the 

world, from al-Qaida running fundraising operations and campaigns with cryptocurrencies to Hezbollah operating drug trafficking rings in South America. We must ensure that Congress understands the full nature of the threats that we are currently facing. 

This hearing will provide up-to-date information about which terrorist groups represent the highest threat and the new ways that 

they are financing their operations and infrastructure. I would like 

to thank our witnesses for being here today, and look forward to 

their expert testimony on these important issues. 

I now would recognize the gentleman from Colorado for 2 minutes for an opening statement. 

Mr. PERLMUTTER. Thank you, Mr. Chairman. 

I will keep my remarks brief because we are going to have votes 

on the floor pretty early this morning. 

Thank you, Mr. Chairman. And thank you to all the panelists for 

being here to share your insight on major terrorist groups and how 

they finance their operations. 

Terrorism takes many different forms, and bad actors finance 

their operations in many different ways. While there is no one silver bullet to shut down all of this financing, the United States and 

its allies must remain vigilant and adapt to a continually changing 

landscape. 

Additionally, we must ensure law enforcement at the local, State, 

National, and international levels have the tools and information 

sharing necessary to reduce and prevent terrorism. 

This subcommittee has learned a great deal about emerging technologies like cryptocurrencies, which present new challenges to law 

enforcement, but traditional financing methods such as drug trafficking, extortion, and kidnapping remain prevalent. We have to 

ensure we are devoting attention to both these age-old and emerging financing methods in our anti-terror efforts. 

I look forward to the panelists’ testimony today to update us on 

current terrorist groups and steps we can take to cut off their 

money. 

Thank you, Mr. Chairman, and I yield back. 

Chairman PEARCE. The gentleman yields back. 

The Chair now recognizes the gentleman from North Carolina for 

an opening statement for 1 minute. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

I want to just thank each of you for being here today. It is important for us to hear from you. And I would rather hear from you 

than listen to me, so I would like to waive my remarks. Thank you. 

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Chairman PEARCE. Thank you. 

Now we would like to recognize our guests, our witnesses today. 

First of all, Katherine Bauer. Ms. Bauer is the Blumenstein-Katz 

Family Fellow at the Washington Institute for the Near East Policy. She is a former Treasury official who served as the Department’s financial attache in Jerusalem and the Gulf. 

Before leaving Treasury in late 2015, she served several months 

as Senior Policy Adviser for Iran in the Office of Terrorist Financing and Financial Crimes. Prior to working at the Treasury, Ms. 

Bauer was a nonproliferation graduate fellow at the Department of 

Energy’s National Nuclear Security Administration. A graduate of 

Macalester College, she received her master’s degree in Middle 

East Studies and International Economics at Johns Hopkins University. 

Mr. Ali Soufan is the Chief Executive Officer of The Soufan Center. Mr. Soufan is a former FBI supervisory special agent who investigated and supervised highly sensitive and complex international terrorism cases, including the East African Embassy 

bombings, the attack on the USS Cole, and the events surrounding 

9/11. 

Mr. Soufan also serves as a member of the Homeland Security 

Advisory Council. He is an honors graduate from Mansfield University of Pennsylvania and also received a master of arts from 

Villanova University. 

Yaya Fanusie is the Director of Analysis for the Foundation for 

Defense of Democracies’ Center on Sanctions and Illicit Finance. 

Yaya spent 7 years as both an economics and counterterrorism analyst in the CIA where he regularly briefed the White House-level 

policymakers, U.S. military personnel, and Federal law enforcement. 

After government service, Yaya worked with a small consulting 

firm where he led a team of analysts working on multibillion dollar 

recovery efforts involving a global corruption ring. He received a 

master’s degree in international affairs from Columbia University 

and received his bachelor’s degree in economics from UC Berkeley. 

Mr. Oren Segal is the Director of the Anti-Defamation League, 

Center on Extremism, which combats extremism, terrorism, and all 

forms of hate in the real world and online. Much of Mr. Segal’s 

time with ADL has been devoted to evaluating the activity and the 

tactics of extremist groups and movements, training law enforcement officers, and publishing reports and articles on a wide range 

of extremist topics. 

In 2006, Mr. Segal was recognized by the FBI for his exceptional 

service in the public interest. He is a graduate of Wheaton College 

in Massachusetts. 

Now I would like to recognize Mr. Rothfus to introduce our last 

guest witness today. 

Mr. Rothfus. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

It is a real privilege today to welcome Dr. Colin Clarke, all the 

way from western Pennsylvania. And it is great to have you here 

today. We just met last week talking about some of these very 

issues. 

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Dr. Clarke is a Senior Political Scientist at the RAND Corporation where his research focuses on terrorism, insurgency, and 

criminal networks. At RAND, Dr. Clarke has directed studies on 

ISIS financing, the future of terrorism, and transnational crime, 

and lessons learned from all insurgencies between the end of World 

War II and 2009. He is also an Associate Fellow at the International Center for Counterterrorism, a nonresident senior fellow 

at the Foreign Policy Research Institute, and a member of the 

Pardee RAND Graduate School Faculty, and a lecturer at Carnegie 

Mellon University. 

He received his BA in communications from Loyola College, an 

MS in international relations from New York University, and a 

Ph.D. in international security policy from the University of Pittsburgh. 

Welcome, Dr. Clarke. 

I yield back. 

Chairman PEARCE. The gentleman yields back. 

Now it is time to hear from our witnesses and their testimony. 

Ms. Bauer, you are recognized for 5 minutes. Thank you again 

for being here. 

STATEMENT OF KATHERINE BAUER 

Ms. BAUER. Good morning. Thank you, Chairman. 

Chairman Pearce, Ranking Member Perlmutter, and distinguished members of the subcommittee, it is an honor to be testifying before you today. 

Although the threat of terrorism spans the globe, my written testimony focuses on Middle East-based groups, notably the so-called 

Islamic state, al-Qaida, and Iranian support for terrorism, tracing 

the evolution of their financing methodologies, and the U.S. and 

foreign government responses, as well as discussing the effectiveness of the CFT, or counterterrorist financing toolkit. 

In the next few minutes I will summarize some of the key trends, 

challenges, and opportunities, which I discuss in greater detail in 

my written testimony. 

The threat of extremism and terrorism across the Middle East is 

increasingly complex. Since 9/11, the U.S. and its allies have dramatically improved their capacity to detect, disrupt attacks through 

increased information sharing, and to undermine such groups 

through the deployment of sophisticated, diplomatic, military, and 

financial initiatives. 

Nonetheless, years of conflict in Syria, Iraq, Yemen, and elsewhere have provided fertile ground for terrorist groups and extremist ideologies. These conflicts have spurred humanitarian crises 

and stoked sectarianism. Although al-Qaida historically relied on 

external donations as it and, more recently, the Islamic state, established global networks of affiliates, their methods of financing 

have diversified. 

A number of dynamics underlie these changes, including counterterrorism efforts broadly and counterterrorist financing efforts specifically, but also the breakdown of political systems and the proliferation of ungoverned spaces that have allowed terrorist organizations to increasingly hold territory to tax and extort the local 

population and to even control, extract, and sell resources. 

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Terrorist organizations have also capitalized on trends of 

globalization that facilitate even greater movement of ideas, people, 

and funds. Disrupting foreign sources of financing alone, therefore, 

will not bankrupt such groups. As terrorist financing methodologies 

evolve, responses from the international community to counter such 

threats must also adapt. 

Despite the fact that many terrorist organizations appear better 

resourced than ever before, counterterrorist financing remains a 

valuable endeavor. To counter the threat of terrorist financing, the 

United States and its partners deploy an increasingly sophisticated 

toolkit marshaling actionable financial intelligence, regulatory and 

sanctions authorities, and engagement with public and private 

stakeholders. 

Such measures are deployed alongside other elements of power, 

such as diplomatic and military efforts. Consider the Islamic state, 

which in many ways represented unprecedented CFT challenge. 

Building on the extension of the U.N. 1267 mandate, the U.S.-led 

counter-ISIL coalition developed and implemented a dual-track approach that relied on isolating IS-controlled territory from the global financial system and depriving the group of access to revenue. 

While the former included supporting government of Iraq-led 

measures to cut salaries and take offline banks and exchange 

houses in IS-controlled territory, the latter involved military 

strikes on IS oil infrastructure and cash depots. 

Private sector financial data gleaned by finance ministries and 

shared with U.S. military and law enforcement agencies helped to 

identify such targets by providing insight into which refineries and 

oil pumps were generating cash for the group. Despite these successes, sustained attention is required. 

Today, IS remains well-resourced, able to pay salaries, and send 

funds abroad to its affiliates, as well as mount attacks. Regional 

regulators have taken important steps to try to ensure that the financial system is a hostile environment for such activity, but there 

is much more that needs to be done. 

Even so, counterterrorist financing alone will not defeat the 

threat of terrorism, and it is not meant to. In order to achieve durable counterterrorism successes, counterterrorist financing must 

proceed alongside efforts to counter extremist ideologies and promote good governance. 

Critics are right to highlight the high cost of anti-money laundering (AML) and CFT regulation on financial institutions, as well 

as in pointing to the need to better balance some of the competing 

but equally important priorities, such as the efficient delivery of 

timely humanitarian aid amid concerns that terrorists continue to 

abuse charity as a way to raise, launder, and move funds, as well 

as protecting access to banking and remittent services in conflict 

zones and high-risk areas. 

Both have been the subject of intense discussion on ways to ease 

the CFT burden on banks and charities, including in hearings before the subcommittee. More progress can and should be made on 

both of these fronts. It is in the interest of broader counterterrorism objectives to do so. 

Thank you for the opportunity to testify today, and I look forward to your questions. 

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[The prepared statement of Ms. Bauer can be found on page 34 

of the appendix.] 

Chairman PEARCE. Thank you. 

Mr. Fanusie, you are recognized for 5 minutes. 

STATEMENT OF YAYA J. FANUSIE 

Mr. FANUSIE. Good morning Chairman Pearce, Vice Chairman 

Pittenger, and Ranking Member Perlmutter. On behalf of the 

Foundation for Defense of Democracies and its Center on Sanctions 

and Illicit Finance, CSIF, thank you for the opportunity to testify 

today. 

Cryptocurrencies may become the way we transact in the future, 

but they are also becoming a part of the illicit financing toolkit 

available to terrorists. CSIF has documented multiple jihadist 

cryptocurrency fundraising campaigns on social media. 

Cryptocurrencies and blockchain technology are not innately illicit and should not necessarily be feared. Like most technological 

innovations, they can be utilized for good or ill, depending on the 

user. The good news is that most terrorists, particularly those operating on jihadist battlefields, inhabit environments that are not 

currently conducive to cryptocurrency use. Still, there are multiple 

examples of terrorist cryptocurrency funding campaigns in my written statement, but in the interest of time, I will highlight one. 

Late last year, CSIF began monitoring a jihadist funding campaign on Telegram, calling itself al-Sadaqah, Arabic for the charitable giving. The group claimed to be raising bitcoin funds for 

fighters in Syria. We monitored al-Sadaqah’s social media channels 

and analyzed their bitcoin address, which it would highlight regularly asking followers to donate anonymously with bitcoin. In its initial campaign, it sought $750 for camp reinforcements. 

Within weeks, we noticed the address, the bitcoin address received 

$685 worth of bitcoin. The group continued requesting funding for 

logistical supplies, but only received a handful of bitcoin transactions, none of them as large as the $685 early in the campaign. 

However, as the address lagged in receiving donations, they introduced techniques for supporters to give funds—or new techniques. At one point, the group encouraged followers to purchase 

bitcoin vouchers for a website that took payment in euros. The 

group posted sites where supporters could use bitcoin ATMs to buy 

cryptocurrencies. Clearly, the campaign organizers were trying to 

make the bitcoin process easier for novices. 

Their most significant adaptation, though, was eventually 

branching out beyond bitcoin. By early 2018, the group posted on 

Telegram that they were accepting cryptocurrencies like Monero, 

Verge, and Dash. These are tokens that are less traceable than 

bitcoin. 

The above case makes a few things clear: One, some terrorist organizations are looking to add cryptocurrency donations to their 

funding streams; but, two, their efforts thus far have not been very 

fruitful, probably because cryptocurrency’s technical complexities, 

extremist preference for cash, and the traceability of most public 

blockchain protocols deters wider use. 

Terrorist adoption of cryptocurrencies, in a way, simply mirrors 

that of the general public. This also means that if public 

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cryptocurrency adoption increases, terrorist groups will probably 

begin to transact more in digital tokens. So the U.S. must keep up 

with this technology and address new risk emerging from an evolving financial ecosystem. 

I have a few actions, recommended actions that policymakers 

and also the tech industry should take to mitigate risk. One, 

counterthreat financing units must learn blockchain analysis. All 

units and agencies that investigate terrorist funding need to become proficient in analyzing cryptocurrency transactions. 

Two, financial authorities should engage more cryptocurrency exchanges. Most people purchase their digital currency from exchanges. Many of these exchanges have ramped up their AML compliance the past few years, but many smaller exchanges trade in 

a greater variety of alternative tokens, especially these privacy 

coins. Many within the industry do want to keep terrorists and bad 

actors off their platforms, and authorities should work with those 

firms to protect citizens from terrorism without stifling technological innovation. 

Three, cryptocurrency enthusiasts themselves should flag illicit 

wallets. Enthusiasts who care about the integrity of the 

cryptocurrency industry should flag illicit activity associated with 

terrorists and other illicit actors. In a sense, there should be a repository, perhaps developed by entrepreneurs in the private sector, 

where everyday users can flag illicit addresses from various 

blockchain systems. Such a site could be built with protocols to review—or should be built to review and vet submissions for credibility before publishing. But such a resource would make it easier 

for investigators to find illicit activity and help everyday users stay 

clear of problematic wallets. This could also be applied to 

ransomware and other illicit cyber criminals. 

Cold hard cash, in conclusion, is still king. But jihadist groups 

are building diverse portfolios. Illicit actors adopt new technologies 

earlier than the wider public. When paper checks, credit cards, and 

PayPal each emerged, criminals exploited them early on. There are 

enough case studies of jihadist groups experimenting with 

cryptocurrencies to suggest that law enforcement and the intelligence community must prepare for terrorists to try to exploit digital tokens as the technology spreads. 

On behalf of the Foundation for Defense of Democracies and its 

Center on Sanctions and Illicit Finance, thank you for the opportunity to testify. I look forward to your questions. 

[The prepared statement of Mr. Fanusie can be found on page 66 

of the appendix.] 

Chairman PEARCE. Thank you, Mr. Fanusie. 

Mr. Segal, you are recognized for 5 minutes. 

STATEMENT OF OREN SEGAL 

Mr. SEGAL. Good morning, Chairman Pearce, Ranking Member 

Perlmutter, and members of the subcommittee. My name is Oren 

Segal, and I serve as the Director of the Anti-Defamation League 

Center on Extremism. Thank you for the opportunity to testify 

today. 

Since 1913, the mission of the ADL has been to stop the defamation of the Jewish people and to secure fair treatment and justice 

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for all. For decades, ADL has fought against anti-Semitism and all 

forms of bigotry by monitoring and exposing extremists who spread 

hate and commit acts of violence. 

America continues to face these threats of crime, of violence from 

a number of different extremist movements, including white supremacists, antigovernment extremists, individuals who are motivated by radical interpretations of Islam, left-wing extremists, and 

others. ADL’s research into these threats demonstrates that hatred 

and violence is not the sole domain of any one extremist movement, 

and we ignore any one of these movements at our peril. 

ADL tracks murders and terrorist plots by these groups every 

year, with data stretching back to the 1970’s. Over the past 10 

years, domestic extremists of all kinds have killed at least 387 people in the United States. Of those deaths, the vast majority, approximately 71 percent, were at the hands of right-wing extremists, 

such as white supremacists and antigovernment extremists. These 

statistics are available in our report, which I have attached to my 

testimony. 

Although extremist-related killings comprise a fraction of the 

total number of homicides in the United States each year, they 

often have an outsize impact, creating fear and anxiety in entire 

communities or even the entire country. 

Just last month, ADL launched an interactive heat map which 

provides data on various extremist activity in the country, including murders and plots, shootouts with police, public displays of 

white supremacist propaganda, and anti-Semitic incidents nationwide. It can be filtered by region and by type. And this may be a 

useful tool to see what incidents have occurred in your own districts. 

Unlike some foreign terrorist organizations that receive large 

amounts of financial resources from state sponsors, extremist 

movements in the United States are generally self-funded. In response to recent white supremacist activity, we conducted a study 

of the ways that white supremacists raise their money. 

I would like to provide just a few details on these findings because this movement is in the midst of a resurgence and also because the dynamics are reflected in the way other violent extremists operate within the country. Recent advancements in online 

funding and social media usage have provided white supremacists 

with more fundraising and recruitment opportunities. 

White supremacists quickly discovered for themselves the usefulness of these dedicated social media internet platforms like 

GoFundMe, Kickstarter, and others. Certain funding modalities 

like bitcoin and other cryptocurrencies are ripe for exploitation as 

extremists get more tech savvy. 

But as mainstream funding platforms become aware of the exploitation of their services, they have increasingly moved to shut 

these extremists out. And we welcome these efforts. In fact, ADL 

helps identify these cases for the industry to assure that they are 

adhering to their own terms of services. And while these companies 

need to police their own platforms, there is a role for civil society 

in government. 

My written testimony outlines several policy recommendations 

geared toward better understanding and preventing extremism 

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from across the ideological spectrum. These include government officials and civil society leaders, who must use their bully pulpit to 

send loud, clear, and consistent messages that hatred and violent 

extremism is unacceptable. 

The Administration should resource a full range of CVE programs to counter all forms of violent extremism. Congress should 

pass legislation directing executive agencies to track statistics and 

regularly report on domestic violent extremism, including the extremism discussed today. And policymakers should urge tech companies to continue to provide and improve their terms of service 

and rigorously enforce their own guidelines. 

Thank you very much for the opportunity to testify today. I 

would be pleased to answer any questions that any of the members 

may have. Thank you. 

[The prepared statement of Mr. Segal can be found on page 77 

of the appendix.] 

Chairman PEARCE. Thank you. 

Mr. Soufan, you are recognized for 5 minutes. 

STATEMENT OF ALI H. SOUFAN 

Mr. SOUFAN. Thank you, sir. 

Chairman Pearce, Ranking Member Perlmutter, distinguished 

members, thank you for hearing my statement today. 

During this session on terrorist financing, you will hear a great 

deal about the means by which terrorists fund their organizations, 

taxation and extortion, sales of stolen oil, looted artifacts, opium, 

organized crime, donations, and ransoms. These are all vital mechanisms to understand. And my fellow witnesses here represent 

some of the leading experts in the field. 

In my statement, however, I would like to take a step back and 

invite members to consider the wider geopolitical factors that together afford terrorists the opportunity to raise money. I am speaking of the many conflicts around the world in which such groups 

participate, especially those in Syria, North Africa, and Yemen. 

Terrorists use these wars to boost their resources in several 

ways. Let me briefly highlight two. 

First, they systematically embed themselves in the messy specifics of each conflict to the point where it becomes difficult to separate them from legitimate local combatants. They may use this 

cover to create front organizations through which to funnel funds. 

For example, one example was a Ahrar al-Sham, which means free 

people of the Levant. As its name suggests, Ahrar al-Sham wanted 

to be seen as a nationalist group rather than a jihadi one. In reality, it cooperated with al-Nusrah, and its leader was a man whom 

the Treasury Department called al-Qaida’s representative in Syria. 

Yet their rebranding stuck. The group reportedly received funds 

and material from sources in the Gulf states and Turkey, all American allies. 

The logic behind such support is as old as the conflict itself: My 

enemy’s enemy is my friend. But in this case, it represents an extremely dangerous line of thinking. 

Today, in the complex civil war in Yemen, Saudi Arabia and its 

allies finds themselves, in effect, on the same side of al-Qaida in 

the Arabian Peninsula. AQAP has strengthened its ties to Yemen’s 

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Sunni tribes and militias, to the point where it would be difficult, 

if not impossible, to support those groups without indirectly supporting al-Qaida. 

Last month, the Associated Press reported that the Saudi-led coalition had resorted to paying AQAP to retreat from strategic holdings, in the process allowing them to retain their weapons and stolen assets. This is worrying, especially given active U.S. support for 

the coalition. 

Second, terrorist groups benefit from heavy-handed foreign intervention. In the Middle East today, Saudi Arabia has set itself as 

a Sunni counterweight to Iran. But in doing so, both regional powers, Saudi Arabia and Iran, have prolonged already bloody conflict 

and lent them a vicious sectarian edge. 

Bloodshed plays into the jihadis’ overall game plan, which has always been exploiting these conflicts and weaponizing sectarianism. 

In the chaos of war, jihadi groups have seized territory from across 

the region, opening the door to all kinds of fundraising opportunities from taxation and extortion to outright robbery. 

Regional conflicts have also provided a recruitment bonanza. For 

example, almost 45,000 foreign fighters from around the globe had 

joined the so-called Islamic state in Iraq and Syria. Another example, as one AQAP commander has been quoted as saying with respect to the front lines in Yemen, ‘‘If we send 20 fighters, we come 

back with 100.’’ Indeed, AQAP has grown from around 1,000 members before the Yemen conflict to about 7,000 today. 

Seventeen years ago, almost to the day, the United States was 

attacked by a terrorist organization of around 400 members based 

primarily in Afghanistan. We responded swiftly and defeated that 

version of al-Qaida. Today, however, a new jihadi threat has 

emerged around the world. It consists of many different radical organizations deeply embedded in local conflict that has made them 

difficult to target. 

But there is a common factor linking these groups, including the 

so-called Islamic state, as well as every al-Qaida franchise. That 

factor is the ideology of salafi jihadism that manifests itself in the 

narrative of Osama bin Laden. We must dedicate ourself to destroying that narrative. Only when we do so we finally defeat 

them. 

Thank you once again, and I welcome your questions. 

[The prepared statement of Mr. Soufan can be found on page 118 

of the appendix.] 

Chairman PEARCE. Thank you, Mr. Soufan. 

Dr. Clarke, you are recognized for 5 minutes. 

STATEMENT OF COLIN P. CLARKE 

Mr. CLARKE. Thank you, Chairman Pearce, Ranking Member 

Perlmutter, and distinguished members of the subcommittee, for 

inviting me to testify today. 

As you will hear from my testimony, I believe ISIS is going to 

be around for a long time, enabled in part by its finances, which 

means that countering its ability to operate is critical to U.S. national security. 

My testimony will address three fundamental issues. First, what 

is terrorist financing and where does it fit within the broader hismcarroll on FSR431 with DISTILLER

11 

torical context; second, how do terrorists generate income, how 

have their methods changed over time, and what are the current 

trends; third, with ISIS as the most significant terrorist threat we 

are facing today, how might this group attempt to finance a renewed campaign of terror in the future. 

Terrorist financing is the raising, storing, and movement of funds 

acquired through licit or illicit methods for the purpose of committing terrorist acts or sustaining the logistical structure of a terrorist organization. Financing is used to augment militant groups’ 

ability to execute attacks and fund organizational components 

aimed to increase group cohesion. 

The way terrorist groups have earned funds has shifted drastically over time. During the cold war, superpowers funded proxy 

groups that engaged in insurgencies and committed acts of terrorism. In the aftermath of the dissolution of the Soviet Union, 

great-power geopolitical competition came to a temporary halt, as 

did the sponsorship of terrorist proxy groups. 

Several high-profile groups no longer benefited from the largesse 

of state sponsorship and turned to criminal activities to fund their 

organizations. There were changes in the frequency and strength 

of cooperation among terrorists and criminals who were forced into 

a marriage of convenience to survive. 

To insulate their organizations from shocks similar to those like 

losing an external sponsor, terrorist groups moved to insource the 

bulk of their financing, giving rise to terms like ‘‘do-it-yourself organized crime’’ and the ‘‘crime-terror nexus.’’ ISIS has embraced 

the notion of the crime-terror nexus going to great lengths to recruit members from the criminal underworld. We saw this with the 

individuals involved in the Paris November 2015 and Brussels 

March 2016 attacks. 

ISIS is different from previous terrorist groups because the territory it controlled provided extremely lucrative resources such as oil 

and a renewable funding source in the form of a taxable population. ISIS generated its wealth from three primary sources: Taxation and extortion, the looting of banks, and oil and gas. Like 

other terrorist groups, ISIS also relied on a range of criminal activities, including kidnapping for ransom and antiquity smuggling. 

External state sponsorship, at least to date, has not been a major 

source of ISIS financing. 

The struggle against ISIS has proven that serious challenges remain. As its territory is further reduced, ISIS will compensate for 

losses in certain revenue streams by increasing revenue generation 

elsewhere. Every facet of ISIS revenue should be nominated for 

targeting or sanctioning, with the most difficult areas to counter, 

namely taxation and extortion, a longer-term objective tied to 

postconflict reconstruction. 

This is especially important given the group’s history with extorting construction companies. Reconstruction aid to newly liberated 

cities will provide an attractive target for ISIS to make money 

without holding or controlling territory. 

At present, there are no law enforcement or security service entities capable of preventing ISIS from making large sums of money 

from reconstruction contract skimming. The policing assets that do 

exist are underfunded and their resources are already strained. 

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12 

As the caliphate disappears, much of the counter-ISIS mission in 

Iraq should transition from military force to law enforcement. This 

means investing more resources in training Iraqi and other law enforcement entities, an effort that must be more comprehensive than 

simply supplying equipment. 

In Syria, the situation is far more difficult, since Assad remains 

in power and there is no semblance of state security services capable of policing rebel-held pockets of the country. 

Traditional counterterrorism financing tools must be used to continue to keep ISIS isolated from external patrons and state sponsors of terrorism, even though, as I mentioned, to date, the group 

has largely avoided external state sponsorship. 

Many terrorist groups attempt to circumvent the form of financial system, but their transactions occasionally intersect with various touch points, including corresponded banks in the region. 

Therefore, bank regulators and financial intelligence units of partner nations must be intimately involved in monitoring and identifying suspicious transactions. 

In short, the coalition must continue to track financial flows into 

ISIS-held territory to monitor whether changes are occurring and 

closely monitor financial flows from countries where wealthy individuals have historically funded jihadist causes. 

Thank you for the opportunity to testify today. 

[The prepared statement of Mr. Clarke can be found on page 57 

of the appendix.] 

Chairman PEARCE. Thank you, Dr. Clarke. 

This is now time for us to move to questions from the committee 

members. I would recognize myself for 5 minutes. 

Mr. Soufan, you mentioned that the only thing to do is to change 

the narrative of Bin Ladenism. How would you recommend that we 

go about that? 

Mr. SOUFAN. Yes, sir. That is a good question. I think we need 

to recognize what kind of threat are we facing, and the threat 

today is a narrative by Osama bin Laden, and that narrative has 

different components. Component number one, it hijacked religious 

terminology in order to put out a political message. Number two, 

it created a conspiracy narrative in the Muslim world that the 

United States and the West are against Islam, and there is a crusade between the Christians and the Jews to defeat the Muslim 

world. And not a lot of people, in the beginning, believed in that 

but, unfortunately, that narrative is becoming more and more popular in the Middle East. 

I think the intelligence operations that we do are extremely important. The law enforcement is extremely important. The military 

is extremely important. But we need to have a diplomatic effort to 

have a message out to counter what al-Qaida is saying, to counter 

what ISIS is saying and from a political perspective. But also we 

need to force our so-called allies to have the religious establishment 

to stand up and counter the religious arguments that these guys 

are doing. Unfortunately, 17 years after 9/11, we still did not do 

that successfully. 

Chairman PEARCE. OK. Thank you. 

Dr. Clarke, according to some press today, one could be led to the 

idea that ISIS has effectively been removed from the territory. 

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13 

Your testimony moves in the opposite direction from that, and you 

are saying that still, oil is a significant source of revenue for ISIS. 

Is that more or less—am I hearing you correctly? 

Mr. CLARKE. So I think it is correct that ISIS has lost the majority of its territory. I think 98 percent of its territory from—at one 

point, they controlled territory the size of Great Britain. They are 

still active in the Euphrates River Valley, and within the last 

month, month and-a-half, have moved back in and around Deir ezZor in parts of northeastern Syria and are once again attempting 

to regain— 

Chairman PEARCE. Any estimates of how much, say, the oil revenues are? Are they still engaged in the archeological antiquities, 

the sale of those? 

Mr. CLARKE. To a lesser extent, but they are seeking to regain 

control of the oil because it is so lucrative in and around Deir ezZor. 

Chairman PEARCE. You mentioned in, I think it is page 6 of your 

testimony, that there are very little law enforcement efforts to 

counteract. If there are law enforcement efforts from any of the 

countries worldwide, who would be one of the examples of good 

interaction on the part of the police and the funding of the agencies? 

Mr. CLARKE. So I would look to the Italian Carbonari, because 

they actually have experience combatting organized crime, and 

from what I understand, they actually are somewhat active in Iraq. 

My statement that there is an absence of law enforcement refers 

more so to Syria, where there is just a giant vacuum and large 

swaths of rural eastern Syria outside the writ of control of Assad. 

But also, there are Kurdish groups operating, there is the SDF and 

others in it, so in many ways an ungoverned space. 

Chairman PEARCE. Ms. Bauer, are you seeing any activities in 

Central or South America from the terrorist organizations? As we 

raise the pressure in the Middle East, are you seeing that eruption 

other places? 

Ms. BAUER. Hezbollah networks in Central and South America 

have long been an interest and a focus. The Treasury Department, 

for example, identified a network in the tri-border area in the middle part of the last decade, the Barakat Clan, and it sanctioned 

them. But beyond the financing of course, operational networks 

and Hezbollah’s work with criminal networks and drug traffickers 

in that region are also of concern. 

One thing that I think is positive to note, there has been some 

recent action by countries in the region. For example, with regard 

to Barakat, the Argentinians have taken up the issue. They froze 

assets of the Barakat Clan over the summer, and have also committed to cooperation with the U.S. to go after Hezbollah funding 

in the tri-border area. 

Chairman PEARCE. Thank you. My time is expired. 

I would recognize the gentleman from Colorado for 5 minutes. 

Mr. PERLMUTTER. Thanks, Mr. Chairman. 

My first question is to you, Mr. Fanusie. While the Financial Action Task Force, FATF, has issued guidance, currently its formal 

recommendations do not cover cryptocurrencies. So with terrorist 

finance in mind, should the U.S. Department of Treasury be pushmcarroll on FSR431 with DISTILLER

14 

ing FATF or other international bodies for more targeted action on 

cryptocurrencies? 

Mr. FANUSIE. Yes. The short answer is yes. I do believe that 

FATF has signaled that it wants to update its recommendations to 

actually specify virtual currencies in a more precise way. Right 

now, there is definitely a loophole there. 

But, there should be clarity on the issue of how do virtual currencies differ from wire transfers. Right now, there is language 

within FATF’s recommendations that do talk about wire transfers, 

but you can’t really apply those to virtual currencies. So there 

should be that. 

I believe even the G20 has recently said that by October, they 

are planning to have a session where they are going to provide a 

better definition of virtual currencies and how that should relate 

to anti-money laundering. But they are going to base their decision 

or their language off of FATF. So I know that there is some movement there, but it just hasn’t been fleshed out. 

Mr. PERLMUTTER. Thank you. Because we have had other panels 

that have talked about the cryptocurrencies and, bitcoin and 

Litecoin are pretty easy, through their blockchain, to follow, but 

others get more and more obscure and opaque. So I would hope 

that we take all of that into consideration too. 

Mr. FANUSIE. Yes. And one thing I would say, there is actually 

benefit in looking at what the U.S. has done when FinCEN in 2013 

put out guidance, which was very clear about how cryptocurrency 

businesses should operate, basically under mostly the same laws 

that money transmitters and money service businesses operate. 

We have actually done some studying where we saw that guidance, it appears, accounted for there being less illicit finance in 

North American exchanges compared to Europe. So much of the 

world is catching up in terms of implementing regulation. So I 

think as the U.S. model becomes perhaps more of a standard, the 

Europeans, the EU is actually trying to follow up and update their 

regulations. So I think it is trickling down, but it has to happen 

sooner. 

Mr. PERLMUTTER. All right. Mr. Segal, and to the rest of the 

panel—and I am probably stealing Mrs. Maloney’s thunder here, 

but I would be curious whether it is domestic terrorists or international, jihadist, whatever, whether or not you are seeing them 

use shell companies, phony front men, women, whatever, to shield 

their financing and what you might suggest we do about that. 

Mr. SEGAL. Yes. Most of the domestic extremists, whether they 

are white supremacists, antigovernment, or even those who are inspired by ISIS and al-Qaida but who have lived here or raised here, 

they are able to mask in some ways some of their online donations. 

So if you have an online crowdfunding site, you don’t always necessarily have to even use your real name. Or in some cases what 

they do is pretend to raise money for some cause that doesn’t sound 

particularly volatile or extremist as a way to fool people into providing them money. 

Sovereign citizens in this country who pose a very significant violent risk are engaged in all sorts of scams from mortgage fraud to 

fake money, essentially monopoly money where they convince people that they are able to pay off their student loans, et cetera. 

mcarroll on FSR431 with DISTILLER

15 

Yes, in some ways they are hiding behind fake entities, but in 

many ways they don’t really have to, because a lot of their activity 

and their beliefs are not illegal in this country. 

Mr. PERLMUTTER. Anybody else? 

Ms. BAUER. Yes. I think that one of the interesting ways that 

terrorist groups use front companies is for procurement. So if you 

think as organizations get more globalized and have these global 

networks and are buying things more in bulk, they are acting like 

a lot of other illicit actors in terms of setting up false fronts to get 

dual-use goods. 

Some of these have been exposed. Hezbollah has used front companies in the Gulf to procure parts for UAVs that were being deployed in Syria. The Islamic state has procured IED components in 

bulk and other precursors and things like that. So I actually see 

this as a vulnerability, because from an intelligence standpoint, if 

you can identify them, once you can make that public through a 

sanctions action, then they are exposed, and they are no longer valuable, and they are hard to set up, and this takes effort and resources to do it. And so you force them to change their modus operandi and do something slightly different. 

Mr. PERLMUTTER. All right. My time is expired, so I thank you 

all for your testimony, and I yield back. 

Chairman PEARCE. The gentleman yields back. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. Pittenger, for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. I thank each of you 

again for being here. 

I think we all recognize that terrorists receive funds from various 

sources. We have state sponsors, extortions, antiquities, foundations, oil, trade-based money laundering, drugs, taxes, bank 

looting. I think we also recognize that they transfer money in many 

ways. There is hawalas. You have, of course, some measure of 

cryptocurrencies, cash. We are able to—they do wire transfers. 

What I am trying to understand is, at the end of the day, how 

much of those funds need to ultimately get into the international 

financial system? How much do they need to receive cash to help 

them fund their requirements? And to that end, how capable are 

we in tracking those funds? How capable are we with technology 

and software? How capable are certain countries? How capable are 

our various embassies? Do we have adequate attaches? 

Anybody. Who would like to start out? 

Ms. Bauer, we are just going to go down the line. We will start 

with you, if you want. 

Ms. BAUER. OK. Thank you. There are a lot of questions there. 

I think that the question of how much they use the international 

financial system, it is incredibly efficient. And if they are confident 

that they can use it in a way that they won’t be detected, I think 

that is often a choice that illicit actors make. 

Their needs are— 

Mr. PITTENGER. At the end of the day, do you believe that they 

ultimately need to cash out? Whether they have gone through antiquities or have diamonds or oil or whatever, at the end of the day, 

do they need cash? 

mcarroll on FSR431 with DISTILLER

16 

Ms. BAUER. At the end of the day, they usually need cash, but 

cash, it depends on geography, cross-border, cash smuggling is an 

issue. If you look at networks in the Gulf that were at the beginning of the Syrian conflict, aggregating funds and moving them 

likely not through the financial system. 

I wanted to address your question also about whether or not we 

are well enough resourced in terms of financial attaches, since that 

is a role that I have been in, and it is an important issue to me. 

Mr. PITTENGER. Quickly, if you can. 

Ms. BAUER. OK. I think that attaches play a critical role in being 

able to engage in a technical conversation with their counterparts 

at finance ministries and at central banks. And so I think it is very 

important in the countries where we do need to have a robust bilateral conversation that there is an attache there. 

Mr. PITTENGER. Mr. Fanusie. 

Mr. FANUSIE. I will just say quickly, or I will point out that I 

think one way to think about this is, I think it is understood that 

much money laundering, much illicit finance activity does pass 

through the financial system. A lot of it does. It is very difficult to 

catch this. 

The thing I will say, though, is, the volume is what is important. 

So the bigger the activity, the easier it is to find and to disrupt. 

The big issue is the onesies and twosies, the small transactions. 

To pivot back on the cryptocurrencies issue, I think that is where 

we are there, that if you have small transactions, it is going to be 

much more difficult to intercede. But, generally speaking, yes, a lot 

still does go through, but the bigger it is, the more— 

Mr. PITTENGER. How capable is our software and how adept are 

we in effectively using that? And how capable are our allied countries in embracing and utilizing the available technology? 

Mr. FANUSIE. Depends on—if we are thinking about the banking 

system, the traditional banking system— 

Mr. PITTENGER. Yes. 

Mr. FANUSIE. —it totally—it varies. The financial intelligence 

units in different countries have different capabilities. That is one 

of the things that the Egmont Group works on. It really depends. 

And that is the issue, that you do have a lot of anti-money laundering arbitrage that happens in jurisdictions where they don’t 

have the same level—maybe they have the software but perhaps 

not the same level of training that we have in the U.S. 

Mr. PITTENGER. Quickly, does FATF create through its peer-topeer accountability? Is that a good model? 

Mr. FANUSIE. I am not familiar—I am sorry. 

Mr. PITTENGER. FATF, Financial Action Task Force. 

Mr. FANUSIE. Correct. Correct. 

Mr. PITTENGER. It does peer-to-peer review of its 40 requirements to be fully engaged with it. Is that a good structure? 

Mr. FANUSIE. I am not sure I have that much insight on their 

review model, so I can’t speak in depth to that. 

Mr. PITTENGER. My time has expired. Thank you. 

Chairman PEARCE. The gentleman’s time is expired. 

The Chair now recognizes Mr. Lynch for 5 minutes. 

Mr. LYNCH. Thank you, Mr. Chairman. 

mcarroll on FSR431 with DISTILLER

17 

We had a chance to meet with some of the rebel groups that are 

fighting in Syria against Bashar al-Assad a couple of years ago, 

and we asked each of these five or six rebel leaders what they were 

using to communicate with inside Syria. They all said the 

WhatsApp. So they are all using that. They had end-to-end 

encryption back then. I think they may still have it to a certain extent. 

But more recently, we have seen that they have switched over 

to Telegram. Some of these terrorist groups are using that because 

of a couple of features. One is, they have self-destruct, automatic 

self-destruct on some of their messaging platforms, so that after a 

certain amount of time or after the message is read, it is automatically destroyed. 

And they also can change out the SIM card. The SIM card can 

be swapped out. It makes it increasingly difficult for FBI—thank 

you, Mr. Soufan—and others to actually track them down. 

So what is the status right now in terms of our ability to track 

some of this terrorist financing and terrorist activity in terms of social media? Are we still one step behind them? Are we getting full 

cooperation from Facebook and others and Twitter? 

I saw the interviews over the past couple of days of their CEOs, 

but they said we will have to get back to you when we asked them 

questions of this nature. But what do you see, Mr. Soufan, in terms 

of that? 

And by the way, thank you. Thank you all for your service to the 

country and to protecting our democracy. 

Mr. SOUFAN. Thank you, sir. I don’t know the capabilities of the 

intelligence community now. I am out of the government. But I 

trust my former colleagues in the intelligence community and in 

the FBI and the military. I think they have a really good handle 

on how to deal with their communication, especially when it is on 

WhatsApp or other encrypted platforms, 

However, there was a big problem between the intelligence community and the law enforcement community and Silicon Valley on 

the issue of encryption. And I don’t think that is solved. The same 

thing goes with the platforms. If you go and see how these groups, 

groups like al-Qaida or ISIS, or any of these extremist jihadi 

groups communicate, they use these platforms a lot. 

Most of the recruitment that we see here in the United States 

is not a face-to-face recruitment. We don’t have what, for example, 

they have in Europe. What we have are people getting recruited, 

being brainwashed because they are watching YouTube videos, because they are spending time on a WhatsApp group. So you don’t 

need training camps or safe houses in order to brainwash folks 

now— 

Mr. LYNCH. I need to reclaim my time because I have another 

question for you. 

You said at the outset that really what we have to do is change 

the narrative, change this bin Laden narrative that the Christians 

in the U.S. and the Jews in Israel are against Islam, that is the 

central narrative that he uses to recruit and to perpetuate terrorism. 

Do you think that—you look at some of our recent action, do you 

think that the Muslim ban that was announced by President 

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Trump, do you think that feeds the narrative that the U.S. is 

against Islam? 

Mr. SOUFAN. Sir, the narrative is based on a conspiracy. 

Mr. LYNCH. Come on, now. I need a yes or no answer. I only have 

44 seconds. Do you think it feeds—I am just asking your professional opinion. Do you think that feeds the narrative? 

Mr. SOUFAN. Absolutely it feeds the narrative. 

Mr. LYNCH. OK. I have another question for you. Do you think 

cutting off the funding to Palestinians, do you think that feeds the 

narrative? 

Mr. SOUFAN. That does not help, because somebody else will get 

the money. 

Mr. LYNCH. Right, it doesn’t. OK. Do you think moving the U.S. 

Embassy to Jerusalem, do you think that helps, or does it feed the 

narrative that the U.S. is against Islam? 

Mr. SOUFAN. It does not help, no. 

Mr. LYNCH. OK. That is all I have to ask. OK. Now, if you would 

like to extrapolate, expand on your answers, go right ahead. You 

have 13 seconds. 

Mr. SOUFAN. If we view this conflict as a clash of civilization, 

then the conspiracy of bin Laden wins. If you view it as it really 

is and enter civilizational clash where we see Shia fighting Sunnis, 

Kurds fighting Arabs, Persians fighting Turks, or whatever—and I 

think that is how we need to view it—then we will be dealing with 

the roots of the conflicts. And if we don’t deal with the roots of the 

conflict, that threat will continue to mutate as it has been mutated 

in the last 20 years. 

Mr. LYNCH. Thank you very much. I yield back. 

Chairman PEARCE. The gentleman’s time is expired. 

The Chair would now recognize the gentleman from Colorado, 

Mr. Tipton, for 5 minutes. 

Mr. TIPTON. Thank you, Mr. Chairman. And I thank the panel 

for taking the time to be able to be here. 

Mr. Clarke, you had mentioned earlier that we must be able to 

monitor cash-flows into ISIS-controlled areas. We have a pretty robust system here in the United States to be able to track some of 

those dollars with FATF that we have. Are we really seeing that 

coordination with our allies? Others have a real concern about terrorism. Are there any consequences if they don’t employ those 

methods to be able to do it? 

Mr. CLARKE. So the most difficult part, sir, about monitoring 

ISIS finances is that the group is largely self-contained. So a lot 

of money wasn’t flowing from outside, from external state sponsors 

like it had with al-Qaida a decade and-a-half earlier. Part of that 

is because terrorist groups are learning organizations, and they 

have seen how effective Treasury and other partners have been. 

The other piece to that is that ISIS, unlike previous terrorist 

groups, controlled such large swaths of territory that they didn’t 

need to go out looking for other methods of fundraising and financing. The other piece to that, back in Europe with the foreign fighter 

piece, is that these individuals were taking advantage of what I 

call small dollar terrorism. 

So they were through petty theft, robbery, minor drug trafficking, sales of counterfeit items, and defaulting on loans, getting 

mcarroll on FSR431 with DISTILLER

19 

enough money to go, quote/unquote, ‘‘take a holiday in Turkey,’’ 

which was enough to pay for their one-way ticket to actually show 

up and fight. 

I was questioned once, they said, someone asked me—it was a 

journalist—well, aren’t these people concerned they are defaulting 

on all these loans? And I joked, I said, well, when your plan is to 

martyr yourself, you are not really concerned about your credit 

score. And I think—I said it tongue in cheek, but it is largely true. 

Three-quarters of terrorist attacks cost less than $10,000. And so 

if you are aware of that and you are purposely trying to stay under 

the radar and you can raise funds through small dollar terrorism— 

Magnus Ranstorp called it micro financing the caliphate—and that 

poses a really significant threat to monitoring these transactions 

because they are in such small denominations. 

Mr. TIPTON. Thank you. 

Mr. Fanusie, you talked a little bit about some of the blockchain 

end of this. Given we have gotten some internal transfers that are 

going on, it is a little problematic for us to be able to track that 

with blockchain, if they are making transfers, small dollar amounts 

or otherwise. I think you had cited $685, is that correct, in terms 

of one of the largest ones? Is there a real challenge that we need 

to be looking at? Are there some methods we should look at in 

terms of blockchain, given the disparity that we would have in 

terms of how that money can now move? 

Mr. FANUSIE. The way to think about or to approach the 

blockchain transactions is, one, to think about there is a public 

ledger. So you can actually see transactions right as they move 

across the blockchain, and actually this is what we did. I think 

there is a different way to think, though, about these type of payments compared to what we are used to in the conventional banking system. 

So if I identify a terrorist group that has made a transaction, my 

problem, whether I am law enforcement or regulators, we do not 

have the ability to freeze an account or freeze a cryptocurrency address like we do with regular bank accounts. So it calls for even 

a new way of thinking. 

The only way that you could access those funds, if you are a 

third party, if you are an outsider, is if you have a private key 

with—I won’t get too technical, but you have to have something 

that person—even if you arrest the person, you may not be able to 

get at those funds. So we have to actually think differently about 

how do we approach illicit finance and getting to terrorists who are 

using it. 

It is a really different ball game. The analysis that we outlined 

that we need, we need tools where you do more of this. You can’t 

just rely on looking at a transaction manually. You need to use 

software that actually uses algorithms to help you track and trace 

and maybe de-anonymize a little bit on the blockchain. That is 

something that I know people are looking at, but I would say that 

we actually need more expertise in that type of analysis in the government. 

Mr. TIPTON. Great. And thank you for that. 

mcarroll on FSR431 with DISTILLER

20 

And regarding some of the international communities, is there 

any type of suspicious activity that is identified really that generally is going to point to terrorism financing? 

Mr. FANUSIE. So in terms of maybe, you mean, state sponsors 

being involved not so much with terrorism or terrorist financing. 

But I will say that we are concerned about this experimentation 

with some state actors, Venezuela, Iran most recently, and Russia 

in particular, to create alternative blockchain systems. 

There is a long-term issue there. In the short term, I am not worried about a terrorist maybe using the Venezuelan petro, which 

probably doesn’t really even exist. I am not worried about that, but 

I am worried about these states getting together and making an alternative system that could be resistant to sanctions in the long 

term. 

Chairman PEARCE. The gentleman’s time is expired. 

The Chair would now recognize the Ranking Member of the full 

committee, Ms. Waters, for 5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman, for scheduling today’s hearing to examine the current state of terrorism and 

financing of these terrible acts. While the types of terrorist attacks 

have changed since September 11, 2001, the need for terrorists to 

raise funds and pay for their activities has not. 

As we contemplate new or improved programs to counter the financing of terrorism, our efforts must not forget the continuing 

threat from domestic terrorists and extremists. These include the 

ISIS-inspired attack in San Bernardino, which killed and injured 

36 people, the deadly white supremacist mass shooting at the historic Emanuel AME Church in Charleston, and last year’s murder 

of Ms. Heather Heyer as white nationalists marched in Charlottesville. 

The Anti-Defamation League has determined that over the last 

10 years approximately 71 percent of the U.S. deaths from extremists were at the hands of right-wing extremists such as white supremacists, antigovernment extremists, and so-called sovereign citizens. 

The financing methods that these terrorists and extremists use 

can be harder to uncover. For example, they raise money for organization and operations with credit card overpayments, cash and 

even cryptocurrency payments sent by mail, petty crime, and simple fraud or tax evasion. 

What is concerning to me is whether the Administration understands the present and growing threat from these right-wing extremists and is taking appropriate action to thwart them. The 

President’s own comments strongly suggest otherwise. I hope this 

hearing will consider all of these terrorist groups and the individuals who seek to harm us. 

So I am very pleased that the witnesses are here today. 

And to Mr. Segal, I would like to raise a question. ADL has done 

exhaustive work in reviewing decades of terrorist acts by extremists of all kinds. As I have noted in my opening comments, your 

Center on Extremism found that, of all extremist- or terrorist-related murders in the U.S. over the last decade, including attacks 

in San Bernardino and Charleston, nearly three-quarters were 

committed by right-wing extremist groups. This is an astonishing 

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21 

number. What do these statistics tell us about domestic terror now 

and in the future? 

Mr. SEGAL. Thank you, Congresswoman. 

Yes, I think one of the realities in this country is, when people 

think of the threat of terrorism, in many ways they are still thinking of the threat from abroad and foreign terrorist organizations 

and their ability to influence, as Mr. Soufan said, with the narrative that they are creating. 

There are narratives in this country that are being created every 

day by individuals living in this country that are as equally evil or 

equally trying to stereotype particular communities in order to uplift the extremist ideologies that they represent. 

For example, white supremacists believe that, whether it is 

multiculturalism or liberalism or, frankly, the Jews, that they need 

to fight back in order to win their country back to what it once was 

or what they perceive it once was. 

While that is protected speech in this country, most domestic extremists are not actually affiliated with any group. And that is why 

you see many of the attacks that have been, for lack of a better 

term, successful, that have been deadly, have been carried out by 

people who share this ideology but may not actually be linked to 

any specific group. 

The Congresswoman mentioned Dylann Roof, for example. Again, 

very much influenced by these ideologies of violence and hate that 

are very much homegrown and created in this country, but he was 

not affiliated with a particular group that is easy to, say, designate 

and try to deal with. 

When you look, whether it is the past 10 years, 71 percent of terrorist attacks—excuse me, terrorist murders have been carried out 

by right-wing extremists, whether you look at 25 years and over 

150 right-wing terrorist plots and attacks in this country, it is 

something that we do believe is ignored but we don’t have the luxury to ignore any longer. 

Ms. WATERS. In the last few seconds that I have, of course there 

has been a lot of discussion about how they acquire money and resources, and I heard some talk about the cryptocurrency. 

And the gentleman who just responded to that question, I was 

just going through blockchain with someone last evening, trying to 

get up to speed on it. And unless you have a token or you have a 

key, you can’t get in there and determine what people are doing, 

whether they are investing or they are raising money or trading or 

what have you. 

So I am very interested in what methods are being used to raise 

money for these domestic terrorist acts. 

Mr. SEGAL. Yes, so domestic terrorists essentially are primarily 

self-funded. Some of them have jobs. Some of them are looking to 

raise money online through donations. Some, indeed, are using social media sites and cryptocurrencies to try to raise some money. 

Ms. WATERS. Are they using GoFundMe? 

Mr. SEGAL. They sure are. I will say GoFundMe, Kickstarter, and 

others have done a pretty good job, though, when they are made 

aware, of kicking them off and enforcing their terms of service. So 

that is one way to prevent that. 

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22 

But, again, the cost of actual—the fundraising that occurs within 

white supremacists, for example, does not necessarily correlate 

with the violence they commit. They don’t need all that much 

money, frankly, in order to create fear and anxiety in our communities. 

Ms. WATERS. Thank you very much. 

And I yield back. 

Chairman PEARCE. The gentlelady’s time has expired. 

Be advised that we have votes. We have 8 minutes left in a vote 

series. There is just one vote. It is my understanding that we have 

members of the committee who will ask questions after the vote series. If you do not have the ability to stay afterwards and to reconvene, then you can submit your questions in writing. We will accept those. 

And we will ask that you all respond to them. 

But, for the moment, we will recess and go to the floor, vote, and 

come back. We have just one vote, so cycle as fast as we can. 

The committee stands in recess. 

[Recess.] 

Chairman PEARCE. The committee will come to order. 

The Chair would now recognize Mr. Rothfus for 5 minutes for 

questions. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Thank you for your patience, panel. We do get interrupted from 

time to time with those votes. I am glad it was just a quick onevote series. 

I would like to maybe ask Ms. Bauer about this. It has been said 

by some in the intelligence community that they believe AQAP still 

poses a considerable risk to the U.S. homeland in terms of a terror 

attack. What are the local sources of income for AQAP? 

Ms. BAUER. So AQAP is engaged in a variety of different sorts 

of raising funds. Most recently, they had a financial windfall when 

they were able to take control of the Port of Mukalla and raised 

a reported, I believe, $2 million a day off of port fees. They also 

robbed a branch of the central bank of Yemen and may have recovered as much as $100 million. So they have been well-resourced at 

this point. 

In the past, they have relied on kidnapping for ransom and were 

able to more than double their budget during a short period—or 

their revenue, I should say—during a short period around 2013. So 

their financial status has just been on an upward trend for several 

years. And now they have been pushed out of Mukalla, but they 

are believed to have a substantial cushion. 

Mr. ROTHFUS. What U.S. policies, what resources, what programs 

do we have that are disrupting AQAP’s ability to gather resources 

right now? 

Ms. BAUER. So there have been a number of designations of financiers related to AQAP. I would say, notably, one was part of a 

tranche of sanctions actions that was done under the Terror Finance Targeting Center, which is an initiative between the U.S. 

and the GCC states to cooperate both on information-sharing as 

well as taking joint actions. And they have taken actions against 

a number of Yemen-based financiers and facilitators from both 

AQAP and the Islamic state. So I think those are notable because 

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23 

it shows that the Gulf states are taking some ownership of the 

issue themselves and are closer to the conflict. 

Also, the UAE, in particular, has been involved in the Saudi-led 

coalition in Yemen and, I would say, sees the counterterrorism mission as equally important, if not interrelated to the mission of 

pushing back Iranian influence there. And so I think that the regional efforts have been very important. 

Mr. ROTHFUS. We can switch to Hezbollah a little bit and particularly what has been going on in Latin America and the Politico 

article that came out last year. What is your understanding regarding how Hezbollah is raising funds currently to sustain its organization and pursue terrorism-related operations? 

Ms. BAUER. So Hezbollah receives a significant amount of funding from Iran. Recently, the U.S. Government has said that could 

be as much as $700 million to $800 million a year. 

But they have also always relied on a worldwide network for financing as well as for operational support. That network has come 

under considerable pressure. And if you look at Hezbollah’s financial status right now, going back to 2016, then-Acting Under Secretary of the Treasury Adam Szubin said that Hezbollah was in its 

worst financial shape in decades. And I think that there is every 

indication that continues. 

In fact, Secretary General Hassan Nasrallah just recently admitted, according to Lebanese press, that Hezbollah is experiencing a 

financial crisis. And I think that is because of this concerted effort 

to go after commercial fronts that were magnified by HIFPA, by 

the Hezbollah International Financing Prevention Act, which extended secondary sanctions to Hezbollah-related entities. 

And so it really has pushed them out of the financial system. It 

is trying to drive a wedge between Hezbollah and its allies that 

provide commercial and operational cover. And I think it has made 

it harder for them to get funds from their global network as well. 

Mr. ROTHFUS. I wonder if anybody can answer this question. I 

am running out of time. But, this country continues to watch the 

situation in Afghanistan. And we recently lost another one of our 

servicemembers. And we are spending considerable sums over 

there, and it continues to have significant instability in the operation of many terrorist organizations. 

We look at Pakistan and what they have been doing. We look at 

Russia. We look at Iran and these countries seeking to destabilize 

Afghanistan through whatever means. 

Are there things that we should be doing with respect to Iran, 

Russia, Pakistan that would help stem the flow of funds to these 

terrorist organizations in Afghanistan? 

That is an open-ended question, I guess, maybe if one wants to 

take a crack. And I might want to follow up with all of you and 

seek some guidance on this very serious— 

Mr. SOUFAN. Sir, I think the war in Afghanistan has been the 

longest war, and I think what we do is we are depending a lot on 

our military. I think we need to bring also the diplomats into this, 

because you need a political solution in Afghanistan that includes 

the Taliban, the Afghan Government, and a lot of the regional powers that have so much equity in the future of Afghanistan. And as 

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24 

long as we don’t have this kind of a political engagement, then I 

think this is going to continue. 

Chairman PEARCE. The gentleman’s time has expired. 

The Chair would now recognize the gentleman from Arkansas, 

Mr. Hill, for 5 minutes. 

Mr. HILL. Mr. Chairman, thank you for holding this hearing and 

having these quality witnesses to give us this overview of all the 

networks. 

It has been very helpful to our work to hear your testimony 

today. 

Following up on my friend from Pennsylvania’s question on 

Hezbollah, I am curious, in terms of the ways and means of financial resources there, are they coming principally overland into 

Syria and Lebanon, or is it still principally in and out of Lebanon? 

And give me some geographic focus on the flow of the money. No 

matter where the global organization is deriving that money, Africa 

or South America or wherever, how is it—tell me about the geography of how those funds are getting into the ground in either Lebanon or Syria. 

Ms. Bauer. 

Ms. BAUER. So I think it is hard to know exactly how the funds 

are moving. I think if you broaden the aperture a little bit and you 

look at how Iran resources its proxies in the Levant, a big part of 

that is through an airbridge that has been more active during the 

Syrian conflict but existed before, moving fighters and goods and 

arms to and from Iran, often fighters for training, and funds as 

well. 

But a lot of the funding, I would say, just to clarify a point that 

I made before about Hezbollah’s financial crisis, is in part because, 

despite the fact that they get so much money from Iran, their expenses have increased. And that is because of the conflict in Syria 

and that the funding is going not just to support Hezbollah’s military efforts but Iranian proxies more broadly. 

So I think I would just leave it at that. 

Mr. HILL. All of us are concerned with Iran’s engagement there 

and the expansion of their ground forces and air force and support 

of Hezbollah in terms of targeting Israel. I think all of us share our 

concern there. And trying to cut off the money flow there is equally 

important to our military objectives. 

Mr. Fanusie, I was very intrigued by your testimony. Thanks for 

being here today. 

Would you think that expanding—and I am asking this as a hypothetical question, so perhaps it is already expanded and that is 

something I am not aware of—expanding the idea of reporting a 

SAR (suspicious activity report) or on the crypto exchanges or wallet aspects or even miners, that they have some obligation to report 

a SAR over in the cryptocurrency arena? 

And then can you envision how one would have a parallel to a 

currency transaction report in that arena? So I am presuming in 

my question that this is an exchange that is not affiliated with a 

commercial bank or someone who is already subject to the AML/ 

BSA laws. 

Can you share some thoughts on that? 

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25 

Mr. FANUSIE. So most exchanges, if they are under U.S. jurisdiction, even if they are not affiliated with a bank, if they are a 

cryptocurrency exchange, they do have to file SARs. So they have 

to look at transactions, they have to do a lot of the same things 

that Western Union or MoneyGram would have to do. So that already does exist. And for U.S. exchanges, that has been in effect 

since 2013. 

But, again, when you go outside the U.S., then you do have the 

issue where you have exchanges, and anyone, whether they are in 

the U.S. or not, they technically could anonymously access one of 

these other exchanges where you don’t have those built-in requirements. So there is still a gap; there is a global gap. 

Mr. HILL. And this idea of an exchange, of course, is just almost 

in the eye of the beholder. We refer to it as an exchange. It could 

be just a digital site that is setting itself out as an exchange of this 

cryptocurrency, perhaps of their own creation. 

Mr. FANUSIE. Yes. 

Mr. HILL. And so those are in—are they found in jurisdictions 

that we either have an MLAT with or who have a fairly robust securities regulatory apparatus? 

Mr. FANUSIE. So they are—it runs the gamut. They are all over. 

But even to follow up on your point about how informal this can 

be, even though I said there has been guidance and folks in the 

U.S. have to follow FinCEN guidance on this, but there have been 

examples of folks who have been very informal, because they held 

a lot of bitcoin, have served as basically money transmitters, without registering. That has happened. In fact, there was a recent 

prosecution of someone who laundered millions of dollars just doing 

it on his own. 

The biggest thing to maybe look out for is there are different 

types of exchanges now that are being developed, smaller ones 

where the trading happens more by software and there is less need 

for customer identification. That is something that is experimental, 

but it is one of the things that I would flag as something to watch, 

because that is going to be even more difficult to get the entity to 

follow AML requirements. 

Mr. HILL. Thank you for your contribution. 

And thank you, Chairman. 

Chairman PEARCE. The gentleman’s time has expired. 

The Chair would now recognize Mr. Davidson for 5 minutes. 

Mr. DAVIDSON. Thank you, Chairman. 

And thank you all for your written testimony and for the dialog 

that we have had. It is very helpful and greatly appreciated. 

Mr. Fanusie, I really appreciate the crypto side. I am working on 

a bill with initial coin offerings. Of course, lots of these aren’t currencies. Most of them really aren’t—even bitcoin is more of a commodity than a true currency so far. But there are a lot of voids, 

as you have highlighted. 

I guess, once you have identified an address, how easy is it, what 

tools are necessary, what legal framework is necessary to detect 

and prosecute the—you highlight a case where you have flagged 

this address. Once that is converted—the off-ramp basically—to 

hard currency, whatever it is, how can we detect that? 

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26 

Mr. FANUSIE. So this is where the framework is really very similar to what we already have in place, because—you are right in 

asking that. Once they off-ramp, they have to go through—anyone 

that is acting illicitly still, if they want cash, if they want euros, 

if they want dollars, they have to go through somewhere, and those 

endpoints are the chokepoint, because there— 

Mr. DAVIDSON. And that is the best place to catch them, to identify the person behind this otherwise fairly anonymous IP address. 

Mr. FANUSIE. Right. Because usually they would have to register 

somewhere in order to do that. Because they are going into the regular banking system. So those are the chokepoints. 

Mr. DAVIDSON. Right. So I was impressed with the ability to detect the address. Now, if we can continue to monitor that address 

for the off-ramp, I am hopeful that we can have some successful 

prosecutions. 

Mr. Segal, I appreciate the work that you have done, and the 

written testimony, to highlight threats domestically. You did allude 

to this political spectrum but spent a lot of the topic on right-wing 

groups and whatnot. But I am particularly curious, I didn’t see a 

single mention of the group Antifa. How do they get their money? 

Mr. SEGAL. Right. So Antifa, just like any other movement in 

this country, is self-funded. To show up at a white supremacist 

rally to protest, or even if they want to engage in physical confrontation, maybe you get a bus ticket, maybe you get a ride from 

a friend, you need to spend some money on food. It is not—they are 

getting money the way I think most people would get money who 

want to join a protest. 

Mr. DAVIDSON. Just bring your bike lock and you are ready. 

Mr. SEGAL. Right. 

Mr. DAVIDSON. OK. Thank you. 

Ms. Bauer, I appreciate the—really, the Politico story gets lots of 

press, but, frankly, the head of our committee in February 2017, 

you had highlighted that this Operation Cassandra had been 

stalled due to concerns about the impact on the Iran negotiations. 

So thank you for your expertise in that matter and, frankly, some 

ongoing dialog with my colleagues. 

I am curious about the progress with Cassandra and the prosecutions related to this and particularly with Hezbollah’s ongoing activity with drug trafficking or other types of trafficking. 

Ms. BAUER. So I can say, first of all, I think that the situation 

was much more nuanced than the media portrayed it to be. And 

I think that the thrust of the point I was making in the testimony 

that was cited there was, first of all, to note all of the actions and 

the sustained attention to the issue under the Obama Administration. Because, really, as I said just earlier, Hezbollah has been put 

in a difficult financial position, and that is because of concerted effort on that front. 

And I would encourage you, if you want to look at a chronological 

approach to the different issues related to this, that my colleague 

Matt Levitt wrote a detailed piece in Lawfare that came out a few 

months ago that goes over really every step of the way. But I think 

there are often plenty of reasons why things aren’t done, and he 

goes through a lot of those different reasons. 

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27 

Today, Hezbollah does likely continue to engage in criminal activity, or at least individuals affiliated with them. That has always 

been part of the question, how close the affiliation is. And that is 

something that has drawn a lot of attention, as you mentioned, 

from the law enforcement community, from other parts of the U.S. 

Government, as well as from Congress. 

Mr. DAVIDSON. OK. 

As my time expires, I guess, ideally, for all, but if someone can 

mention, the link between drug trafficking and illicit finance. 

Frankly, with 72,000 dead Americans due to overdoses, it is hard 

for me to not see drug traffickers as real threats to our national 

security. Any comment on the funds there? 

Chairman PEARCE. The gentleman’s time has expired. 

The Chair would now recognize the gentleman, Mr. Himes, for 5 

minutes. 

Mr. HIMES. Thank you, Mr. Chairman. 

And thank you all for being here. 

I had a bunch of questions about terrorist finance, but I got to 

thinking about a broader question that I would love to just get your 

opinions on. 

My other committee is Intelligence. I spend a lot of time looking 

at the remarkable tactical capability we have, including our ability 

to disrupt financing when we want. And it is really remarkable 

tactically and spectacularly unsuccessful strategically. And what I 

mean by that is that 10 years have gone by and we have more 

groups and more places and more ungoverned space, particularly 

with respect to radical Sunni groups. 

So my question is: As good as we are tactically, what are we getting wrong strategically? 

And we have 4 minutes and 15 seconds. That is a Ph.D. thesis. 

But I didn’t want to miss this opportunity to just get 40 seconds 

from each of you about a tangible thing, not abstractions, not more 

soft power and better diplomacy, a tangible thing we can do. 

I look at this and I see us lining up with appalling dictators and 

quirky monarchies in ways that probably have blowback for us. I 

don’t see us really helping to generate the economic growth that 

provides opportunity. 

So let me just start on the left, and I would love to hear some 

tangible things that we could do that would change the strategic 

picture and actually begin to shrink the threat globally from Sunni 

radicals. 

About 30 seconds each. 

Ms. BAUER. OK. So I think, in the short time provided, that one 

of the things we can do better, since the lack of rule of law, these 

ungoverned spaces is part of the problem, is to focus more on ruleof-law efforts and specifically financial regulation, since that is my 

area of focus, I think, in conflict and post-conflict areas. 

I think the Iraqi Central Bank has done a good job to try to take 

on this issue in just the last couple of years and that this contributes to efforts to try to constrain the Islamic state financially. 

Mr. HIMES. Thank you. 

Mr. Fanusie. 

Mr. FANUSIE. I would point to engaging elements of our communities that should be engaged more in counterterrorism, so, let’s 

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28 

say, the Muslim American community. This narrative that is out 

there that we have discussed, there is also a narrative where folks 

within our communities are hesitant to—actually, let me phrase 

this properly. 

There is a sense that counterterrorism efforts impact the Muslim 

community improperly. And I think there should be more engagement with Muslim counterterrorism offices, Muslim counterterrorism analysts and folks in law enforcement who can articulate 

what it is like to work in counterterrorism and be of the faith. And 

that is something that you don’t hear about, you don’t see it that 

much, and I think it is missing in our narrative about counterterrorism. 

Mr. HIMES. Thank you. 

Mr. Segal. 

Mr. SEGAL. I would just add perhaps, in a similar vein, using 

former extremists to deliver the messages to those who are potentially at risk of believing these narratives. They have been there, 

they know what it is like, they have gotten out. And that could 

serve as a good model. 

Mr. HIMES. Thank you. Thank you. 

Mr. SOUFAN. I think, as you correctly mentioned, these groups 

are way bigger in numbers than they used to be on the eve of 

9/11. The ideology showed a lot of resiliency. I think I will say that 

sectarianism now is a new nature of the conflict and the new banner for recruitment. I think the Arab Spring shifted the calculus 

of a lot of these groups to be involved through their own strategy 

of management of savagery to have control of land, as we have 

seen in Iraq and in Syria and in other places. 

And I think these conflicts that are happening today in Yemen, 

in Syria, in North Africa are giving a new oxygen for these groups. 

In order to have a better strategic picture for the United States, 

we need to work on solving these conflicts. And without solving 

these conflicts, I think the military, the intelligence alone can only 

best, I think, marginally, really, affect the outcome of what is happening. 

Mr. CLARKE. Thank you, Congressman. 

We talk all the time about ungoverned space. Just a note on 

that. And I use that term myself, but I think we should better 

think about it as alternatively governed space. Because that space 

is governed; we just don’t like who is governing it. And that gives 

you a sense of what is going on there. 

What could we do to be less myopic? Annunciate a clear and cogent policy for Syria beyond destroying the Islamic state. I don’t 

know what our Syria policy is. Amazingly, 17 years into Afghanistan, I don’t know what the policy is there. 

Mr. HIMES. Yes. 

Thank you. You have all done the impossible. That was actually 

really interesting. 

I will just close by noting that—I don’t know how to evaluate all 

of that; I will take it you are all experts. But it is striking to me 

that what you listed—better working with local Muslims, better 

working with ex-extremists trying to tamp down conflict—we are 

actually doing the opposite of many of those things, or at least not 

talking about those things. I would just highlight that. Because, 

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29 

again, I think tactically we are stunningly good at what we do, but 

we are just not moving the strategic picture on this issue. 

Anyway, thank you, Mr. Chairman, for your indulgence. 

And thank you all. 

Chairman PEARCE. I would recognize now the gentleman from 

North Carolina, Mr. Budd, for 5 minutes. 

Mr. BUDD. Thank you, Mr. Chairman. I appreciate you holding 

this hearing. 

Mr. Himes, I appreciate your line of questioning. That was very 

insightful. 

And all of our witnesses and panelists today, a lot of talent up 

there. So we appreciate you coming in, for your time. 

I want to start by giving a special shout-out to you, Yaya 

Fanusie, for the Foundation for the Defense of Democracies. You 

have been very helpful to us, and you have been nothing but excellent in our requests to you. So whenever we have a question on terrorism/illicit financing, you have been excellent and responsive. 

Anyone else, any of my colleagues over here, I wish they would 

use you. And as I have found out today, lots of other talented panelists, so thank you. 

Yaya, after that high praise, I want to ask you some questions. 

So I want to start with Hezbollah and move into crypto. 

First, how would you describe Hezbollah’s current financial activities and sources of support in West Africa, also East Africa, and 

then Southern Africa. 

Mr. FANUSIE. So this is something that we are looking at closely 

at FDD. In fact, my colleague, who you may be aware of, Emanuele 

Ottolenghi, who is a big expert on Hezbollah outside of the Levant—Hezbollah is active. Hezbollah, for a long time, has had networks within Africa, going from all the places that you mentioned—west, southern, central, and east. 

So Hezbollah, I would assess, is still very active there, as it is 

in Latin America. It relies on its networks, business, businessmen, 

particularly who may have ties to Lebanon, historical ties to Lebanon. 

Also, Africa serves as an intermediary point for trafficking and 

laundering. The drug trafficking that emanates from South America has to make its way to Europe, and Africa is actually a stopping 

ground for some of those routes. So Africa continues to be a part 

of their narcotrafficking network. 

Mr. BUDD. Yaya, particularly in South America, you mentioned— 

and then I heard this area come up—Ms. Bauer, you mentioned the 

tri-border area, or the Triple Frontier. Is it that area, in particular, 

or is it broader than that in South America? 

Mr. FANUSIE. That is a key nexus, a key location because there 

is so much illicit activity that happens there, and you have a lot 

of Hezbollah folks who participate in it. It is almost free rein for 

a lot of illicit activity. 

But the networks do go throughout South America because of the 

drug trafficking. So where you see the drug trade, you are going 

to see a lot of Hezbollah influence emanating up further, Colombia, 

Venezuela, and other parts of Latin America. 

Mr. BUDD. I understand. Thank you. 

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30 

So what new U.S. efforts are we doing to interdict all that support? 

Mr. FANUSIE. I think we have mentioned some of the things in 

terms of HIFPA going through. We recently had—almost a year 

ago, we had the narcotrafficking Department of Justice task force 

or investigation group, and that is operating. 

I don’t know. You could say it has probably been a mixed bag, 

in a sense, in that there have been more designations. I don’t think 

we have had as many Latin America designations, though, so I 

think maybe there is a gap there. 

So there is still more work to do, and it is likely that there is 

going to continue to be pressure for Hezbollah to ramp up its efforts because of the rising drug trade and what is going on with 

Iran, as we have mentioned, that there actually may be a financial 

crunch on Hezbollah with Iran facing more financial pressure itself. 

Mr. BUDD. In your mention of Hezbollah, I want to use that as 

a shifting-over point to go over to cryptocurrencies. What are you 

seeing Hezbollah do in regards to cryptocurrencies, in particular? 

Mr. FANUSIE. Yes, this is something that we have our eye on. We 

have not seen much. There is some scant reporting about some perhaps shady businessmen connected to Hezbollah who may be trying 

to get into the fintech space. This is actually something that we are 

trying to investigate more. 

Mr. BUDD. OK. 

Mr. FANUSIE. So it is something that is on our radar. 

Mr. BUDD. Let me transition to state actors who are increasingly 

creating national cryptocurrencies. Venezuela, Iran, Russia—those 

come to mind. 

Can you describe in detail how the efforts of state actors to create national cryptocurrencies impacts terror financing? And if you 

need to lay, in the time we have remaining, a little bit of a backdrop of who is doing what there. 

Mr. FANUSIE. OK. I would also say there is a long term and the 

short term. Venezuela tried to create a cryptocurrency. It is not 

clear if it is even in existence. Russia says it wants to do—Iran 

also—a type of cryptocurrency system. 

I would say, in the short term, this is not a major issue for terrorist financing, because a terrorist is not going to want Venezuelan Petro more than it wants bitcoin or Monero. 

The only issue, I would say, is, in the long term, the potential 

for these groups for these states to maybe coordinate and create an 

alternative financial system—I am not saying that is going to happen, and I think there are a lot of barriers to that. But that would 

be the risk, that there is an alternative method of financing and 

transacting that is global. And right now that doesn’t exist, but 

that is a thing that we should prevent. 

Mr. BUDD. Very good. 

It seems my time has expired. Thank you to each of you. 

Chairman PEARCE. The gentleman’s time has expired. 

I would like to thank each one of our witnesses for your testimony today and for the gracious time you spent while we were in 

recess. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

mcarroll on FSR431 with DISTILLER

31 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

I just ask that, if you would please, respond as promptly as you 

are able. 

Chairman PEARCE. This hearing is adjourned. 

[Whereupon, at 11:11 a.m., the subcommittee was adjourned.] 

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(33) 

A P P E N D I X 

September 7, 2018 

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l~J----------------------------------------------- ~4""""''"',_~~ Survey of Terrorist Groups and Their Means of Financing 

Katherine Bauer 

Blumenstein-Katz Family Fellow, The Washington Institute for Near East Policy 

Testimony submitted to the House Financial Services Subcommittee on Terrorism and Illicit Finance 

September 7, 2018 

Chairman Pearce, Ranking Member Perlmutter and distinguished members of the subcommittee, 

thank you for the opportunity to testifY today on counter-terrorist financing (CFT). 

The threat of terrorism and extremism is increasingly complex. Over the last fifteen years, the 

U.S. and its allies have dramatically improved their capacity to detect and disrupt attacks through 

increased information sharing and to undermine such groups through the deployment of 

sophisticated diplomatic, military and financial initiatives. Nonetheless, years of conflict in 

Syria, Iraq and Yemen have provided fertile ground for terrorist groups and extremist ideologies. 

These conflicts have spurred humanitarian crises and stoked sectarianism. 

Prior to the 9/11 attacks, al-Qaeda's (AQ) primary source of funds was external donations 

funneled largely through charitable fronts. However, as AQ, and more recently the so-called 

Islamic State (IS), established global networks of affiliates, their methods of financing have also 

diversified. A number of dynamics underlie these changes, including counterterrorism efforts 

broadly and counter-terrorist financing efforts specifically, but also the breakdown of political 

systems and the proliferation of weak and ungoverned spaces that have allowed terrorist 

organizations to increasingly hold territory, tax and extort the local population, and even control, 

extract and sell natural resources. Terrorist organizations have also capitalized on trends of 

globalization that facilitate ever greater movement of ideas, people and funds. 

As these organizations appear better resourced than ever before, some have called into question 

the value of CFT efforts. My testimony today will first look at the evolving nature of terrorism 

and terrorist financing, focusing on the cases of the Islamic State, AI Qaeda, and Iranian support 

for terrorism. Next, I will examine the effectiveness of counter-terrorist financing efforts, 

looking at the "tools in the toolkit," and their application; the role of financial sanctions and 

financial intelligence, and as well as the role of the private sector. 
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THE ISLAMIC STATE 

When the Islamic State took over vast swaths of territory in Syria and Iraq in the spring and 

summer of2014, it posed an unprecedented and nontraditional CFT challenge, due both to the 

size of its budget-reportedly close to $2 billion in 20 14-and its ability to derive the vast 

majority of its revenues from the territory it controls. The Islamic State did not develop this 

expertise overnight. Over a decade, its predecessors, al-Qaeda in Iraq (AQJ) and the Islamic 

State in Iraq, developed a sophisticated system of financial management, even taking the 

strategic decision in 2009, according to documents recovered in Iraq 1

, to derive revenues locally 

to avoid foreign dependence and direction. During the second part of the last decade, AQI 

resembled an organized-crime organization, engaging in sales of stolen goods, black market fuel 

sales and later, large scale extortion2 

In Iraq and Syria, the Islamic State effectively took advantage of multiple preexisting dynamics 

to enrich itself quickly after taking territory. These included a high concentration of natural 

resources, and established smuggling networks needed to monetize them; a sizable population 

and sufficient economic activity to tax and extort; and opportunities to loot valuable goods, 

including machinery and weapons, as well as bank branches, from which it is reported to have 

taken as much as $500 million. 

Despite the Islamic State's early prosperity, its considerable expenses created vulnerabilities that 

the U.S.-led Counter IS Coalition, along with the government of Iraq, effectively exploited. For 

example, in August 2015, the Iraqi government ceased paying salaries to employees in Islamic 

State-controlled territories, thereby cutting their revenue from the taxation of the salaries and 

reducing liquidity in IS-controlled territory.3 In late 2015, the Coalition also began to use air 

strikes to target and degrade Islamic State-controlled oil extraction, refining, and transportation. 

However, perhaps the greatest impact on IS's bottom line has been the loss of territory, which 

means fewer local resources--including people--under its control to tax and extort.4 

As the Islamic State in Syria and Iraq has reverted to an insurgency, it has returned to many of 

the fundraising methodologies deployed by AQL For example, as journalists and humanitarian 

workers return to recently liberated areas, the organization could potentially begin kidnapping 

for ransom again. In fact, in its most recent report, the UN Analytical Support and Sanctions 

1 Johnston, Patrick B., Jacob N. Shapiro, Howard Shatz, Benjamin Bahney, Danielle F. Jung, Patrick Ryan and Jonathan Wallace, 

Foundations of the Islamic State: Management, Money, and Terror in Iraq, 2005-2010, Santa Monica, CA: RAND Corporation, 

2016, http://www.rand.org/pubs/research reoorts/RR1192, 2 Bauer, Katherine, "The Evolution of Terrorist Financing Methodologies and Response" Institut Europea de la Mediterrania, 

"'IEMcD Mediterranean Yearbook 2017," 20 17, htto:/ /\\'WW .icmcd.org/publicacions/historic-de~publicacionsfanuari-dc-lamediterrania!sumaris!iemed-rnediterranean-yearbook~2017 

3 Glaser, Daniel, "The Evolution of Terrorism Financing: Disrupting the Islamic State," The Washington Institute for Near East 

Policy, October 21, 2016, lU!t!~:'b:YWW. wa..?.h.ltJ.Kt.Qninst_Lt!!t~on!/p0li.£Y:.illl<:!.IY5.J_s/vi~..l\./the-evo lution-of-terrorism-fi.nancing: 

disrupting-the-islamic-state 

4 1bid. 
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Monitoring Team warned about the heightened risk of"an increased global incidence of 

kidnapping for ransom among other revenue generating crimes and methods offrnancing."5 

Islamic State Provinces 

The Islamic State's recognition of franchises in eight countries across the Middle East, Africa, 

and Asia in November 2014, raised concerns that the so-called IS core in Syria and Iraq would 

share both its wealth and its fundraising expertise with its new affiliates. The groups that pledged 

allegiance to the Islamic State, most of which were preexisting organizations, already had 

established funding mechanisms. The provinces' forerunners were primarily locally financed 

through crime, smuggling, extortion, and kidnapping for ransom; they generated significant 

revenue but were unable to support and sustain a state-building project like that of the Islamic 

State6 

Some of the IS provinces were undoubtedly motivated to affiliate themselves with the Islamic 

State based on the perception (and sometimes the promise) of additional resources. For a number 

of the provinces-at least in Libya, Sinai, Yemen, and the Philippines-it appears to be the case. 

Funds were provided either directly from the Islamic State core, or via other provinces, such as 

Libya to the Sinai and Yemen to Somalia. 7 

Prior to being pushed out of Sirte in December 2016, the IS province in Libya appeared to 

emerge as a regional hub for the group. In May 2016, the Treasury Department designated 

Libya-based Salmi 'Ammar, IS-Sinai Province's representative in Libya for transferring 

hundreds of thousands of dollars from Libya to the Sinai Province. 8 The Islamic State in Somalia 

has also received funds from IS Libya, according to the UN, as well as support from IS in 

Yemen. Also notable, Abdelhamid Abaaoud, a suspected organizer of IS attacks in France and 

Belgium in November 2015 and March 2016, is reported to have had contacts with IS members 

in Libya related to financial and travel issues on behalf of the "V erviers cell," which was 

disrupted by Belgian police in early 2015. 9 

5 United Nations Security Council , "Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant to 

resolutions 1526 (2004) and 2253 (2015), "July 27,2018, http:i/undocs.org/S/20181705 6 Bauer, Katherine. "Financing" in "Beyond Syria & Iraq: Examining Islamic State Provinces," ed. Katherine Bauer, The 

Washington Institute for Near East Policy, November 2016. https://www. \Vashinmoninstitute.orglpolicy-analvsis/view/beyondsvria-and-iraq~cxamining-islamic~statc-provinccs 

7 United Nations Security Council "Twentieth report of the Analytical Support and Sanctions Monitoring Team submitted 

pursuant to resolution 2368 (2017) concerning !S1L (Da'esh), Al-Qaida and associated individuals and entities," Jun. 30, 2017. 

Web. http://1}.-'WW.un.org/cn/gn!scarch/view doc.a.·m?svmbol=S/2017/573; United Nations Security Corun:il, "Twenty-first report 

of the Analytical Support and Sanctions Monitoring Team submitted pursuant to resolution 2368 (2017) concerning ISIL 

(Da'esh), Al-Qaida and associated individuals and entities," Dec. 31, 2017, 

http://v,'ww.un.org/cn/galscarch/vicw doc.asp?symbol=S!20l8/14/rcv.1· 8 U.S. Department of Treasury, "Treasury Designates Al-, A1-Nusrah Front, AQAP, and Isil Fundraisers and Facilitators," press 

release, May 19, 2016, https:/fwww.treasury.gov/press-center/prcss-relea.<>es/Pagesli!0462.a..:;px 9 Brisard, Jean-Charles and Jackson, Kevin, "'The Islamic State's External Operations and the French-Belgian Nexus," CTC 

Sentinel Vol: 9, Is: 11, November/December 2016, https://ctc.usma.edu/tbe-islamic-states-external-operations~and~the-frenchbclgian-ncxus/ 
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Neither Remaining nor Expanding 

Having deprived the Islamic State of ninety-eight percent of the territory it once occupied, 10 the 

international community is entering a new phase in the counter-IS campaign. 

While it initially focused on the group's territorial grounding, which made it easier to locate 

fighters, both of foreign and indigenous origin, the next phase will focus on less visible networks 

of individuals and cells acting with a greater degree of autonomy. 11 In fact, the group's most 

significant recent attacks have been traced back to groups or "provinces" operating outside of 

Syria and Iraq, such as the Manchester and Barcelona bombings, as well as the bombing of a 

Sufi mosque in Egypt. 12 So-called frustrated travelers-those who were unable to travel before 

the collapse of the so-called Caliphate, or who have since returned-will continue to pose a 

greater threat and challenge to local law enforcement. 13 

As IS has backed away from its mantra of"remaining and expanding," it has encouraged 

followers to undertake attacks locally rather than traveling to fight in the Levant. Small cells, like 

foreign terrorist fighters, often self-fund through legitimate sources such as employment income, 

social assistance, or family support as well as through illicit sources such as fraudulent bank 

loans or other forms of fraud. Despite recognizable typologies, such transactions can be hard for 

law enforcement to spot without specific intelligence due to the relatively modest amount of 

funds being moved. 14 

Much of the conversation surrounding IS fmancing likewise has focused on its ability to derive 

revenue from territory it controlled. Despite reports that revenue generation has fallen broadly in 

line with territorial losses, the t,rroup appears to continue to be well-resourced: reportedly paying 

salaries, covering medical expenses 15, and making on-going transfers to branches or provinces 

beyond Syria and Iraq. 16 According to a recent UN report, one member state estimates IS's total 

10 "CJTF-OIR reflects on 2017 and looks forward to 2018," United States Central Command, Jan. 1, 2018, 

http://w\Vw .centcom. mil/MEDTA/NEWS-A RTlCLESrNews~ Article-View/ Article/ 1 406595/cjtf-oir-reflects-on-20 17 -and-looksf(nward-to-2018/ 

11 United Nations Security Council, "Report of the Analytical Support and Sanctions Monitoring Team pursuant to Security 

Council resolutions 1526 (2004) and 2253 (2015) concerning Islamic State in Iraq and the Levant (ISIL) (Da'esh), Al-Qaida and 

the Taliban and associated individuals and entities," Apri14, 2016, 

http://w\Nw.un.oro/enlga/search/view doc.asp?symbol=S/20 16/213 12 Hoffman, Bruce, "Episode 19: Bruce Hoffman on ISIS in 2017 and Beyond," The Security Studies Podcast, Georgeto\Vn 

University. January 2018. Podcast. https://soundcloud.com/security-studies-podcast/episode-19-bruce-hoffman-on-isis-in-20 17-

and-beyond 

13 The net flow of foreign terrorist fighters out of Syrian and Iraq has been lower than initially anticipated~ according to: United 

Nations Security Council, "Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant to 

resolutions 1526 (2004) and 2253 (2015)." July 27,2018, http:/iundocs.org!S/2018/705 14 United Nations Security Council , "Twentieth report of the Analytical Support and Sanctions Monitoring Team," August 7, 

2017, http://www.un.org/enlga/search/view _ doc.asp?symbol~S/2017/573 

15 Daragahi, Borzou, "After The Black Flag of!SIS, Iraq Now Face The White Flags," Buzzfeed News, Apr. I, 2018. Web. 

https://www.buzzfccd.com/borzoudaragahilisis-irag-whitc-flao-s-svria-ncw-namc?utm tcnn=.pvPKYBbiz#.pxPLcnvDJ 16 United Nations Security Council, '"Twentieth report of the Analytical Support and Sanctions Monitoring Team submitted 

pursuant to resolution 2368 (2017) concerning !SIL (Da'esh), Al-Qaida and a.sociated individuals and entities." Jnn. 30, 2017. 

Web. http:/iww\v.un.org/en!ga/search/view 42f=.?Sp?symbol=S/20l7!573; United Nations Security Council, "Twenty-first report 

of the Analytical Support and Sanctions Monitoring Team submitted pursuant to resolution 2368 (2017) concerning IS!L 

(Da' csh), Al-Qaeda and associated individuals and entities," Dec. 31, 2017, 
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reserves to be in the low hundreds of millions of dollars. 17 Meanwhile, Islamic State affiliates are 

also looking to diversifY their sources of funding; the Sinai branch robbed a bank in a! Arish in 

October 2017, believed to have netted 17 million Egyptian pounds (about one million dollars). 18 

There has been great concern that the group was able to stash considerably amounts abroad or in 

front companies within Iraq and abroad. 19 In February 2018, The Economist reported that, 

according to an Iraqi legislator, $400 million was smuggled out of Iraq and Syria during its 

retreat.20 According to U.S. National Intelligence Manager for the Middle East David Cattier the 

U.S. intelligence community continues to hunt for the funds. 21 In fact, the UN Monitoring Team 

recently reported that the lack of information on the current state of IS finances was of 

"immediate concem."22 

The Islamic State is apparently still able to move funds across borders using money exchange 

houses and hawala dealers, including to provide financial support to affiliates overseas--

although "the extent of such support is unclear, and may be declining," according to the UN 

Monitoring Team.23 Some of these funds appear to have gone to or through Turkey, via hawala 

dealers on the Syria/Turkish border, and possibly via other militants based in Idlib province. ISlinked exchangers likewise claim to have sent millions of dollars through other militant 

organizations there, then onward to Europe.24 In mid-March 2018, Turkish police raided a 

currency exchange in Istanbul with alleged ties to the Islamic State, arresting two and recovering 

http://www.un.org/en/ga/search/vicw doc.asp?symbol=S/2018114/rev.l; Daragahi, Borzou, "After The Black Flag ofiSIS, Iraq 

Now Face The White Flags," Buzifeed News, Apr. l, 2018, https://www.buzzfccd.com/borzoudaragahi/isis-iraq-whitc-flagssvria-new-narne?utm term=.pvPKYBbi;..-#.pxPLenvDJ 17 United Nations Security Council, "Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant 

to resolutions 1526 (2004) and 2253 (2015), "July 27,2018, http:/iundocs.org/S/20181705 18 Magdy, Sam & Sweilam, Ashraf, "Militants rob bank, attack church in Egypt's Sinai; 7 dead," Associated Press, Oct. 16,2017. 

https:/lapnews.com/9b6b816cc2c64 5dfab8c4460cc84876e 19 United Nations Security Council, "Twentieth report of the Analytical Support and Sanctions Monitoring Team submitted 

pursuant to resolution 2368 (2017) concerning ISIL (Da'esh), Al-Qaida and associated individuals and entities," Jun. 30, 2017, 

http://www.un.9rg/en/ga!search/view doc.asp?symboi=S/2017/573; United Nations Security Council, "Twenty-first report of the 

Analytical Support and Sanctions Monitoring Team submitted pursuant to resolution 2368 (2017) concerning ISIL (Da'esh), AJQaida and associated individuals and entities," Dec. 31, 2017, 

http:i !www. un.org/cn/gal search/view doc.asp?svmboi""S/20 18/14ircv. 1 20 ''Islamic State has been stashing millions of dollars in Iraq and abroad;' The Economist, Feb. 22~ 2018, 

https:/ /wv.:w.econ()mist.com/news/middle-east-and-africal2 I 737302-their-so-called-cal iphate-crumbles-jihadists-are-saving-up-

.fi.gill 

21 Cattier, David, "A Survey of the Near East: lmjpli<oati<ons 

Policy, March 13, 

u.s.-national-security 

22 United Nations Security Council, "Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant 

to resolutions 1526 (2004) and 2253 (2015)," July 27, 2018, http:i/undocs.org/S/20181705 23 "Twentieth report of the Analytical Support and Sanctions Monitoring Team submitted pursuant to resolution 2368 (2017) 

concerning ISIL (Da'esh), Al-Qaida and associated individuals and entities," United Nations Security Council, Jun. 30, 2017. 

Web. http://\vv.r\v.un.org/cn!ga/scarch/vicw doc.asp'!svmboi=S/20171573; Twenty-first report of the Analytical Support and 

Sanctions Monitoring Team submitted pursuant to resolution 2368 (2017) concerning ISIL (Da'esh), Al-Qaida and associated 

individuals and entities," United Nations Security Council, Dec. 31, 2017. Web. 

http://www.un.org/en/ga/search/view dos;.asp?symbol=S/2@/14/rev. I 24 Solomon, Erika, "Isis finds escape route for the profits of war," Financial Times, Aug. 23, 2017, 

https:i/www.tl.com/contentib2f616d4·8656·11 e7·8bbl-5ba57d47eff7 
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$1.3 million, as well as gold, silver, British pounds, and weapons.25 In August 2017, the U.S. and 

Iraq jointly designated IS Finance Emir Salim al Mansur, who is believed to have moved from 

Iraq to Turkey in early 2017.26 

Funds abroad were also used for procurement purposes. In February 9, 2018, the U.S. designated 

Yunus Emre Sakarya and his company Profesyoneller Elektronik, in Turkey due to his 

involvement in procuring UAV equipment worth $500,000 in 2016 for the Islamic State27 

A study of improvised explosive device (lED) procurement by Conflict Armament Research 

published in December 2017 revealed that IS obtained components for lED through money 

service businesses and front companies, which purchased the components for IS from legitimate 

suppliers.28 The United Nations Monitoring Team warned in July 2018 that IS was likely to 

increase its use of lED as it reverts back to asymmetric tactics. The Monitoring Team said that IS 

in Afghanistan was reportedly using an lED precursor-ammonium nitrate--preferred by the 

group and that an attempt to smuggle the compound to Libya had been disrupted in January 

2018.29 

Exchange Houses 

The Islamic State often used exchange houses to collect international funds, pay its fighters and 

employees, and make purchases. 30 With the majority of its territory lost, exchange houses are 

now particularly useful to move funds out of Syria and Iraq. Iraqi authorities have taken a 

number of actions against exchange houses to isolate the Islamic State from the international 

fmancial system. In December 2015, the Central Bank ofiraq banned 142 currency-exchange 

houses from participating in Central Bank currency auctions based on concerns that they were 

moving funds for the Islamic State.31 On December 13,2016, the United States, in collaboration 

with the Government of Iraq, sanctioned Selselat al Thahab Money Exchange in Iraq for 

facilitating the movement of funds on behalf ofiS. 32 Again, in June 2017, Washington took joint 

action with the Government of Iraq against Umar al-Kubaysi and his al-Kawathar money 

25 '"Turkish police discover around $2M in cash in Istanbul office of2 Daesh-linked suspects," Daily Sabah, Apr. 4, 2018, 

https:/ /\\'\Vw.dai !ysabah.com./war-on-tcrror/20 18/04!04/turkish~police-discover-around-2m- in--cash-and-gold-in-istanbul-officcof-2-daesh-linkcd-suspccts 

26 U.S. Department of the Trea.o:::ury, "Treasury Collaborates with lraqi Government to Sanction ISIS Finance Emir,'~ press release, 

Aug. 29, 2017. https://www.treasury.gov/press-center/pressMreleases/PageslsmO 149.aspx 27 U.S. Department of the Treasury, "Treasury Sanctions ISIS Facilitators Across the Globe," press release, Feb. 9, 2018, 

https:!/home.treasury.gov/newsfpress-release/sm0284 

28 "Reports: Weapons of the Islamic State," Conflict Armament Research, Dec. 2017, 

http:!/\N\1/w.conflictarm.com/rld?.Qr1~iY.~illilltlS-of..the-islami~,>statet 

29 United Nations Security Council, '"Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant 

to resolutions 1526 (2004) and 2253 (2015), "July 27,2018, http:l/undocs.orgiS/2018/705 30 Warrick, Joby~ "Inside the economic war against the Islamic State," The Washington Post, Dec. 31,2016, 

https://www. washingtonpost.com/world/national-seclllitv/takc-them-back-to-thc-19th-ccntury-inside-the-economic-war-againstthc-islamic-statc/20 16/12!3015191 f514-ccb7-11 c6-a747-d03044780a02 story.html?norcdircct=on&utm tenn~.8fdc058t'l64c 

31 Bauer. Katherine and Levitt, Matthew. "Denying the Islamic State Access to Money-Exchange Houses," The Washington 

Institute for Near East Policy, February 3, 2016, http://\vww. washingtoninstitutc.org/poh~v-analvsis/vie\v/dcnying-thc-islamic­

§tate-qycess-to-mon~y-exchange-houscs 

32 U.S. Department of the Treasury, '"Treasury Sanctions Senior IsH Financier and Two Money Services Businesses, ·'press 

release, Dec. 13, 2016, https://www.treasurv.gov/prcss-ccntcr/prcss-rckascs/Pagcs/jJ0684.aspx 
40 

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exchange firm. According to the Treasury, al-Kawathar reconciled approximately $2.5 million 

with another Iraq-based IS-associated money exchange company, as well as the previouslysanctioned Syria-based Hanifa Currency Exchange, and sent transfers to a Gulf-based company, 

which was co-owned by two suspected IS facilitators. 33 

The risk of exchange houses being exploited by terrorist financiers is not new. The Islamic State 

has taken advantage of the same informal or weakly regulated channels as other illicit financial 

actors such as Iran have done before. In a 2015 report on emerging terrorist financing typologies, 

the intergovernmental Financial Action Task Force highlighted the vulnerability of exchange 

companies and other remitters to terrorist fmancing where they are not regulated. 34 The exchange 

houses targeted by the Iraqi government are a prime example, since most were located in Islamic 

State-controlled areas outside the scope of Central Bank supervision. By denying such exchange 

houses access to dollar auctions, the Iraqi government effectively found a way to regulate these 

out-of-reach enterprises. 

More broadly, it should be noted that in areas where banking services are largely inaccessible to 

segments of society, or unavailable altogether, exchange houses can provide a much-needed 

means of sending or receiving remittances, including humanitarian support in conflict zones and 

their environs. But they also present vulnerability as a potential conduit for comingling illicit 

funds with licit remittances. Even in nonconflict areas with sizable populations lacking bank 

access, exchange houses act as a bridge between cash-based informal economies and the banks 

upon which they rely to effect international transfers. But this layer can also help obfuscate the 

underlying party to a transaction and shield bad actors from the global financial institutions they 

transit. Regional regulators, therefore, must take decisive steps to wall off their fmancial systems 

from unlicensed or loosely regulated money remitters vulnerable to exploitation by illicit actors. 

Despite these efforts, the group's credible threats of violence against enterprises in Syria, Iraq, 

and elsewhere will likely allow it to maintain a large sum, out of sight of authorities. 35 As 

information becomes available, authorities should prioritize targeting cross-border movement of 

funds as well as procurement efforts, which are particularly susceptible to disruption through 

public exposure because of the need to appear legitimate in order to complete purchases of dual 

use goods. 

33 U.S. Department of the Treasury, '"Treasury Sanctions Iraq-based ISIS Financial FaciJitation Network," press release, June 15, 

2017, https://\\'WW, trcasurv. gov/press~center/press-releases/Pages/smO 1 09 .aspx. 34 "FATF Report: Emerging Terrorist Financing Risks;' Financial Action Task Force, October, 2015. http://W\\I\V.fatf-

~org!mediaffatf/documents/reportslE!.n£r&i.ng:Jerrorist-Financing-Ris~f 

35 Johnston, Patrick B. "Oil, Extortion Still Paying Off for ISIS," The Cipher Brief, Oct. 27,2017, 

https:/!w\\'\v.theciphcrbricfcom/article/midd!c-castloil-cxtortion-still-paying-off .. jsis 
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AL-QAEDA 

As the Islamic State burst onto the scene and quickly dominated the threat landscape, its 

financial underpinnings drew significant attention. Al-Qaeda funding, however, became less of a 

focus as IS overshadowed its precursor. Al-Qaeda fmancing also grew more difficult to track as 

the group took a back seat to the Islamic State and its fmancial infrastructure labored under the 

increasing irrelevance of its traditional core in Afghanistan. But al-Qaeda has more recently been 

able to exploit its safe havens in Syria and relocated some senior leaders to the country from 

South Asia. There and elsewhere, such as in Yemen, al-Qaeda has rebuilt its financial baseline. 

Altogether, the threat from al-Qaeda persists, and understanding its sources of revenue and 

resources is therefore critically important36 

As most al-Qaeda affiliates have diversified their fundraising methods away from reliance on 

individual donors and the exploitation of charitable flows in order to mask their transactions, 

they have become less dependent on the core. The beginnings of this decentralizing trend could 

be recognized years ago with the rise of a reverse-directional flow of money going from affiliates 

toward the increasingly impoverished core.37 In a 2005 letter to Abu Musab al-Zarqawi, then 

leader of AQI, Ayman al-Zawahiri, then al-Qaeda's number two, asked for money, noting that 

"many of the lines [of fmancing] had been cut off. Because of this we need a payment... " 38 

Documents recovered from AQI in 2009 revealed that, in the intervening years, Zarqawi's 

organization, then called the Islamic State in Iraq and led by Abu Omar al-Baghdadi, had made a 

strategic decision to derive revenues locally to avoid foreign dependence and direction. 39 

Experts have also noted an increase in collaboration and assistance among and between al-Qaeda 

branches. For example, a January 2017 UN report claimed that al-Shabab in East Africa has 

"relied on financial, logistical, and ideological guidance" from al-Qaeda in the Arabian Peninsula 

(AQAP).40 Similarly, the UN reported, al-Qaeda in the Indian Subcontinent (AQIS) has taken on 

"a more active supporting role" for Taliban groups in Afghanistan.41 Indeed, there is historical 

precedent for such cooperation. A letter between the leaders of AQAP and al-Qaeda in the 

Islamic Maghreb (AQIM) in 2012 discussed kidnapping for ransom, calling the tactic a 

"profitable trade and a precious treasure. "42 

36 Portions of this section are drawn from Bauer, Katherine and Matthew, Levitt, "AJ Qaeda Financing: Selected Issues/' in Zelin, 

Aaron, "How Al~Qaeda Survived Drones, Uprisings, and the Islamic State," TI1e Washington Institute for Near East Policy, June 

2017, https://www. washingtoninstitute.org/up loads/Documents/pubs!PolicyFocus 153-Zclin.pdf 37 Levitt. Matthew and Michael Jacobson, "The Money Trail," The Washington Institute for Near East Policy, November 2008, 

https;//www. washingtoninstitute.org/uploads!Documents/pubs/Policvfocus89.odf 38 Letter from Ayman al-Zawahiri to Abu Musab ai-Zarqawi, July 9, 2005; English translation available at 

htt.ps://ctc. usma.edu/app/uploads/20 1311 0/Zawahiris~Letter-to-Zarqawi-Translation.pdf 39 Patrick B. Johnsto·n et al., Foundations of the Islamic State: Management, Money, and Terror in Iraq, 2005-2010 (Santa 

Monica, CA: RAND Corporation, 2016). Web. 

bttp:iiwww.rand.org/contcntldam/randipubslresearch reports/RR!l 00/RRI1921RAND RR 1192.odf. 40 United Nations Security Council, "Nineteenth Report of the Analytical Support and Sanctions Monitoring Team established 

pursuant to resolution 1526 (2004), January 13,2017, http://www.un.org/en/oa/search/view doc.asp?svmbol-=S/2017/35. 41 Ibid. 42 United Nations Security Council, "'Nineteenth Report of the Anal)1ical Support and Sanctions Monitoring Team established 

pursuant to resolution ,"Fifteenth Report of the Analytical Support and Sanctions Monitoring Team Submitted pursuant to 
42 

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For years, al-Qaeda affiliates have pursued more diverse funding streams as compared to the 

core, most prominently engaging in such tactics as kidnapping for ransom and extortion. In 

northwest Afiica, AQIM received roughly $100 million in ransom payments between 2008 and 

2014, according to estimates.43 In 2016, the U.S. Department of State reported that AQIM 

continued to conduct kidnapping-for-ransom operations, primarily targeting Westerners whose 

govermnents were known to pay ransoms.44 In Somalia, al-Shabab generated as much as $25 

million in revenue from the illicit charcoal trade alone when it controlled Kismayo port, 

according to the UN Monitoring Group on Somalia and Eritrea.45 In Yemen in 2015 AQAP took 

advantage of the ongoing conflict between the internationally recognized govemment of Abdu 

Rabu Mansour Hadi and the Houthi rebels, backed by now-deceased former president Ali 

Abdullah Saleh, to take control of parts of Hadramawt govemorate, seizing perhaps $100 million 

from a Central Bank branch,46 extorting funds from the national oil company, and raising as 

much as $2 million per day in taxes on goods and fuel coming into the port of al-Mukalla.47 

Today, observers note more "terrorist economies": areas where groups take advantage of weak, 

corrupt states lacking rule of law or even full territorial control to tax, extmt, and exploit local 

resources. 

Al-Nusrah Front 

The rise of al-Qaeda's Syrian affiliate, al-Nusrah Front (ANF) brought new opportunities for the 

organization both operationally and fmancially. Al-Qaeda leadership considers the Levant to be 

of strategic importance for the group's future. A 2016 UN Security Council report claimed that 

al-Nusrah "remains one of the most effective branches of AI Qaeda worldwide."48 The group's 

budget could have been as much as $10 million a year in 2016, according to a U.S. 

official.49 Although ANF's split with the Islamic State in April 2013 undoubtedly hurt its bottom 

line, it is also possible that ANF' s financial needs are relatively small: the group reportedly does 

not pay salaries to foreign fighters and can extort military and other nonlethal support from 

moderate groups in exchange for allowing them to operate in northern Syria. In addition, a 

crucial aspect of al-Nusrah's long-term strategy has been to minimize its control over populated 

Resolution 2083 (2012) concerning al-Qaida and Associated Individuals and Entities"' January 23,2014. 

http://www .securitycouncilrcnort.org/atf/cf/%7B65BFCF9B-6D2 7 -4E9C~&CD3-CF6E4FF96FF9% 7D/S 2014 41 .pdf. 43 Rukmini CaBimachi, ''"Paying Ransoms. Europe Bankrolls Qaeda Tcrrort New York Times, July 29,2014, 

.h:n,n~.;L!Vvl-:vw.nytimes.com/2014/07/30/world/africalransoming-citizens~curopc-becomes~al-qacdas-patron.html. 

44 U.S. Department of State. Country Reports on Terrorism 2015, https://w\vw.state.govfi.lct/rls/crtt2015/index.htm. 45" United Nations Security Council , Report of the Monitoring Group on Somalia and Eritrea," July 12, 2013, 

http://ww\v.un.ondga/search/view doc.asp?symboi=S/2013/413. 46 United Nations Security Council, '"Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant 

to resolutions 1526 (2004) and 2253 (2015)," July 27, 2018, htto://undocs.org/S/20181705 47 Yara Bayoumy ct aL, "flow Saudi Arabia ·s War in Yemen Has Made al Qaeda Strong-and Richer,~' Reuters, April 8~ 2016, 

http://w\Vw.reuters.com/investigates/special-rcportiycmcn-aqap/. 

48 United Nations Security Council, "Eighteenth Report of the Analytical Support and Sanctions Monitoring Team Submitted 

pursuant to Resolution 2253 (201 5) concerning Islamic State in Iraq and the Levant (Da 'esh). al-Qaida and Associated 

Individuals and Entities," July 19,2016, https://v.'Ww.un.org:/sc/ctc./v.p-content/uploads!2016i09iMT-18th-rcth""lrt.pdf. 49 Nicole Magncy and Paul Cruickshank, "A View from the CT Foxhole: Adam Szubin. Acting Under Secretary for Terrorism 

and Financiallntelhgence, U.S. Dept. of Treasury," CTC Sentine/9~ no. 8 {August 2016), https;liwww.ctc.usrna.edu/postsia-

"icw-from-thl.':-ct~foxhoJe-adam-szubin-a~ting-under-secretary-for-tennrism-and-financial-intclligence-u-s-dept-of-treasury. 
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areas within Syria, focusing instead on practical power-sharing arrangements and the 

socialization of civilians and armed groups into gradual acceptance of its power. 50 Thus, the 

affiliate has not been overly burdened by costs of governance. Although ANF "may earn some 

funds from external donations," the UN reported in 2018 that the group "appears to be largely 

self-sufficient."51 That al-Nusrah is no longer reliant on foreign sources does not necessarily 

mean that the group no longer receives such support. However, it does likely mean that even if 

ANF foreign funding was disrupted, that alone would be insufficient to bankrupt the group. 

ANF may have historically received as much as a few million dollars a year from private donors 

in the Gulf. U.S. Treasury designations of al-Nusrah financiers based in Qatar and Kuwait paint a 

picture of what former Treasury undersecretary for terrorism and financial intelligence David 

Cohen called "permissive jurisdictions" for terrorist fmancing. 52 For example, in August 2015, 

the U.S. Treasury designated Sa'ad bin Sa'd Muhammad Shariyan ai-Ka'bi, a Qatari financier 

for ANF. AI-Ka'bi had reportedly "set up donation campaigns in Qatar to aid with fundraising in 

response to a request from an ANF associate for money to purchase both weapons and food."53 

Gulf-based donors and fundraiscrs have long supported al-Qaeda core, as well as the group's 

affiliates in lfaq and, more recently, Syria, often relying on an !fan-based facilitation network to 

move funds and operatives--including senior leaders--between the Gulf, South Asia, and the 

Levant. 

The September 2014 designation of Abd al-Malik Abd al-Salam (aka Omar al-Qatari) 

demonstrates the connectivity between the various fundraising and facilitation networks. 

According to the Treasury Department, al-Qatari, a Jordanian with Qatari residency, provided 

"broad support" to ANF, including funds and material support. In 2011 and 2012, he worked 

with associates in Turkey, Syria, Lebanon, Qatar, and !fan to raise and move funds and weapons, 

and enable fighter travel, including with al-Qaeda facilitators Khalifa Muhammad Turki aiSubaiy in Qatar and Muhsin ai-Fadhli, who was then heading the group's network in !fan. 54 

Facilitators he worked with recruited fighters among Syrian refugees in Turkey and coordinated 

weapons procurements via Lebanon for al-Nusrah's benefit. Qatari himself raised funds through 

the Internet for ai-Qaeda, moved funds on behalf of Subaiy to ai-Qaeda senior leaders, and 

delivered funds to Fadhli in !fan. 5

5 

5

° Charles Lister, Profiling Jabhat a/-Nusra, Brookings. 2016, httos:i/w\\w.brookings.edulwpcontentluploads/20!6/07iiwr 20160728 profiling nusra.pdf. 51 United Nations Security Council, "Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant 

to resolutions 1526 (2004) and 2253 (2015)," July 27, 2018, http:i/undocs.org/S/2018/705 52 Ibid. 53 U.S. Department of Treasury /'Treasury Designates Financial Supporters of AI-Qaida and Al-Nusrah Front," press release, 

August 5, 2015, https://www. treasury.gov/press-centcr/press-rdeao;es/Pages/ilO 14 3 .aspx 54 U.S. Department of the Treasury, "Treasury Designates Twelve Foreign Terrorist Fighter Facilitators," press release, 

September 24, 2014, https:/ /\V\VW. treasurv.govfpress-centcr/press-rclcases/Pages/jl2651 .aspx. 55 !bid. 
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Al-Qaeda In Iran 

For decades, Iran has provided safe haven to a central network of facilitators for al-Qaeda and its 

affiliates for moving money and aiding members' transit from South Asia to Syria. 56 According 

to a UN report released on July, 2018, "AI Qaeda leaders in the Islamic Republic of Iran have 

grown more prominent, working with Aiman al-Zawahiri and projecting his authority more 

effectively than he could previously."57 The relationship between Iran and al-Qaeda is long and 

complicated, dating back to at least the mid-1990s, when al-Qaeda negotiated safe passage for its 

members from Sudan through Iran to Afghanistan. Later, some al-Qaeda members and their 

families sought safe haven in Iran following the U.S. invasion of Afghanistan. Although Iran 

arrested a number of al-Qaeda members residing within its borders in 2003-including Osama 

bin Laden's son Saad-it was unclear if they remained in custody and whether Iranian detention 

constrained their activities. 58 In 2009, then Treasury undersecretary Stuart Levey called on Iran 

to "give a public accounting of how it is meeting its international obligations to constrain alQaeda."59 

According to the State Department's 2016 Country Reports on Terrorism, Iran has "remained 

unwilling to bring to justice senior al-Qa'ida members it continued to detain, and refused to 

publicly identify the members in its custody."60 Over the last decade, U.S. sanctions against alQaeda have pointed to the significance of the Iran-based network.61 Sanctions actions in 2011 

and 2012 highlighted "Al-Qaeda's critically important Iran-based funding and facilitation 

network"62 and sought to expose "Iran's secret deal with al-Qaeda allowing it to funnel funds 

and operatives through its territory,"63 according to the U.S. Treasury. 

Sanctions that exposed the Iran-based network initially, in July 2011, targeted six al-Qaeda 

members, including facilitators in Kuwait and Qatar. According to the Treasury Department, the 

network, led by Y asin al-Suri, was "collecting funding from various donors and fundraisers 

throughout the Gulf and was responsible for moving significant amounts of money via Iran for 

onward passage to al-Qaeda leadership in Afghanistan and Iraq."64 Suri also worked with the 

Iranian government to secure the release of ai-Qaeda personnel from Iranian prisons. In 

announcing a related action under the State Department's Rewards for Justice program later in 

56 U.S. Department of State, Country Reports on Terrorism 2015, https://wv.w.state.gov/documents/organization1258249.pdf. 57 United Nations Security Council, "Twenty-second report of the Analytical Support and Sanctions Monitoring Team pursuant 

to resolutions 1526 (2004) and 2253 (2015)," July 27, 2018, bttp://undocs.orgiS/2018/705 58 U.S. Department of the Treasury, "Treasury Targets AI Qaida Operatives in Iran," press release, January 16, 2009, 

https:/ /wv.;w .trea..:.;urv.gov/press-ccnter/press~releases/Pages/hp l360.aspx. 59 Ibid. 60U.S. Department of State, Country Reports on Terrorism 2016, https://\V\N\.v.state.gov/documents/organization/2724R8.pdf 61 Bauer, Katherine and Matthew, Levitt, "AI Qaeda Financing: Selected Issues," in Zelin, Aaron, "How AJ~Qaeda Survived 

Drones, Uprisings, and the Islamic State," The Washington Institute for Ncar East Policy, June 2017, 

https://www. washingtoninstitute.org/uploads!Documcnts/pubs!PolicvFocus 153 ~Zclin.pdf 

62 U.S. Department of the Treasury, "Treasury Further Exposes Iran-Based A1¥Qa'ida Network, .. press release, October t 8, 2012, 

https:/fwww. treasury. gov/press-center/press-releascs/Pages/tg 17 41.aspx. 63 U.S. Department of the Treasury, "Treasury Targets Key Al-Qa'ida Funding and Support Network Using !ran as a Critical 

Transit Point," press release, July 28, 2011, https://www.treasury.gov/press¥center/press-releases/Pages/tgl26l .aspx. 64 lbid. 
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2011, a Treasury official said that Iranian authorities had maintained a relationship with Suri and 

"allowed him to operate within Iran's borders since 2005."65 

The Kuwaiti Muhsin al-Fadhli soon replaced Suri as al-Qaeda's senior facilitator and financier in 

Iran.66 Fadhli had been sanctioned in 2005 for financing aspects of the Iraqi insurgency, 

including "the Zarqawi network" and al-Qaeda. He had also been convicted by a Kuwaiti court 

and was wanted in Saudi Arabia for terrorism-related activities. According to the Treasury 

Department, Fadhli began working with the Iran-based network in 2009 but was later arrested by 

Iranian authorities. After being released in 20 II, he assumed leadership of the network, which 

the State Department described as "a core facilitation pipeline through Iran, enabling al-Qaeda to 

move funds and fighters to South Asia and to Syria." As of October 2012, according to the 

Treasury Department, al-Qaeda elements in Iran led by Fadhli were "working to move fighters 

and money through Turkey to support al-Qaeda affiliated elements in Syria," as well as 

leveraging his extensive network of Kuwaiti jihadists to send money to Syria.67 Fadhli was killed 

on July 8, 2015, by a U.S. airstrike in Syria, where he was reportedly leading a group of 

seasoned al-Qaeda operatives working with ANF in hopes of recruiting Europeans and 

Americans to conduct attacks in the West.68 

To further address al-Qaeda's network in Iran, the U.S. Treasury in July 2016 announced new 

sanctions against three senior al-Qaeda members located in Iran. The sanctions, characterized by 

the Treasury as "action to disrupt the operations, fundraising, and support networks that help alQaeda move money and operatives from South Asia and across the Middle East,"69 echo 

congressional testimony from National Counterterrorism Center director Nicholas Rasmussen 

earlier that year in which he raised concerns that al-Qaeda was exploiting safe havens in Syria 

"by relocating some of its remaining leadership cadre from South Asia to Syria."70 These 

sanctions again highlight the ease of travel for al-Qaeda facilitators and operatives in Iran, as 

well as their ongoing contact with Iranian officials and operational roles. One designee, Yisra 

Muhammad Ibrahim Bayumi, has been in Iran since 2014 and has served as a mediator with 

Iranian authorities. Abu Bakr Muhammad Muhammad Ghumayn appears to have traveled 

65 U.S. Department of State, "Briefing on New Rewards for Justice Reward Offer," December 22, 2011, https://2009-

2017.state.gov/r/pa/prs/ps/2011/!2/179654.htm. 

66 U.S. Department of State, "Rewards for Justice-ai-Qaeda Reward Offers," October 18, 2012, https://2009-

20 !7.state.gov/r/pa/prs/ps/2012il Oil 99299.htm. 67 U.S. Department of Treasury, "Treasury Further Exposes Iran-Based AI-Qa'ida Network," press release, October 18, 2012, 

htt.ps://www. treasurv.gov/press-centcr/press-rcleases/Pages/tg 1 7 41.aspx. 68 Eric Schmitt, "Leader of Qaeda Cell in Syria, Muhsin al-Fadhli, Is Killed in Airstrike, U.S. Says," New York Times, July 21, 

2015, https://\vww.nytimes.com/2015/07/22/world/middleeast/leader-of-qac.da-cell-in-svria-muhsin·al-fadhli-is·killcd-inairstrike-.us-says.html? r=O. 69 U.S. Department of the Treasury, "Treasury Designates Three Senior al-Qaida Members," press release, July 20, 2016, 

https://www.treasury.govfpress-center/press-reJcases/Pages/jJ0523.aspx. 

70 Nicholas J. Rasmussen, ~'Worldwide Threats to the Homeland: ISIS and the new wave of terror," Hearing before the 

Committee on Homeland Security, House of Representatives, One Hundred Fourteenth Congress, July 14,2016, 

httns:f/www.gpo. gov/fdsys/pkg/CHRG-1 l4hhrg25 265/html/CHRG-l14hhrg25265. htm 
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between 2014 and 2015 to Iran, where he assumed control of the fmancing and organization of 

al-Qaeda members.71 

Abuse of the Charitable Sector 

Another way in which al-Qaeda has successfully raised funds is through abuse of the charitable 

sector. In the years after the September 11 attacks, disrupting terrorists' ability to abuse 

charitable giving as a means of raising, transferring, and laundering funds was a major focus of 

counterterrorism authorities around the world. Charities operating as fronts for terrorist groups 

were designated by national authorities and world bodies such as the UN, the charitable sector 

was encouraged to implement more sophisticated due-diligence procedures to protect the 

industry from abuse, and governments engaged in outreach and information campaigns.12 

Thus, for a while, it seemed like terrorist abuse of charity had dissipated as a preferred illicitfinance typology. Then came the war in Syria and a series of other conflicts across the Middle 

East and North Africa, and the issue was back on the agenda as a counterterrorism priority. 

Consider AQAP, which as of January 2017 "continue[ d] to receive significant donations, 

including under the cover of charitable organizations .• m As conflicts continue with no end in 

sight across the Middle East and North Africa-from Syria toY emen to Libya-charities are 

crucial for alleviating the accompanying humanitarian crises. 

While terrorism financing through the abuse of charities has returned, there is not the same 

emphasis on large-scale false fronts as before 9/ll. Facilitated by the rise of social media, 

fundraisers can now more easily set up false fronts online. Hajjaj al-Ajmi, who was sanctioned 

by the UN in 2014, used Twitter to solicit donations for ANF.74 Some have even openly crowdsourced donations for ANF and other jihadist groups operating in Syria, such as Saad bin Saad 

al-Kaabi, who posted solicitations on Facebook and WhatsApp accounts for "arming, feeding 

and treating" fighters in Syria75 Kaabi was listed at the UN in 2015.16 

Fundraisers have also used social media to thank and confirm to donors the delivery of funds and 

material support to jihadist groups. In a video uploaded to You Tube in October 2016, U.S.-

71 U.S. Department of the Treasury, '·Treasury Designates Three Senior ai-Qaeda Members," press release, July 20, 2016, 

https://www.treasury.gov/press-center/press-releases/Pages/jl0523.aspx. 

72 U.S. Department of the Treasury, "Typologies and Open Source Reporting on Terrorist Abuse of Charitable Operations in 

Post-Earthquake Pakistan and India," https://www.treasury.govfresource-center/terrorist-illicit-finance/Documents/charities postearthguakc.pdf. 

73 UN Security Council, ''Nineteenth Report of the Analytical Support and Sanctions Monitoring Team Submitted pursuant to 

Resolution 2253 (2015) concerning ISIL (Da'esh), al-Qaida and Associated Individuals and Entities," S/2017/35, January 13, 

2017, http://w\VW.un.org/en/galsearch/vicw doc.asp?symbol=S/2017 /35. 74 UN Security Council, "'Narrative Summary ofReasons for Listing: Hajjaj bin Fahd a! Ajmi," August 15,2014, 

httns://'www. un.org/sc/suborg/en!sanctions/126 7 lag sanctions listfsummarics/individualJhaj jaj-bin-fahd-al-ajmi. 75 "Are Terrorists Raising Money in Qatar?" CNN, video clip, 7:14, http://www.cnn.com/videos/us/2014/06/18/erin-dnt-qatarterror~ fundraiser.cnn. 76 UN Security Council, "Narrative Sa'd bin Sa'd Muhammad "September 
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designated ANF financier AbdAllah bin Muhammad al-Muhaysini thanked Gulf donors for 

supportingjihadists in Syria: 

"As for the businessmen, and I will mention some of them, the ones who prepared these 

hundred rockets, may God reward them. One hundred Elephant rockets ... some from a 

group of brothers in Islan from Riyadh, some from our brother Abu Ahmad from Kuwait, 

some from our brother Abu al-Jud from Qatar, and some from brothers I have not 

mentioned ... I tell all the businessmen of the Muslims, this is your money now, fighting 

in the path ofGod."77 

According to the U.S. Treasury, between 2013 and 2015, Muhaysini raised millions of dollars for 

ANF, claiming himse1fthat he had secured $5 million in donations to arm fighters.18 

Nevertheless, cases of major charity fronts remain, and large-scale organizations fimneling 

money to al-Qaeda continue to come to light. For example, Saudi Arabia and the United States 

jointly acted against the al-Furqan Foundation Welfare Trust in May 2015. The U.S. Treasury 

identified al-Furqan as the successor entity to two organizations it had previously designated, the 

Afghan Support Committee and the Revival of Islamic Heritage Society, and described alFurqan as a "charitable organization that is a major conduit of financial and material support for 

terrorist groups .. .in some cases under the guise of humanitarian work." In addition to charging 

that it supported al-Qaeda, the Treasury denounced al-Furqan for aiding the Taliban and the 

Pakistanijihadist group Lashk:ar-e-Taiba. Simultaneously, Saudi Arabia designated al-Furqan 

under its own counterterrorism laws. 79 

Less than a year later, the United States and Saudi Arabia again took joint action against four 

individuals and two organizations for supporting the same three terrorist groups in Afghanistan 

and Pakistan. Among those sanctioned were the Scottish-bomjihadist James McLintock and the 

al-Ralunah Welfare Organization (RWO), of which McLintock was the president, CEO, and 

chairman. According to the Treasury Department, RWO and other associated outfits received 

"large amounts of money from British donors who were not aware of the NGOs' Taliban ties." 

Whereas the Treasury statement cited McLintock for supporting a variety of terrorist groups in 

Afghanistan and Pakistan, he also appeared to be involved in Syria. 80 

77 al~Muhaysini, Abdullah. "Sheikh al-Muhaysini Annmmces Beginning of Breaking Siege of Aleppo and Fires I 00 Elephant 

Rockets~'. YouTube video, 12:02. Posted October 2016, since removed date unknown. See Zehn, Aaron Y, "Policy Focus 

153:How Al-Qacda Survived Drones, Uprisings, and the Islamic State: The Nature of the Current Treat," The Washington 

Institute for Near East Policy, June 2017. http://www.washingtoninstitute.org/uploads/Documcnts/pubs/PolicyFocusl53-

Zelin.pdf 

78 U.S. Department of the Treasury, "'Treasury Designates Key a1-Nusrah Front Leaders," press release, November 10, 2016, 

https:!/www.treasury.gov/press-center/mcss-rcleascs/Pages/jl0605.aspx. 

79 U.S. Department of the Treasury, "The U.S. and Saudi Arabia Take Joint Action against Terrorist Financing Entity Attempting 

to Evade U.S. and UN Sanctions and Violate Saudi Laws," press release, April?, 2015, https://wv.rw.treasurv.gov/prcsscenter/press-releases/Pages/ill 00 19.aspx. 80 U.S. Department of the Treasury, ''United States and Saudi Arabia Designate Terrorist Fundraising and Support Networks," 

press relea~e. March 31,2016, https:/lwww.treasurv.gov/press-center/press-relea<;es/Pacres/jl0400.aspx. 
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IRANIAN SUPPORT FOR TERRORISM 

As the foremost state sponsor of terrorism, Iran provides hundreds of millions of dollars a year to 

proxies in the Levant, and increasingly across the Middle East. Beyond funding, Iran also 

provides training, and arms and equips its terrorist proxies. This is primarily done through the 

Islamic Revolutionary Guards Corps' (IRGC) Qods Force or IRGC-QF, the branch of the IRGC 

responsible for external operations, as well as increasingly via its chief proxy Lebanese 

Hezbollah.81 

Beginning in the mid-2000s, the U.S.-led financial constriction campaign against Iran drew 

attention to Iran's use of deceptive fmancial practices to move funds to its terrorist proxies. In 

2007, the U.S. Treasury Department sanctioned Iran's state-owned Bank Saderat for transferring 

"$50 million from the Central Bank oflran through its subsidiary in London to its branch in 

Beirut for the benefit of Hezbollah fronts in Lebanon that support acts of violence. " 82 

In recent actions, the U.S. government has brought a renewed focus to this behavior. In 

November 2017, the Treasury announced new sanctions against a network circumventing 

European export control restrictions to procure materials to print counterfeit Yemeni banknotes 

"potentially worth hundreds of millions of dollars to support Iran's destabilizing activities."83 In 

May 2018, the United States and the United Arab Emirates acted jointly to disrupt a currency 

exchange network using UAE-based exchange houses to acquire U.S. dollar banknotes for use 

by the IRGC-QF.84 And, the following week, the then-Governor of the Central Bank of Iraq, 

Valiollah Seif, was included in a round of sanctions that included an Iraq-based bank and a 

Hezbollah official. According to the Treasury, Seif"conspired with the IRGC-QF to move 

millions of dollars ... to allow the IRGC-QF to fund its activities abroad."85 The transfers were 

routed through the Iraqi al-Bilad Islamic Bank for the benefit ofHezbollah. 86 

Although substantial attention has been given to Iran's efforts to establish a "land bridge" in the 

Levant, the IRGC-QF has, for years, used an air bridge to move weapons and fighters to and 

from training in Iran. In 2011, the United States sanctioned Iranian carrier Mahan Air for 

81 Eisenstadt, Michael, ''Shia Militias as a Military," in Ghaddar, Hanin, "Iran's Foreign Legion," Policy Note 46, Washington 

Institute for Near East Policy, February 2018. https://w,vw. v.'ashingtoninstitutc.org/policy-analysis/view/irans-t()reign-Jegion-theimpact-of-shia-militias-on-u.s.-foreign-policy 

82 U.S. Department of the Treasury. "Fact Sheet: Designation oflranian Entities and Individuals for Proliferation Activities and 

Support for Terrorism," October 25,2007. httos://\vww.treasury.gov/press-ccnter/prcss-releasesiPages1m644.aspx 83 "Under Secretary Sigal Mandelker Speech before the Foundation for the Defense of Democracies," Press Release, U.S. 

Department of the Treasury, June 5, 2018, https:/!home.treasury.gov/ncws/press-releases/sm0406; "Treasury Designates LargeScale IRGC-QF Counterfeiting Ring," Press Release, U.S. Department of the Treasury, November 20, 2017, 

https:/ /www.treasurv.gov/press-center/press-releases/Pages/sm0219 .aspx. 

84 "United States and United Arab Emirates Disrupt Large Scale Currency Exchange Network Transferring Millions of Dollars to 

the !RGC-QF," Press Release, U.S. Department of the Treasury, May 10, 2018, 

httos:/!homc.trcasurv.gov/news/press-releases/sm0383 

85 "Treasury Targets Iran's Central Bank Governor and an Iraqi Bank Moving Millions of Dollars for IRGC-Qods Force,'' Press 

Release, U.S. Department of the Treasury, May J 5, 2018, 

https:/!home.treasury.gov/news/prcss-releases/sm0385. 

86 "Under Secretary Sigal Mandelker Speech before the Foundation for the Defense of Democracies," Press Release, U.S. 

Department of the Treasury, June 5, 2018, https://home.treasury.gov/ncwsfprcss-releases/sm0406. 
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"secretly ferrying operatives, weapons and funds on its flights. "87 The airline "provided travel 

services to IRGC-QF personnel flown to and from Iran and Syria for military training," and 

"transported persormel, weapons and goods on behalf ofHizballah."88 Mahan also briefly made 

passenger flights from Tehran to Sana in the spring of2015, not long after Houthi rebels took 

control of the Yemeni capital. These continued until the Saudi-led coalition bombed the tarmac 

to prevent a Mahan plane from landing89 Despite remaining on U.S. sanctions lists, Mahan 

opened new routes to Moscow, Kiev, Copenhagen, and Paris in the first year after the Iran 

nuclear deal came into force. 90 

Since its 2011 designation, more than 200 individuals and entities associated with Mahan Air 

have been added to U.S. sanctions lists.91 Most recently, in July 2018, the Treasury designated a 

Malaysia-based General Sales Agent (GSA) acting on behalf ofMahan. 92 Treasury Secretary 

Steven Mnuchin put the airline industry "on notice," stating: "The United States government has 

been very clear about the deadly role played by Mahan Air. Our action against an independent 

company providing General Sales Agent services to Mahan makes clear to all in the aviation 

industry that they urgently need to sever all ties and distance themselves immediately from this 

airline."93 

Hezbollah 

In addition to substantial Iranian support, Hezbollah has for decades helped fund its terrorist and 

social service initiatives through a diverse portfolio of criminal and commercial activities, 

relying on a worldwide network not only for fmancial, but also logistical and even operational 

support. This includes from large Lebanese diaspora communities, especially in West Africa and 

South America. In the tri-border area of Paraguay, Argentina, and Brazil, for instance, supporters 

have taken advantage of loosely regulated territory to engage in a range of illicit activities 

including fundraising and money laundering for the benefit of Hezbollah. 94 

These networks have come under pressure in recent years following a series of U.S. actions that 

have constrained Hezbollah's finances, and prompting Hezbollah secretary-general Hassan 

87 ''Treasury Designates Iranian Commercial Airline Linked to Iran's Support for Terrorism,'' Press Release, U.S. Department of 

the Treasury, October 12, 2011,https://www.treasury.gov/press-center/press-re1eases/Pages/tg1322.aspx 88 Ibid. 89 "First Iran Flight Lands in Shiite-Held Yemen Capital," National, March 1, 2015, http://www.thenational.ae/world/middte-

~:!:ll!Y..first-ir<!n-tlight-lands-in-shiite-held-vemcn-capital; Mohammed Ali Kalfood and Kareem Fahim, "Saudis Hit a Yemeni 

Airport, Possibly Closing Aid Route," New York Times, April28, 2015, http://www.nytimes.com/2015/04/29/world 

/middleea,;;t/saudis-hit-a-ycmeni-airport-possibly-closing-aid-route.html. 

90 See Mahan Air Press Room, http://www.mahan.aero/en/contact!press-roorn. 

91 Nadimi, Farzin. ··Treasury Increases the Pressure on Iranian Airlines," The Washington Institute for Near East Policy, June 1, 

2018, https:!/www. washington institutc.orcr!policy-analvsis/view/treasurv-increases-the-messure-on-iranian-airlines 92 "Treasury Designates Mahan Air Service Provider," Press Release, U.S. Department of the Treasury, July 9, 2018, 

https:/!home.treasury.gov/newslpress-releases/sm423 

93 idib 94 Levitt, Matthew. "HezboHah's Criminal Networks: Useful Idiots, Henchmen, and Organized Criminal Facilitators". In: 

Matfess, Hilary and Mikalucic, Michael, ed., Beyond Convergence: World Without Order. Washington, DC.: Center for Complex 

Operations, Institute for National Strategic Studies, National Defense University. 
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Nasrallah in July 2016 to (falsely) insist that Hezbollah is exclusively funded by Iran.95 His 

remarks came after Lebanese authorities moved to comply with U.S. legislation-the Hezbollah 

International Financing Prevention Act (HIFPA)-that put Lebanese banks at risk of being cut 

off from the U.S. financial system if they did business with designated Hezbollah-affiliates. 

Hundreds of such Hezbollah-linked accounts were closed, threatening the militia's social support 

network and commercial interests. 96 

HIFP A hit especially hard because of a multiyear effort by the U.S. Treasury to target Hezbollah 

business interests used both to generate revenue and provide commercial cover. Notably, in June 

2015, the U.S. designated Adham Tabaja and his al-Inmaa Engineering Contracting group, which 

had been used "to obtain oil and construction development projects in Iraq that provide both 

financial support and organizational infrastructure to Hezbollah."97 According to the Treasury, 

Tabaja maintained direct ties to senior Hezbollah organizational elements and held properties in 

Lebanon on behalf ofthe group. Al-Inmaa Engineering and Contracting had been used by 

Hezbollah as an investment vehicle dating to at least the mid-2000s. "More recently" the Iraqi 

branches of Tabaja's firm have provided "organizational infrastructure" to Hezbollah. Tabaja 

associate Kassem Hejejj opened bank accounts for Hezbollah in Lebanon and Iraq and "provided 

credit to Hezbollah procurement companies." Another Tabaja associate, Husayn Ali Faour, 

managed the Lebanon-based Car Care Center, a front company used to supply Hezbollah's 

vehicle needs. 98 

Another example is Kassim Tajideen, designated in May 2009 for being "an important financial 

contributor to Hezbollah who operates a network of businesses in Lebanon and Africa." Tajideen 

also contributed to Hezbollah and funneled money through his brother, a Hezbollah commander 

and ran "cover companies" for Hezbollah in Africa. 99 In December 2010, Treasury designated 

Kassim Tajideen's brothers and business partners, Ali Tajideen and Hussein Tajideen, for 

"providing support to Hizballah." Stuart Levey, Under Secretary for Terrorism and Financial 

Intelligence at the time, regarded Ali Tajideen and Hussein Tajideen as "two ofHizballah's top 

financiers in Africa," stating that their "multinational network generates millions of dollars in 

funding" and "secures strategic geographical strongholds for Hizballah."100 Arrested by 

95 https://www.washingtoninstitute.org/policy-analysis!view/targeting-hezboHahs-home-front-finances 96 Schenker, David and Bauer, Katherine, "Targeting Hezbollah's Home-Front Finances," The Washington Institute for Near East 

Policy, July 5, 2016, https://www.washingtoninstitute.org/policy-analysis/view/targeting-hezbollahs-home-front-financcs. 

97 ·'Treasury Sanctions Hizballah Front Companies and Facilitators in Lebanon And Iraq,·• Press Release, U.S. Department of the 

Treasury, June 20, 2015, https://www.treasury.gov/press-center/press-releases/Pages/jl0069.aspx. 98 U.S. Department of the Treasury, "Treasury Sanctions Hizballah Front Companies and Facilitators in Lebanon and Iraq," press 

release. June 10,2015, https:!/\vww.treasurv.gov/press-center/press-rcleases/Pages!i!0069.a.;;px. 99 U.S. Department of the Treasury, "Treasury Targets Hizballah Network in Africa," press release, May 27,2009, 

lmps://www.treasury.gov/press-center/press-releases/Pages/tgl49.asgx. 

100 U.S. Department of the Treasury, "'Treasury Targets Hizballah Financial Network," press release, December 9, 2010~ 

11.!!tli:/fv.:\\!w.trcasury.goviprcss-ccnter/press-rcleascsfPagcs/tg997.aspx. 
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Moroccan authorities on March 12,2017 based on a U.S. indictment, Kassim Tajideen was 

extradited from Morocco to the United States later that month. 101 

IRGC-QF has also used commercial cover to move funds to Hezbollah. In February 2017, 

Beirut-based QF official Hasan Dehghan Ebrahimi was called out for facilitating millions of 

dollars' worth of cash transfers to Hezbollah, including through U.S.-designated Hezbollah 

construction firm Wa'ad Company. According to Treasury, Ebrahimi used a network of 

Lebanon-based companies with ties to the broader Middle East to transfer funds, launder money, 

and conduct business." 102 

Separately, in 2016, the U.S. Drug Enforcement Agency announced that, in cooperation with 

European authorities, it had uncovered a dedicated Hezbollah unit for drug trafficking and 

money laundering of drug proceeds, resulting in the arrest of members of the network's 

European cell. The proceeds were used to finance arms purchases for Hezbollah in Syria. 103 

In May 2016, a U.S. official told Congress that Hezbollah was "in its worst financial shape in 

decades." 104 There are no indications that this has changed. As more of the group's funding from 

Iran is dedicated to regional military operations -both those ofHezbollah and the other regional 

Iranian proxies- Hezbollah has been forced to cut some social services it provides to its Shia 

base in Lebanon. 105 Nasrallah recently acknowledged the group's "financial crisis," according to 

Lebanese press. 106 Hezbollah has ramped up public fundraising em:)ltS in recent years, posting 

calls for donations on billboards, running advertisements on Hczbollah's al-Manar television 

station and launching an on-line campaign urging supporters to send funds to "equip a 

mujahid." 107 

As the administration moves in November to fully reimplemcnt U.S. nuclear sanctions 

suspended under the Iran nuclear deal, it's important to remember that even in time of economic 

crisis, Iran has historically prioritized funding its external activities, including through the 

101 SpencerS. Hsu. "Lebanese Businessman, Hezbollah Supporter, Charged with Evading U.S. Terror Sanctions," Washington 

Post. March 24, 2017, sec. Public Safety, https://\VWW. washingtonpostcom!local/public~safety/kbanese-busincssman-hezbollahsunporter-chargcd-_~=tl.h::~vading~us-terror-sanctions/2017/03/241979dbb.d2-1 Ob6-11 c7-ab07-Q]d9f521 tbhS ston,_html; United 

States ofAmedca v. Kassim Tajideen and !mad Hassoun, lndicunent, United States District Court fur the District of Columbia, 

Filed March 7, 2017, hitps://www.iusticc.goviopa/prcss-releasc/fjlc/95207lidov.:nload. 102 U.S. Department of the Treasury ''Treasury San\.'tions Supporters oflran's BaHistic Missile Program and Iran's Islamic 

Revolutionary Guard Corps- Quds Force,'' February 3, 2017. https://www.treasurv.gov/press-ccnteri~ 

relea.;;cs/Pagesfas0004.aspx 

103 U.S. Dntg Enforcement Administration. "DEA and European Authorities Uncover Massive Hizbal!ah Drug and Money 

Laundering Scheme." February J, 2016. https:/ /\\'ww.dea. gov/press-releases/20 16/02/01 /dca~and-european-authorities-uncovermass1ve-hizballah-drug-and-money. 

104 "Hczbollah in 'worst financial shape ln decades,' US says,''lhe Times of Israel, May 25, 2016. 

http://www.timesofisrael.com/hezbollah-in-worst-financial-shape-in-decades-us-says/ 

105 Ghaddar, Hanin, "Hezbollah's Women Aren"t Happy'" lbc Washington Institute for Near East Policy, October 12, 2016, 

http://\\'Ww.washingtoninstitute.org/policy-analysislviewlhezbollahs-women-arent-happy. 

106 Bayram, Ibrahim. "Hezbollah turns to charity amid economic woes," An-Nahar, August 23, 2018, 

ht!n.~_;_!f...c;.IJ. . .?nnahar.cnm/article184 7815-hczho 11ah-tum,&-to-c.hari tv-amid-economic-~Q~.,'i. 

107 "Hezbollah Asks for Support on Billboards and Posters," AI Arabiya, June 7, 2017, 

https://english.alarabiya.netien/News/middlc-east/2017/06107/Hezbollah-a>ks-fur-support-on-billboards.htrnl; 

"Hizbullah Launches Online Fundraising Campaign," MEMRJ, February 10,2017, http://cjlab.memri.or!V1ab-projects/tracking· 

jihadi-tcrrorist~use-of-sodal-media/hizbullah-launchcs~onlinc-fundraising-campaignf 
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allocation oflimited hard currency. Consider, for instance, the case ofiRGC-QF exploitation of 

Emirati exchange houses to procure U.S. dollar bank notes to further its destabilizing regional 

activities. As the value of the Iranian rial continues to fall and oil revenues shrink making foreign 

exchange more scarce, providing such support will come at an even greater cost to the regime. 

RESPONSES: ARE COUNTER-TERRORIST FINANCING POLICIES EFFECTIVE? 

Although the cost of an individual terrorist attack may be small, terrorist organizations rely on a 

steady flow of funds to support operational costs such as salaries, training, transportation, 

recruitment, and even propaganda. Understanding how a terrorist organization manages its assets 

is critical to depriving the organization of funds and disrupting its activities in the long term. 108 

Indeed, an organization's calculation of how and where to raise funds is determined by a number 

of factors including ideological, geographical, and practical concerns. Likewise, how much 

funding an organization requires is determined by its size and objectives. Organizations that 

control territory, engage in insurgency, or provide social services require additional resources. 

The larger and more complex an organization's mission, the greater need it has for specialized 

procedures and personnel to handle financial matters. For example, the Islamic State recruited 

"an army of accountants"; 109 Al-Qaeda is known for requiring receipts 110; and the 9/ll hijackers 

even reportedly returned their remaining funds days before the attacks. 111 Such operations create 

vulnerabilities to detection and serve as key nodes for disruption. 

As terrorist financing typologies evolve, responses from the international community to counter 

such threats must also adapt. In the decade following the 9111 attacks in the United States, 

counter-terrorist financing efforts focused on identifying and disrupting so-called "deep-pocket" 

donors, primarily located in the Arab Sunni states in the Gulf, and protecting charitable 

organizations from exploitation and diversion of funds to support terrorist causes. 

Considerable efforts were made to establish and gain adoption of international best practices 

designed to make the international financial system a hostile environment for terrorist support 

and other forms of illicit finance. Part of this effort involved raising awareness of the risks of 

terrorist fmancing and facilitation; bringing governments in high-risk jurisdictions around to 

108''FATF Report: Emerging Terrorist Financing Risks," Financial Action Task Force, October 2015. Emerging Terrorist 

Financing Risks, 2015, http:/ Jv.wv..r. fatf-gafi.org/publications/mcthodsandtrcnds/documcnts!cmergin<J-tcnorist-financingrisks.htmJ. 

109 Alexander, Harriet and Beach, Alastair, "How Isil is funded, trained and operating in Iraq and Syria," 11te Telegraph, August 

23, 201 4, iHtps:/i-w....-"rw. tclegraph.co.uk/ncws/worldnews/middlccast!irag/ 11 052919/How-Isil-is-funded-trained-and-operatin~:r -inlrag-and-Svria.html 

uo Simpson, Conner, "'AI Qaeda Are Strict About Keeping Track of Their Receipts,'' The Atlantic, December 29,2013, 

https;/ iv.·"'.VW. thcatlantic.com!intcrnational/archive/20 13/12/al=aaeda-are-strict-about-kecping-track -thcir-rcccipts/356552/ 111.'Terrorist Financing Staff Monograph, Appendix A: The Financing of the 9/11 Plot," National Commission on Terrorist 

Attacks Upon the United States, 
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implementation of such standards despite concerns of retaliation. Furthermore, by sharing 

actionable informatimr-either confidentially or through public notification of sanctions 

actions--governments were incentivized or compelled to disrupt terrorists' means to raise, store, 

and move funds. 

The rise of the Islamic State-and its almost complete reliance on locally-derived funds-has 

brought greater attention to the need to not just disrupt terrorist access to the fmancial system, 

but to find ways to cut these groups off from means of raising funds. Together with the trend 

towards criminal sources of funds, there is also a greater focus on law enforcement's role in 

disrupting terrorist financing and even the role of kinetic actions in blocking terrorists' access to 

revenue. 

To counter the threat of terrorist financing, the United States and its allies marshal actionable 

financial intelligence, regulatory and sanctions authorities, and engagement with public and 

private stakeholders. A comprehensive approach is necessary, and indeed increasingly 

implemented. Private sector fmancial data gleaned by finance ministries and shared with U.S. 

military and law enforcement agencies helped identify financial targets for military strikes on IS 

oil infrastructure and cash depots. 112 Today, according to Gerald Roberts, the former section 

chief of the Terrorist Financing Operations Section of the FBI's Counterterrorism Division, 

banks run financial intelligence units, which in several cases have provided "that missing piece 

of the puzzle to identify someone here or abroad who is planning or supporting plans to attack 

our interests." 113 

Although financial sanctions are perhaps the most visible and quantifiable tool, they are only one 

tool in the larger CFT toolkit. For a variety of reasons, not every terrorist funder that comes 

across the U.S. government's radar is sanctioned, including diplomatic or intelligence equities, 

policy considerations, or ongoing law enforcement investigations. Often, it is more useful to 

share that information with partner governments and allow them to act. Sanctions designations 

are targeted at key nodes or vulnerabilities in terrorist networks, and although counter-terrorist 

financing authorities aim to freeze terrorists' funds, governments know that they will never 

bankrupt terrorism. Instead, sanctions designations are driven by intelligence and aim to disrupt 

terrorist financial networks and deter wealthy sympathizers who have financial interests they 

would rather not put at risk. 

Disrupting terrorist's financial transactions makes it harder for them to travel, bribe officials, 

procure materials, provide for their own families, and, ultimately, engage in operations. Denying 

terrorists--as well as insurgents and proliferators--easy access to fmancial tools forces them to 

use more costly, less efficient, and often less reliable means of financing their activities. "We 

have no illusion that we can entirely prevent the flow of funds to terrorist groups," then-Treasury 

112 Ycganch Torbati and Brett Wolf, "In Taking Economic War to Islamic State, U.S. Developing New Tools," Reuters, 

November 24, 20 15~ https:/ fv·.rr.vw .reuters.com/artic le/us-france-shooting-usa-sanctions-insight-idUSKBNOTDOBJ20151124~ 

113 Gerald Roberts, "Money Flow in the Age ofiSIS," Chemical Weapons in the Middle East, The Washington Institute for Near 

East Policy, May 15, 2015, http://\vww.washinotoninstitutc.org/policy~analvsis/vie\vlmoncv-flow-in-the-aoc-of~is.is. 
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Undersecretary David Cohen stated in 2010. "Some funds will find a way to flow. But that 

does not mean the effort is futile-far from it. What we have learned is that by deterring 

would-be funders and disrupting the financial facilitation networks, we significantly impede 

terrorists' ability to operate."II4 

For example, in 2006, Philippine police reported that plans by the jihadist militant group Abu 

Sayyaf was reportedly unable to carry out plans to bomb targets in Manila due to a lack of 

funds. 115 In 2007, following the outing of several of al-Qaeda's deep-pocket donors and the ways 

in which the group used charities to move its fuuds, Mustafa Abu a!-Y azid, al-Qaeda' s finance 

chief, lamented the group's money problems in a propaganda video, arguing that the primary 

need for jihad in Afghanistan was fmancial. "There are hundreds wishing to carry out 

martyrdom-seeking operations, but they can't fmd the funds to equip themselves," he said. "So 

funding is the mainstay ofjihad." 116 

Alongside efforts to disrupt terrorist financing is an equally powerful tool: using financial data to 

gather intelligence. As the 9/11 Commission's report concluded, "Expect less from trying to dry 

up terrorist money and more from following the money for intelligence, as a tool to hunt 

terrorists, understand their networks, and disrupt their operations." 117 Following the money 

allows governments to map out the links between known terrorist operatives and supporters and 

to identifY new ones. The ability to follow the money as an intelligence function is not limited to 

the formal fmancial sector. As former senior Treasury official Stuart Levey explained in 2008, 

"To the extent that terrorists have been pushed out of the formal financial system, this also has 

advantages for us, as their alternative methods of moving money are more cumbersome and 

costly, subjecting terrorists to a greater likelihood of detection and disruption." 118 

Indeed, financial intelligence (FININT) has provided valuable information in several high-profile 

investigations. In 2003, transactions between a known ai-Qaeda suspect and a previously 

unknown figure in South Asia allowed the U.S. government to track down Riduan Isamuddin, 

the mastermind of the 2002 Bali bombing, which killed 202 people. 119 The UK's National 

Terrorist Financial Investigations Unit helped thwart the 2006 airline plot by tracking large 

money transfers disguised as "earthquake relief' from a British-based Islamic charity to the three 

suspected bombers. 120 One particularly effective FININT program-the Terrorist Finance 

!14 David Cohen, "Tackling Terrorist Financing," Council on Foreign Relations, hrtps://w\vw.cfT.org/event/tackling~terroristfinancing-0. 

u.s Manny Mogato, "Militants in SE Asia Rely on Donations-experts," Reuters, July 09, 2008, 

https://www.reuters.com/article/idUSMAN23338. 

116 Levitt, Matthew and Michael Jacobson, "The Money Trail," The Washington Institute for Near East Policy, November 2008, 

https://www.washingtoninstitute.org/up!oads/Documents/pubs/PolicvFocus89.odf 

ll 7"'Executive Summary;· 9/ll Commission Report https://govinfo.librarv.untcdu/911/rcport/911 Renort Excc.htm 118 Stuart A. Levey, "Role ofFinanciallntelligence." Los Angeles Times, March 26, 2008, 

httn://articles.latimes.com/2008/mar/26/opinion/Je~wednesday26.S4. 

ll 9 Eric Lichtblau and James Risen, "Bank Data Is Sifted by U.S. in Secret to Block Terror,1

' The New York Times, June 23, 

2006, !:m:ru!)/www.nytimes.com/2006/06/23/washingtonl23int~l.html?pagewanted=urint. 

120 Stephen Damctto, ''Money trail is the best lead in the fight against terror," WAtoday, November 9, 2014, 

https:f/www. watoday.com.au/opin ion/money-trail-is-the-best -lead-in-the-fight-against~tcrror -201 41 1 09-11 j8ec.html. 
55 

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Tracking Program (TFTP)-produced more than 18,000 FININT leads that U.S. authorities 

shared with their European counterparts through February 2016. 121 

Some argue that in the age of the Islamic State, the ways terrorists fmance their operations 

simply don't lend themselves to the traditional tools used to fight terrorist financing, suggesting 

that financial measures are particularly ineffective at preventing the kinds of self-funded attacks 

that have recently become common. 122 However, such attacks often cost more than meets the 

eye, and because even the cheapest attack is not free, when terrorists are frozen out of their bank 

accounts, they have to resort to riskier tactics. Consider the case of Ismail Issa, an IS operative 

arrested while traveling from Germany to Syria. The group had sent him with cash to shop for 

supplies rather than wiring money to an operative already in the country, because it had become 

too difficult for IS members to transfer money without being picked up by the authorities. 123 In 

many cases, the jihadists have grown so worried that their transactions were being monitored that 

they were too scared to collect the funds. Even when terrorists do manage to carry out an attack, 

financial intelligence can play an important role in the subsequent investigation-as was the 

case, according to the U.S. Treasury, with the 2013 Boston Marathon bombings, the January 

2015 shooting at the offices of the magazine Charlie Hebda, and the November 2015 attacks in 

Paris. 124 

There is no doubt that IS has represented a unique terrorist financing challenge. However, its 

ability to take territory was a function not of its particular financial prowess prior, but the 

breakdown of rule of law in parts of Syria and northwestern Iraq. That terrorist organizations are 

in some ways better resourced than they were pre-9/11 is not a function of the failure ofCFT 

efforts, but a result of the proliferation of weak and ungoverned spaces. Nonetheless, these trends 

necessitate efforts to understand how terrorist organizations continue to adapt their financial 

structures and design of increasingly sophisticated measures to counter them. 

The Counter-IS coalition, for example, building on the extension of the UN 1267 mandate to 

cover the Islamic State, developed and implemented a dual prong approach that relied on 

isolating IS-controlled territory from the global financial system and depriving the Islamic State 

of access to resources. While the former included supporting Government of Iraq-led measures 

to take banks and exchange houses in IS-controlled territory offiine (including through 

121 "Terrorist Finance Tracking Program Questions & Answers," U.S. Department of the Treasury, 

https://www.treasurv.gov/resource-center/terrorlst-illicit-finance/Terrorist-FinanceTracking/Document<;/tftp brochure 0315201 6.pdf. 122 Peter R. Neumann, ''Don't Follow the Money," Foreign Affairs, July 24, 2017, https://v.\vw.foreiunaffairs.com/articles/2017-

06-13/dont-follow-moncv. 

123Justin Huggler, ''Germanjihadi trial shows Islamic State's money transtCr struggle," The Telegraph, November 5~ 2014, 

https://www. telegraph.co.uk/newsiworldnews/eurooe/germanv/1121 0325/Gcrman-jihadi-trial-shows-Islamic-States-moneytranster-struggle.html 

124 'Terrorist Finance Tracking Program Questions & Answers," U.S. Department of the Treasury, 

https:!/www.treasury.goviresource-center/tcrrorist-illicit-finance/Ten·orist-FinanceTrackino-/Documcntsltftp brochure 03l52016.pdf. 
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innovative applications of regulatory authorities targeting illicit exchange houses 125), the former 

did indeed involve kinetic action to dissuade oil smuggling and bombings of cash depots. 

Critics are right to highlight the high cost of anti-money laundering (AML) and CFT regulations 

on financial institutions, as well as in pointing to the need to better balance sometimes competing 

but equally important priorities such as the efficient delivery of timely humanitarian aid and 

concerns that terrorists continue to abuse charity as a way to raise, launder and move funds. 126 

Both have been the subject of intense discussion on ways to ease the CFT burden on banks and 

charities. 127 More progress can and should be made on both these fronts, which explains why the 

agencies like the FBI and Treasury Department have stressed the importance of public-private 

cooperation in the CFT space. 128 

125 Katherine Bauer and Matthew Levitt, "Denying the Islamic State Access to Money-Exchange Houses," The Washington 

Institute for Near East Policy, February 3, 2016, 

http:/ /w,vw. washington institutc.org/po licy-analysis/vicw/denving -the-islamic-state-access-to-money -exchano-e-houses 126 Katherine Bauer and Matthew Levitt, "Al-Qaeda Financing: Selected Issues," How Al-Qaeda Survived Drones. Uprisings, 

and the Islamic State the Nature of the Current Threat, June 2017, 

https://www. washingtoninstitute.oro-/uploads/Documents!pubs!Pol icy Focus 153-Zelin.pdf. 127 Robert Werner, "U.S. Efforts against Terrorism Financing: A View from the Private Sector," Chemical Weapons in the 

Middle East- The Washington Institute for Near East Policy, June 26,2007, http://www.washingtoninstitute.org/oolicyanalvsislvicw/u.s.-cfforts-aoainst-tcrrorism-financino-a-view-from-thc-privatc-scctor.; "Protecting Charitable Organizations," 

U.S. Department of the Treasury, https:/ /www.trcasury. gov/rcsourcc-ccntcr/tcrrorist-i !licit -financc/Pagcslprotccting-indcx.aspx. 128 Gerald Roberts, ''Money Flow in the Age ofiSIS," Chemical Weapons in the Middle East- The Washington Institute for Near 

East Policy, May 15,2015, http://www.washingtoninstitutc.org/policy-analvsis/view/moncy-flow-in-the-age-of-isis.; David 

Cohen ''Remarks of Cndcr Secretary fi:lr Terrorism and Fimmcial Intelligence Da\'id Cohen befbrt the Center ti.)r a New 

American Sc..:uritv on ··Confronting "N~w ll1rcats. in Terrorist financing" t' S. Depmim~..~nt of the Trcasurv J\·1ar~h ~4. 2014 

https:!/wwv.·.trca.">urv.gov/prcss-centcr/prcss-relcascs/Pagcs/il2308.aspx. 
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Testimony 

An Overview of Current Trends in Terrorism 

and Illicit Finance 

Lessons from the Islamic State in Iraq and Syria and Other 

Emerging Threats 

Colin P. Clarke 

CT-498 

Testimony presented before the House Financial Serv1ces Committee, Subcommittee on Terrorism and Illicit Finance on 

September 7, 2018. 
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For more information on this publication, visit www.rand.org/pubsltestimonies/CT498.html 

Testimonies 

RAND testimonies record testimony presented or submitted by RAND associates to federal, 

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Published by the RAK'D Corporation, Santa Monica, Calif. 

© Copyright 2018 RAND Corporation 

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information on reprint and linking permissions, please visit 

www.rand.org/pubs/permissions.html. 

www.rand.org 
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An Overview of Current Trends in Terrorism and Illicit Finance: Lessons from the Islamic State 

in Iraq and Syria and Other Emerging Threats 

Testimony of Colin P. Clarke1 

The RAND Corporation2 

Before the Committee on Financial Services 

Subcommittee on Terrorism and Illicit Finance 

United States House of Representatives 

September 7, 2018 

t the height of its territorial control in 2015, Islamic State in Iraq and Syria (ISIS) 

Agenerated over $6 billion-the equivalent of the gross domestic product of 

Liechtenstein.3 This raises the question: In a post-9/11 environment in which 

governments and the private sector are more aware than ever of the importance of 

countering terrorist financing, how was ISIS able to develop a war chest of this 

magnitude? While ISIS's teiTitorial control has declined, it still retains financial power; ISIS's 

surviving leadership is alleged to have smuggled as much as $400 million out ofiraq and Syria 

and used it to invest in legitimate businesses-hotels, hospitals, farms, and car dealershipsthroughout the region, including in Turkey, where some militants have also reportedly made 

large purchases of gold.4 ISIS's financial holdings and funding model have made it the 

wealthiest insurgent group in history, and its diversified funding portfolio and ability to raise 

money through criminal activities provides it with an opportunity to survive and even make a 

comeback in Iraq and Syria over the next several years.5 

The fact that ISIS was able to acquire such a vast financial reserve demonstrates that, despite 

laudable progress over the past decade and a halt~ the international community is stillleaming 

1 The opinions and conclusions expressed in this testimony are the autl1or's alone and should not be interpreted as 

representing those of the RAND Corporation or any of the sponsors of its research. 

1 The RAND Corporation is a research organization that develops solutions to public policy challenges to help make 

communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, 

nonpartisan, and committed to the public interest. 1 ·'Islamic State Has Been Stashing Millions of Dollars in Iraq and Abroad," The Economist, February 22, 20 I 8. 

' Renad Mansour and Hisham ai-Hashimi, ·'[SIS Inc.," Foreign Policy, January I 6, 2018. 

5 Phil Williams and Colin P. Clarke, "Iraqi and Syrian Networks," in Kim Thachuk and Rollie Lal, eds., Terrorist 

Criminal Enterprises. Santa Barbara, Calif: ABC-CLIO, 2018. 
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how to combat terrorist financing. To that end, we must review exactly what we mean by 

terrorist financing, explore how terrorist groups generate income, analyze how ISIS might seek 

to use its funds to regenerate, and, finally, understand current and emerging trends in this area6 

In this testimony, I define terrorist financing and place it in its proper historical context. 

Second, I analyze how terrorists generate income and how their methods have changed over time 

and identify current trends in the financing of terrorism, including the c1ime-terror nexus. Third, 

I describe what I see as the most significant threat to international security-ISIS-and how this 

group may attempt to finance a renewed campaign of terror. I conclude with an assessment of the 

cunent campaign to counter ISIS finances and the implications for U.S. national security. 

Defining Terrorist Financing 

Tcnorist financing is the raising, storing, and movement of funds acquired through licit or 

illicit methods for the purpose of committing terrorist acts or sustaining the logistical structure of 

a ten·orist organization7 Tenorists and insurgents are always seeking innovative means to evade 

law enforcement, and security officials must be dogged in their pursuit of countermeasures to 

deny, destroy, detain, and disrupt these networks. In the contemporary global security 

environment, these challenges are further complicated by the cross-border movement of people, 

goods, and money. Considering the already complex landscape of weak states and poorly 

governed tenitories, those tasked with "following the money" have an immensely difficult task8 

Even though, by definition, violent nonstate actors exist largely outside of the f01mal 

economy, their illicit activities are connected to it in a variety of ways. Terrorist and insurgent 

organizations are relentless in their use of the tools of globalization, comingling their money 

with the trillions of dollars of capital transfers that occur each day .

9 These groups have leamed 

how to combine their resources and profits with legitimate funds, compounding the challenge of 

identifYing where criminal funds end and legitimately eamed funds begin. 10 

Financing is used to augment militant groups' ability to execute attacks and fimd 

organizational components aimed to increase group cohesion. 11 Terrorist organizations must 

generate significant levels of income just to survive, much less sustain operational capabilities 

and funding day-to-day activities. Unlike states, terrorist organizations lack the ability to legally 

6 For a comprehensive overview of the evolution of the threat posed by ai-Qaeda and lSlS, see Ali Soufan, Anatomy 

of Terror: From the Death of Bin Laden to the Rise of the Mamie State, New York: W. W. N01ton, 2017. 7 Kevin D. Stringer, "Tackling Threat Finance: A Labor for Hercules or Sisyphus," Parameters, Vol. 4!, No. I. 

Spring 20!1, pp. !01-119. 

8 Nick Vaughan-Williams, Border Politics: The Limits of Sovereign State Power. Edinburgh: Edinburgh University 

Press. 20 12. 

9 Sidney Weintraub, "Disrupting the financing of Terrorism," Washington Quarterly, Vol. 25, No. I, Winter 2002, 

pp. 53-60, 

10 Louise I. Shelley and John T. Picarelli, "Methods Not Motives: Implications of the Convergence of International 

Organized Crime and Terrorism," Police Practice and Research. Vol. 3, No.4. 2002, p. 308. 

11 Colin P. Clarke, ''The financing of Anned Groups in Connict," International Institute for Strategic Studies Armed 

Conflict Survey. 20!8. 

2 
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tax citizens, although such groups as the Liberation Tigers of Tamil Eelam in Sri Lanka and the 

Tali ban in Afghanistan taxed and extorted civilians for gain, activities that the Taliban continues 

today. 

In Iraq and Syria, ISIS generated the lion's share of its vast fortune by mimicking the actions 

of an actual nation-state. It collected taxes and tariffs from the population in the territory it 

controlled and ran state-owned businesses and trading entities, including the oil trade, while 

extorting individuals, ethnic groups, private companies, local businesses, and the Iraqi 

government. While ISIS's actions could be a historical anomaly in the financing of terrorist 

groups, they could also serve as a model for militants to emulate. Yet betore looking to the future 

of terrorist financing, it is crucial to analyze how tenorists have raised funds in in the past and 

how this phenomenon has evolved over time. 

Evolution of Terrorist Financing 

Throughout the Cold War, both sides of the conflict funded proxy groups that engaged in 

civil wars and insurgencies and committed acts often·orism. In the immediate aftermath of the 

dissolution ofthe Soviet Union and the end of the Cold War, great-power geopolitical 

competition came to a temporary halt-as did the sponsorship of terrorist and insurgent proxy 

groups throughout the world, from Africa to the Middle East to Latin America. Several highprofile groups no longer benefited from the largesse of state sponsorship, which included not 

only funding but, in many cases, training and equipment. 12 Around the same time, inexpensive 

weapons flooded the global anns market, fueling the civil wars and insurgencies that raged 

throughoutthe 1990s and enabling terrorists to seek to replace funding from external patrons 

with money gained from criminal activity, such as atmed robbery, extortion, and kidnapping for 

ransom. 13 There were changes in the frequency and strength of cooperation among terrorists and 

criminals, who v,rere forced into a marriage of convenience to survive. 14 

In addition, many terrorist groups underwent radical changes to their command and control 

structures, as vertically aligned, top-down organizations grew more networked and decentralized. 

This organizational change was accompanied by another shift, as some terrorist groups, 

including al-Qaeda, sought to move beyond local grievances to transnational agendas that 

included attacks across the globe. Inevitably, the desire to establish a transnational presence 

brought these groups into contact with terrorist and criminal enterprises in other parts of the 

world, and this contact sometimes acted as a force multiplier. 15 

11 Colin P. Clarke, Terrorism, Inc.: The FinancingofTerrorism, Insurgency and Irregular Wmfare, Santa Barbara, 

Calif.: ABC-CLIO, 20 IS. 

13 Stathis N. Kalyvas and Laia Balcells, "International System and Technologies of Rebellion: How the End ofthc 

Cold War Shaped Internal Conflict," American Political Science Review, Vol. 104, No.3, 2010, pp. 415-429. 

"Steve Hutchinson and Pat O'Malley, .. A Crime-Terror Nexus? Thinking on Some of the Links Between Tenorism 

and Criminality," Studies in Conflict and Terrorism, VoL 30, No. 12,2007, pp. 1095-1107. 

15 Chris Dishman, "The Leaderless Nexus: When Crime and Terror Converge," Studies in Conflict and Terrorism, 

Vol. 28, No.3, 2005, pp. 237-252. 

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To insulate their organizations from shocks similar to those like losing an external sponsor, 

terrorist groups moved to insource the bulk of their financing. 16 Phil Williams, a professor at the 

University of Pittsburgh and one of the world's leading scholars of transnational organized 

crime, recognized this shift and subsequently characterized it as "do-it-yourself organized 

crime."17 Other scholars, including Tamara Makarenko, have refen·ed to this phenomenon as 

"the crime-terror nexus.'' 18 

In its quest to fund its organization, ISIS has embraced the notion of the crime-terror nexus, 

going to great lengths to recruit members from the criminal underworld and even peppering their 

propaganda with slogans along the lines of one used by a British jihadist group, Rayat alTawheed-"Sometimes people with the worst paths create the best futures. 19 Terrorism expert 

Magnus Ranstorp has dubbed this grassroots phenomenon "micro-financing the Caliphate," in 

which jihadists engage in various types of fraud, petty theft, and other low-level criminal 

activities 20 Sometimes these jihadists use their criminal skills to make them more effective 

attackers 21 This hybridization, sometimes called "gangster jihad" refers specifically to 

individuals who drift from the world of crime towards jihadism, perhaps as a way to redeem a 

lifestyle characterized by sin and illegal acts.22 

ISIS: The Wealthiest Terrorist Group in History 

ISIS is different from previous terrorist groups because the territory it controlled provided 

extremely lucrative resources, such as oil, and a renewable funding source in the form of a 

taxable population. As former Assistant Secretary for Tenorist Financing at the Department of 

the Treasury Daniel Glaser has noted, ISIS generated its wealth from three primary sources: oil 

and gas, which generated about $500 million in2015, primarily through internal sales; taxation 

16 Chris Dishman, .. Terrorism, Crime and Transformation," Studies in CoJ?f/h:t and Terrori.1m. Vol. 24, No. l, 2001, 

pp. 43-58. 

17 Phil Williams, "Te!Torist Financing and Organized Crime: Nexus. Appropriation or Tran.'lformation?" in Thomas 

Biersteker and Susan Eckert, eds .. Countering the Financing ofTerrorism, London: Routledge, 2008, pp. 126 -149. 

"Tamara Makarenko, "The Crime-Terror Continuum: Tracing the Interplay between Transnational Organized 

Crime and Terrorism," Global Crime, Vol. 6, No. l, 2004, pp. 129-145. 

"Rajan Basra and Peter R. Neumann, "Criminal Pasts. Terrorist Futures: European Jihadists and the New CrimeTerror Nexus," Perspectives on Terrorism, Vol. 10, No.6. 2016. 

20 Magnus Ranstorp, ·'Microtinancing the Caliphate: How the Islamic State is Unlocking the Assets of European 

Recruits." CTC Sentinel, May 25,20 16; Elisabeth Braw, "Foreign Fighters Financing,'' Foreign Ajji:tirs, October 25, 

2015: and Joby Warrick and Greg Miller, .. New ISIS Recruits Have Deep Criminal Roots." Washington Post. March 

23,2016. 

21 Rajan Basra and Peter R. Neumann, "Crime as Jihad: Developments in the Crime-Terror Nexus in Europe,'' CTC 

Senlinel, Vol. 10, No.9, October 2017. As Basra and Neumann point out. these skills include the ability to access 

weapons, forged documents, safe houses, vehicles, and other logistical necessities of a terrorist plot. The authors add 

familiarity with violence as an enabling "psychological skill." 

"Kacper Rekawck, Stanislav Matejka, Martina Babikova. Tomas Nagy and Jakub Rafay, From Criminals to 

Terrorists and Back? Bratislava: GLOBSEC. December 2017, p. 7. 

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and extortion, which garnered about approximately $360 million in 20 15; and the 2014 looting 

ofMosul, during which ISIS stole about $500 million from bank vaults23 

To put ISIS financing in perspective, it is useful to consider not only ISIS's similarities to 

other group but its differences as well. Indeed, there are far more differences than similarities, as 

ISIS is unique in the scale and scope of its financing activities. Like many other terrorist groups 

in the contemporary era, ISIS relies on a range of criminal activities, including but not limited to 

extortion, kidnapping for ransom, robbery and theft, and antiquities smuggling. ISIS may also 

have been involved with narcotics trafficking?4 There is little evidence to suggest that foreign 

donations from nation-states have been a significant funding source for ISIS, although wealthy 

individuals from the Gulf have been accused of financing terrorists in Syria?5 

In addition to funding its organization from the bottom up, through petty criminality, ISIS 

also relied on a top-down funding structure from a range of sources associated with its control of 

territory. As mentioned in the introduction, ISIS is unique in recent history as one of the few 

terrorist groups to generate most of its fimding from the territory it held-revenue amassed from 

taxation and extortion, the sale of oil and various oil-related products, looting, confiscation of 

property and cash, and fines levied against the population by the religious police for a litany of 

offenses.26 ISIS's reputation as incorruptable, a defining characteristic inherited from its 

predecessors, al-Qaeda in Iraq (AQI) and Islamic State of Iraq (lSI), helped boost popular 

supportP 

Most conceming, however, is that ISIS continues to make money from oil to this very day, 

despite the drastic reduction in its territorial holdings. In late June, four members ofiSIS's Oil 

and Gas Network were killed during Coalition operations in the central Euphrates River Valley 

in Syria?8 According to a United Nations Security Council repmi from just a few weeks ago, 

23 Daniel L. Glaser, "The Evolution of Terrorism Financing: Disrupting the Islamic State," in Matthew Levitt, ed., 

Neither Remaining Nor Expanding: The Decline of the Islamic State, Washington Institute for Near East Policy, 

Counterterrorism Lectures 20 16-2017, August 2018, pp. 43-4 7; Daniel L. Glaser, testimony before the House 

Committee on Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade and House Committee on 

Armed Services Subcommittee on Emerging Threats and Capabilities, June 9, 2016~ and Center for the Analysis of 

Terrorism, ISIS Financing 2015, Paris, May 2016. 

24 Colin P. Clarke, "Drugs & Thugs: Funding Terrorism Through Narcotics Trafficking," Journal ofStrategic 

Security, Vol. 9, No.3, Fall2016; for more on how involvement in narcotics trafficking impacts terrorist groups, see 

Svante Comell, "Narcotics and Anned Conflict: Interaction and Implications," Studies in Conflict and Terrorism, 

Vol. 30, No. 3, 2007. 

25 Scott Bronstein and Drew Griffin, "Self-Funded and Deep-Rooted: How ISIS Makes its Millions," CNN, October 

7, 2014. 

26 Stefan Heibner, Peter R. Neumann, John Holland-McCowan, and Rajan Basra, "Caliphate in Decline: An 

Estimate of Islamic State's Financial Fortunes,'' London: The International Centre for the Study ofRadicalisation 

and Political Violence, 20 17; see also Rukniini Callimachi, "The Case of the Purloined Poultry.: How ISIS 

Prosecuted Petty Crime,'' New York Times, July I, 2018. 

27 Patrick B. Johnston, Jacob N. Shapiro, Howard J. Shatz, Benjamin Balmey, Danielle F. Jung, Patrick Ryan, and 

Jonathan Wallace. Foundations of the Islamic Slate: Management, Money, and Terror in Iraq. 2005-2010, Santa 

Monica, Calif.: RAND Corporation, RR-1192-DARPA, 2016. 

28 U.S. Central Command, "Coalition Kills Daesh Criminal Leader, Followers," Combined Joint Task ForceOperation Inherent Resolve Public Affairs Office, June 19, 2018. 

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ISIS has regained control of oil fields in northeastern Syria and continues to extract oil, both for 

its O\'ltl use, but also for sale to locals. 29 So while significant progress has been made in 

combating ISIS's ability to raise money through oil, this revenue source has yet to be completely 

eradicated and likely never will be. Even when ISIS's predecessors did not control large swaths 

of territory in Iraq between 2006 and 2009, they were similarly able to raise substantial sums of 

money from oil, including by extorting local and regional distribution networks. 

Countering the Return of the Caliphate 

Despite major victories in countering terrorist financing since 9/11, the struggle against ISIS 

has proven that, even with enhanced tools, continued progress in this area will remain fraught 

with serious challenges. Since fall20!5, forces from Combined Joint Task Force Operation 

Inherent Resolve have regularly conducted targeted, intelligence-driven strikes on the group's oil 

infl·astructure and bulk-cash storage sites in Iraq and Syria.30 To mitigate the prospects of an ISIS 

revival. these operations must continue well into the foreseeable future. There are already 

indications that, even with ISIS's substantial loss ofterritory, smaller cells of ISIS fighters are 

regrouping and engaging in fundraising and recmitment.31 

As ISIS's stranglehold on territory is further reduced, it might attempt to compensate for 

losses in certain revenue streams by increasing revenue generation in other areas.32 Accordingly, 

every potential facet of ISIS revenue should be nominated for targeting or sanctioning, with the 

most difficult areas to counter-taxation and extortion of the local population-a longer-term 

objective more closely tied to postconflict reconstruction. This is especially important given 

ISIS's (and before it, AQ! and lSI's) penchant for extmiing constmction companies. 

Reconstruction aid to newly liberated cities, while well intentioned, would provide an attractive 

target and potentially facilitate ISIS's ability to make significant sums of money even without 

holding large swaths of territory. 

At present, there are no law enforcement or security service entities capable of preventing 

ISIS from making large sums of money from reconstruction cotmact skimming. The policing 

assets that do exist are underfunded, and their resources are already strained. Based on 

observation of other conflict zones, nons tate armed groups present on the ground arc more likely 

to seek profit in their own right than risk fighting ISIS to enforce laws on the behalf of a 

repressive regime. A related issue is that ISIS members meticulously collected personal 

information, including asset and income information and the addresses of extended family 

29 United Nations Security Council, "Twenty-Second Report of the Analytical Supp01t and Sanctions Monitoring 

Team Submitted Pursuant to Resolution 2368 (20 17) Concerning !S!L (Da'esh), AI-Qaida and Associated 

Individuals and Entities," New York, July 27,2018, p. 8. 

31) Patrick B. Johnston and Colin P. Clarke, ·'Can the Islamic State Survive Financiallyry" L<mfare, May 14,2017. 

"Seth G. Jones, ''America's CountertetTorism Gamble," CSJS Briefs. July 26,2018. 

"Colin P. Clarke, ''How ISIS is Transfonning.'' Foreign Al}i1irs. September 25, 2017; for more on ISIS's resiliency, 

sec Sune Engel Rasmussen and Nancy A. Youssef. "ISIS Remnants Fight On. Despite U.S. Campaign," Wall Street 

Journal, July 9, 2018; and Hassan Hassan, "Insurgents Again: The Islamic State's Calculated Reversion to Attrition 

in the Syria-Iraq Border Region and Beyond," CTC Sentinel. Vol. 10. No. ll, December 2017. 

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members, from the population within the territory it controlled. This information provides ISIS 

with more leverage in intimidating and extorting civilians in the future. 

As the caliphate disappears, much of the counter-ISIS mission in Iraq should transition from 

military force to law enforcement, especially when elite Iraqi security forces can hamper ISIS's 

ongoing efforts to tax local populations. Intelligence will be essential for these forces to combat 

ISIS's renewed efibrts to earn revenue through taxation and extortion. This means investing 

more resources in training Iraqi and other law enforcement entities, an effort that must be more 

comprehensive than simply supplying equipment. In Syria, the situation is far more difficult, 

since Bashar al-Assad remains in power and there is no semblance of state security services 

capable of policing large swaths of eastern Syria. There are, of course, nonstate armed groups 

operating throughout the country, including highly capable groups like the People's Protection 

Units of the Democratic Union Party, although it is not certain whether these groups would 

enforce the law, turn a blind eye to criminal activities not directly concerning their objectives, or 

collude with other terrorist groups. 

As ISIS continues to evolve, its sources of revenue could change, with the group working to 

secure external funding from sympathetic donors throughout the Arab and Islamic world or from 

nation-states in the Middle East that view ISIS as a useful proxy in the region's ongoing 

intemecine conflict.33 I see this change as unlikely, as throughout its histoxy ISIS has eschewed a 

reliance on outsiders, but it is still worth monitoring for signs of such a change. Given the current 

geopolitical dynamics in the Middle East, it is not entirely unreasonable to imagine Turkey or 

one of the Gulf states becoming a passive sponsor ofterrorism.34 

Traditional counterterrorism financing tools must be used to continue to keep ISIS isolated 

from external patrons and state sponsors of terrorism. Many terrorist groups attempt to avoid the 

formal financial system, but even if they rely on hawalas or other infonnal value transfer 

systems, their transactions could potentially intersect with various touch points, including 

correspondent banks in the region. Therefore, bank regulators and financial intelligence units of 

partner nations must be intimately involved in monitoring and identifying suspicious 

transactions. In short, the coalition must continue to track financial flows into ISIS-held territory 

to monitor whether changes are occurring and closely monitor financial flows from countries 

where wealthy individuals have historically fundedjihadist causes, including, but not limited to, 

countries throughout the Middle East and Persian Gulf. 

"Colin P. Clarke, Kimberly Jackson, Patrick B. Johnston, Eric Robinson, and Howard J. Shatz, Financial Futures 

of the Islamic State of Iraq and the Levan£: Findings ji·om a RAND Corporation IYorkshop, Santa Monica, Calif.: 

RAND Corporation, CF-361, 2017. 

" Passive support includes a state or regime knowingly allowing actors within its territory to assist or aid terrorist 

groups; a state or regime lacking the capacity to prevent this type of assistance or aid; or support provided by 

·'political parties, wealthy merchants, or other actors in society" that do not have a formal affiliation with the 

government (Daniel Byman, "Passive Sponsm·s of Terrorism," Sun•ival, Vol. 47, No.4, 2005, p. 118). See also, 

Colin P. Clarke and Ahmet S. Yayla, "Erdogan's Fatal Blind Spot," Foreign Policy, February 15, 2018; and, N1met 

S. Yayla and Colin P. Clarke, "Turkey's Double ISIS Standard," Foreign Policy, April !2, 20!8. 

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House (llnandal Servk-es Committee 

Suhcommitlce on JCrrorism 

Surv of Terrorist 

and Their eans of 

Financing 

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Yaya J. Fanusie September 7, 2018 

Chairman Pearce, Vice Chairman Pittenger, and Ranking Member Perlmutter, on behalf of the 

Foundation for Defense of Democracies and its Center on Sanctions and Illicit Finance, thank you 

for the opportunity to testify today about a crucial technology that provides virtually unlimited 

opportunities but also certain threats. 

Cryptocurrencies may become the way we transact in the future. But they are also becoming part 

of the illicit financing toolkit available to terrorists. 1 FDD's Center on Sanctions and Illicit Finance 

(CSIF) has now documented cryptocurrency fundraising campaigns run by social media entities 

associated with the Islamic State and al-Qaeda. Although public evidence indicates that terrorist 

groups have had only limited success so far with cryptocurrency fundraising efforts, the rising 

profile of digital currency has been accompanied by jihadist networks2 experimenting with them 

more frequently. By preparing now for terrorists' increasing usage of cryptocurrencies, the U.S. 

can limit the ability to turn digital currency markets into a sanctuary for illicit finance. I will 

conclude my testimony today with specific recommendations for how the federal government and 

the private sector can address this challenge. 

Terrorists Diversifying Their Portfolios 

Terrorist groups regularly adapt their methods to their available resources, skill levels, and the 

opportunities presented in their target areas of operations. This is as true for fmancing as it is for 

plotting attacks. Terrorist organizations have a long history of exploiting banks and other 

traditional financial institutions, as well as semi-formal means of transferring funds, such as the 

hawala exchange system. But emerging fmancial technologies offer new channels to raise and 

move funds. Law enforcement officials and regulators have flagged cryptocurrencies for enabling 

illicit activity because of their pseudonymity and suitability for cyber crime and darknet 

marketplace transactions. 3 

The good news is that most terrorists, particularly those operating on jihadist battlefields, inhabit 

environments that are not currently conducive to cryptocurrency use. They usually need to 

purchase goods with cash (which is the most anonymous funding method), often in areas with 

unreliable technology infrastructure4 In addition, cryptocurrencies are based on distributed ledger 

(blockchain) technology, where users' pseudonymous transactions are recorded for public 

viewing5 This leaves a trail that unsophisticated users may find difficult to obfuscate. However, 

as digital currency usage grows, such barriers may fall away. 

1 This testimony mostly uses "cryptocurrencies" to refer to digital assets like Bitcoin that are based on a 

decentralized ledger blockchain system, but it is interchangeable with the terms "virtual currencies" and "digital 

currencies." 

2 This testimony focuses on terrorist organizations comprised of Salafi jihadist groups and networks. 3 Rachel Rose O'Leary, "Europol Warns Zcash, Monero and Ether Playing Growing Role in Cybercrime," 

CoinDesk, October 3, 2017. (https://www.coindesk.com/europol-warns-zcash-monero-and-ether-playing-growingrole-in-cybercrimei) 

4 Zachary K. Goldman, Ellie Maruyama, Elizabeth Rosenberg, Edoardo Sara valle, and Julia Sol oman-Strauss, 

"Terrorist Use of Virtual Currencies," Center for a New American Security, May 3, 2017. 

(https:/ /www .cnas.org/publications/reports/terrorist -use-of-virtual-currencies) 5 Generally speaking, each of the most popular cryptocurrencies have their own blockchain. For example, you can 

only view Bitcoin transactions on the Bitcoin blockchain and Ethereum transactions on the Ethereum blockchain. 

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For the moment, terrorist groups may lack the necessary skills to employ digital currencies more 

frequently and effectively. User friendliness is a challenge for this technology, whereas everyone 

knows how to use cash. Managing large amounts of cryptocurrency requires being extremely 

savvy in cyber security. For instance, to manage a cryptocurrency wallet, users must keep secure 

their digital private keys, which differ from regular passwords because they can never be replaced 

ifforgotten. 6 If hackers acquire your private key and steal your digital currency, there is little one 

can do to retrieve the funds. Cryptocurrency prices are also volatile, and the broader public buys 

tokens more for speculation than purchasing real-world goods and services. Thus, operating 

financially with digital currencies remains a fringe activity both among the general public and 

within the population of global jihadists. 

However, the minimal traction that cryptocurrencies have among jihadists should not be viewed 

as a steady-state condition. In recent years, I have observed multiple instances of jihadist groups 

trying to raise funds through cryptocurrencies. Although these networks have not raised much 

digital cash, I have watched them adapt and grow more sophisticated in their attempts to leverage 

financial technology. For example, some groups are moving beyond Bitcoin, the most popular 

cryptocurrency, to alternatives such as Monero that provide greater anonymity. There are only a 

few publicly verifiable cases of terrorists pursuing cryptocurrency financing, but these instances 

show that clements within jihadist networks are keenly aware of the technology's potential for 

secretive peer-to-peer and cross-border payments. 

In 2014, Virginian teenager Ali Shukri Amin published a blog article explaining how supporters 

of the Islamic State could help fund the group by sending bitcoins through anonymous software 

wallets.7 Amin was clearly an early technology adopter. He was an honor student who posted 

online advice about cyber security and encryption8 and was accepted into a top college engineering 

program before his arrest.9 He had thousands of Twitter followers, including jihadists in Iraq and 

Syria. 10 It is unclear how much Am in's Bitcoin tutorial directly impacted donations to the Islamic 

State, but it is one of the earliest signs of jihadists exploring how to exploit cryptocurrencies' 

pseudonymity. 

Jahezona: First Terrorist Funding Campaign Publicly Visible on the Blockchain 

In 2016, media reports surfaced that a consortium of jihadists in the Gaza Strip called the 

Mujahideen Shura Council (MSC) in the Environs of Jerusalemll began soliciting bitcoins for its 

6 Christine Masters, "Cryptocurrencies: Not User-Friendly Enough?" Cryptovest, August 23, 2017. 

(https://crvotovest.com/featurcs/cJYPtocurrencies-not-user-friendly-enough/) 

7 U.S. Department of Justice, Press Release, "Virginia Teen Pleads Guilty to Providing Material Support to ISIL," 

June 11, 2015. (https://www.justice.gov/opa/pr/virginia-teen-pleads-guilty-providing-material-support-isil) 

• Yasmeen Abutaleb and Kristina Cooke, "A teen's turn to radicalism and the U.S. safety net that failed to stop it," 

Reuters, June 6, 2016. @tps://www.reuters.com/investigates/special-report/usa-extremists-tee!lL) 9 Warren Richey, "One Virginia teen's journey from ISIS rock star to incarceration," The Christian Science Monitor, 

September 29, 2015. (https://www.csmonitor.com/USA/ J ustice/20 15/0929 /One-Virginia-teen-s-journey-from-ISISrock-star-to-incarceration) 

10 Warren Richey, "One Virginia teen's journey from ISIS rock star to incarceration," The Christian Science 

Monitor, September 29, 2015. (https://www.csmonitor.com/USA/Juslice/2015/0929/0ne-Virginia-teen-s-journeyfrom-ISIS-rock-star-to-incarceration) 

11 David Barnett, "Ibn Taymiyyah Media Center returns to Facebook," FDD's Long War Journal, April28, 2013. 

(https://www.longwarjoumal.org/archives/2013/04/ibn taymivvah media center ret.php) 

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weapons fundraising campaign known as Jahezona, (Arabic for "Equip Us"). 12 The U.S. State 

Department designated the MSC as a foreign terrorist organization in 2014. 13 In 2016, the U.S. 

Treasury Department designated one of MSC's leaders for facilitating funding on behalf of the 

Islamic State. 14 

The MSC's media outlet posted infographics for the Jahezona campaign on Twitter and Telegram, 

listing the prices for rockets, rifles, grenades, and other gear for militants. 15 One effort sought to 

raise $2,500 per fighter. Some of the Twitter infographics gave an option to pay in Bitcoin, 

providing a QR code linked to the campaign's Bitcoin address. 16 

Because the QR code was visible on the Twitter posts, we were able to pull up the address and 

monitor its transactions on the Bitcoin blockchain. We discovered that after a few weeks of 

soliciting on social media, the address received only two deposits, totaling a little over $500 in 

Bitcoin. The Jahezona cryptocurrency crowdfunding campaign fell far short of its aim of raising 

$2,500 per fighter. Still, the Jahezona case is significant because it was the first time a Bitcoin 

funding campaign was definitively associated with a terrorist group, with a Bitcoin address 

publicly verified and observable during the campaign. 17 

By analyzing the Jahezona transactions on the Bitcoin blockchain, 18 CSIF was able to identify the 

cryptocurrency exchange where the deposits originated: a European exchange website named 

BTC-e known for facilitating money laundering. A joint U.S. law enforcement operation shut 

down BTC-e a year later for multiple illicit financing crimes. 19 Typically, media attention on 

terrorist funding campaigns would cause banks to close the associated accounts and scare off 

donors. But unlike money service businesses and bank accounts, cryptocurrency addresses operate 

by open-source software and cannot be shut down by a third party. Cryptocurrency wallets are 

managed by whoever controls the private digital key passcode. Even if law enforcement is aware 

12 "Fundraising Campaign to Arm Jihadis in Gaza Solicits Donations Via Bitcoin," MEMRI Cyber and Jihad Lab, 

July 8, 2016. (http://cjlab.memri.org/lab-proiects/tracking-jihadl-terrorlst-use-of-social-rnedia/fundraisingcampaign-to-arm-jihadis-in-gaza-solicits-donations-via-bitcoin() 

13 U.S. Department of State, Press Release, "Terrorist Designation of the Mujahidin Shura Council in the Environs 

ofJerusalem (MSC)," August 19, 2014. (https:llwww.state.govdff!irls/oth<;_rldesi266549.htm) 14 U.S. Department of the Treasury, Press Release, "'Treasury Sanctions Key ISIL Leaders and Facilitators Including 

a Senior Oil Ofticial," February II, 2016. (https://www.treasury.gov/press-centerlpress-releases!Pages/jl035l.aspx) 15 "Salafi-Jihadis Conduct Online 'Equip Us' Campaign to Raise Funds for Jihad in Gaza," MEMRI Cyber and 

Jihad Lab, December 16,2015. ()lttp:llcjlab.mcmri.orgllab-projects/monitoring:jihadi_,and-hacktivis!:::~ctivity/salafijihadis-conduct-online-equip-us-campaign-to-raise-funds-for-iihad-in-gazaO 

16 Yaya Fanusie, "The New Frontier in Terror Fundraising: Bitcoin," The Cipher Brief, August 24, 2016. 

(https:/lwww.thecipherbrief.com/column articlelthe-new-frontier-in-terror-fundraising-bitcoin) 17 Prior to the Jahezona campaign, there were media reports about the Islamic State using Bitcoin, but these claims 

could not be independently corroborated. It is quite common for scammers to create fake jihadist campaigns as 

moneymaking schemes. For our analysis, we considered a terrorist cryptocurrency campaign to be real if an 

established jihadist media channel promoted it. 18 Yaya Fanusie, "The New Frontier in Terror Fundraising: Bitcoin," The Cipher Brief, August 24, 2016. 

(https://www.thecipherbrief.com/column at1iele/the-new-frontier-in-terror-fundraising-bitcoin) 19 U.S. Department of Justice, Press Release, "Russian National And Bitcoin Exchange Charged In 21-Count 

Indictment For Operating Alleged International Money Laundering Scheme And Allegedly Laundering Funds From 

Hack OfMt. Gox," July 26,2017. (ffitps:/lwww.iu~tifl'.J;PVIu_sao-ndcalprlrussian-national-and-bitcoin-exchan~ 

charged-21-count-indictment-operating -alleged) 

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YayaJ. Fanusie September 7, 2018 

of an illicit address, authorities cannot freeze the account and cannot move funds without the 

private key. 

Although the Mujahideen Shura Council has not recently published the Jahezona address on social 

media channels, it continues to receive deposits every month or so, usually in the low hundreds of 

dollars. It is unclear if the group still controls this address, but as of early September 2018, it 

contained over $1,000 in Bitcoin. 

Jihadist Networks Crowdfunding Cryptocurrencies in Syria 

The price ofBitcoin began to skyrocket in late 2017, with the price of one bitcoin hitting $10,000 

for the first time last November. 20 Rising prices generated media attention, which in tum fed higher 

prices and greater hype.21 This appeared to have the attention ofjihadist networks. 

Late last year, CSIF was notified by cryptocurrency analytics firm Elliptic (with whom we were 

collaborating on a research project on Bitcoin laundering) that some jihadist social media channels 

recently posted requests for Bitcoin funding. Our team looked into these postings22 and initially 

saw little activity in the addresses, especially after social media platforms deleted their posts and 

accounts. However, one campaign associated with al-Qaeda23 stood out because of its frequent 

posting of slick photo graphics and videos on Telegram. Calling itself al-Sadaqa (Arabic for "the 

Charitable Giving"), the group claimed to be raising funds for fighters in Syria. It transmitted its 

messages in English. It even posted quotes from now-deceased American ai-Qaeda propagandist 

Anwar al-Awlaki. 

CSIF monitored al-Sadaqa 's social media channels (its initial Telegram channel was deleted, but 

it resurfaced within days under a new usemame). We also monitored and analyzed the group's 

Bitcoin address, which it highlighted regularly, asking followers to "donate anonymously with 

Bitcoin." In its initial campaigning, al-Sadaqah sought $750 for camp reinforcements. Within 

weeks, we noticed the address received about $685 worth ofBitcoin, which it soon sent to another 

address. 

The al-Sadaqah group continued requesting funding for a variety oflogistical supplies, sometimes 

publishing videos claiming to show fighters' encampments in the mountains. But it only received 

a handful of Bitcoin transactions, none as large as the $685 early in its campaign. 

20 Evelyn Cheng, "Bitcoin surpasses $10,000 for the first time," CNBC, November 29,2017. 

(https://www .cnbc.com/20 I 7/ll/28/bitcoi n-surpasses-1 0000-for -the-first -ti me.html) 21 Nathaniel Popper, "Bitcoin's Price Has Soared. What comes Next?" The New York Times, December 7, 2017. 

(https://www.nytimes.com/2017/12/07/technology/bitcoin-plice-Jise.html) 

22 Michael del Castillo, "Think Tank Links rising Bitcoin Price to Terrorist Use," CoinDesk, December 21, 2017. 

(https://www.coindesk.com/u-s-think-tank-finds-rising-bitcoin-PJice-linked-terrorist-interestl) 

23 "Online Campaign in English Raising Funds for the Jihad in Syria in Bitcoin," MEMRI Cyber and Jihad Lab, 

November 13,2017. (h!.(V.;LL£i1ab.me.mrl.ou;L!atest-reports/online-campillJW::lD:~!lJ;lish-raising-funds-for-the-jiha\l: 

in-syria-in-bitcoinl) 

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Jihadists Adjusting Their Cryptocurrency Crowdsourcing Methods 

Although the al-Sadaqah case may have been as unsuccessful as the Jahezona campaign a year 

prior, it demonstrated how jihadists may adjust when their cryptocurrency campaigns are 

unsuccessfuL In monitoring al-Sadaqah 's activity, we noticed that as its Bitcoin address lagged in 

receiving donations, the group introduced new techniques for supporters to give funds. Since 

Bitcoin blockchain transactions are public, most supporters - especially newcomers to 

cryptocurrency use probably were hesitant to donate for fear of being detected by law 

enforcement or intelligence agencies. 

It appears that al-Sadaqah tried to address this concern. At one point, the group encouraged 

followers to purchase Bitcoin vouchers for a gaming website that took payment in euros. Instead 

of sending Bitcoin directly, supporters could purchase the voucher and share with al-Sadaqah, 

which would use it to access the Bitcoin funds. The group also posted sites where supporters could 

locate Bitcoin ATMs to buy cryptocurrencies. Clearly, the campaign organizers were trying to 

make the Bitcoin-buying process easier for novices. 

Al-Sadaqah 's most significant adaptation was eventually branching out beyond Bitcoin. By early 

2018, the group posted on Telegram that it was also accepting other cryptocurrencies like Monero, 

Verge, and Dash. These other tokens use varying types of anonymization techniques that make 

their transactions less traceable than Bitcoin. 24 However, al-Sadaqah kept the Bitcoin address on 

their infographics. An exception was a rare post of the group's Monero address. However, the 

Monero blockchain allows no views into its transactions. Even with the address, we could not 

determine how much it had received. 

Also, al-Sadaqah did not just stick to cryptocurrency. With donations scarce, it soon announced 

ways to receive cash and money service transfers. To access those methods, supporters would have 

to communicate with the al-Sadaqah Telegram administrator via encrypted messaging. Thus, with 

more anonymous cryptocurrencies and other transmission methods in play, it is very difficult to 

assess al-Sadaqah 's true funding level. 

Another militant group in Syria appears to be following in al-Sadaqah 's cryptocurrency footsteps. 

In mid-2018, CSIF noticed an organization called Malhama Tactical soliciting donations on 

Twitter.25 Malhama Tactical is a private military contractor that caters to jihadists in Syria26 It was 

founded in 2016 by an Uzbek who served in the Russian military before leaving to join rebels in 

Syria in 2013.27 The group has trained various al-Qaeda-affiliated fighters. Though it initially 

24 Kai Sedgwick, "Everything You Ever Wanted to Know About Privacy Coins," Bitcoin News, December 30, 2017. 

(https://news.bitcoin.com/everything-ever-wanted-know-privacy-coins/) 

25 Miles, "Revival oflnsurgent Training Team Malhama Tactical," The Firearm Blog, July 2, 2018. 

(https://www.tbefirearmblog.com/blog/2018/07/02/revival-of-insurgent-training-team-malhama-tacticali) 

26 Jonathan Rugman, "The firm that serves ajihadist clientele," Channe/4 News, April3, 2017. 

(https:/ /www .channel4 .com/news/the-firm-that-serves-a-j ihadist -clientele) 27 Rao Komar, Christian Borys, and Eric Woods, "The Blackwater of Jihad," Foreign Affairs, February I 0, 2017. 

(https:/ /foreignpol in,_com/20 1 7/02/1 0/thc-wo[\;;lfirs\:iillilll.i.::ll!iO:~!~:miJi!ary -contract.QT.::.rn:ja-russia-malhamatacticalD 

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relied on contracts to train and support militants, tbe group started asking for donations amidst a 

financial crunch in 2017.28 

The group's founder reportedly was killed in 2017, but it is now led by someone calling himself 

Abu Salman Belarus whom we discovered is one of al-Sadaqah 's social media followers. Abu 

Salman gives updates about Malhama Tactical through his Twitter account, often in Russian. In 

June 2018, Abu Salman tweeted a Bitcoin address for Malhama Tactical donations, but it was later 

deleted. We reviewed the address and found it had received only a few transactions and had less 

than $100 worth of Bitcoin. We last saw tbe Twitter account seek Bitcoin donations in early 

August, but instead oflisting the actual address, tbis time Abu Salman asked supporters to contact 

him via direct message for details. 

Jihadist Media Outlets Tapping Cryptocurrency Technology 

It is not just fighters that terrorist networks seek to support with cryptocurrencies. Salafi jihadist 

media sites are integrating Bitcoin campaigns into tbeir platforms. In late November 2017, the proIslamic State Arabic website Akhbar al-Muslimeen (Arabic for "News of the Muslims") published 

a link for Bitcoin donations, according to an Israeli research institute. 29 Akhbar al-Muslimeen 

frequently publishes videos of Islamic State attacks and otber jihadist propaganda. The donation 

link was connected to a page at a mainstream Bitcoin payment processor site. The link was soon 

removed, probably after the payment processor became aware tbat one of its customers was a 

terrorist media outlet. 

However, the Akhbar al-Muslimeen administrators adjusted by keeping hyperlinks on the site 

reading, "Donate to site, servers are costly" above many articles. These links led readers to a page 

generating multiple Bitcoin addresses. Supporters could then copy these addresses and donate to 

them directly, away from tbe page. This showed some technical sophistication on tbe part of site 

administrators who eliminated their dependence on a Bitcoin payment processing site. In addition, 

generating many different Bitcoin addresses was likely designed to make it harder for outsiders to 

monitor donations. We identified a few dozen addresses created by tbc site, but most of them had 

no donations. 

In December 2017, a jihadist website monitoring group reported that a separate Islamic Stateaffiliated website called Jsdarat was requesting bitcoins. 30 The Is dar at website can only be viewed 

on the dark web via a Tor browser.31 The site also uses multiple Telegram channels to disseminate 

28 Jonathan Rugman, "The firm that serves ajihadist clientele," Channe/4 News, April3, 2017. 

(https://www.channel4.com/news/the-firm-that-serves-a-jihadist-clientelc) 

29 "Drive for Bitcoin donations on an Isis-affiliated website," The Meir Amir Intelligence and Terrorism Information 

Center, December 6, 2017. (https:/iwww.terrorism-info.org.il/app/uploads/2017/12/E 235 17.pd0 30 New Jersey Office of Homeland Security and Preparedness, "Female HVEs Likely to Play Supportive Role for 

ISIS," July 10, 2018. 

(https:l/www.waterisac.org/system/files/at1icles/Female%2BHVEs%2BSupport%2Bof"lo2BlSIS%2B%287.23.2018 

%29.pdf) 

31 Anthony Cuthbertson, "Hackers replaced ISIS propaganda on the dark web with advertisements for an online 

pharmacy," Business Insider, November 5, 2015. (~/www.businessinsider.com/hackers-replaced-islspropaganda-on-the-dark -web-with-advertisements-for -an-on li ne-phannacy-20 15-11 ) 

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Islamic State videos and other propaganda. 32 Media sources did not publish the Bitcoin address, 

so it is unclear how much, if any, Bitcoin Isdarat raised. 

Detection Does Not Necessarily Stop Cryptocurrency Campaigning 

As mentioned above, a challenge with cryptocurrency addresses for counterterrorist financing is 

that digital wallets cannot be shut down by an outside party without acquiring private keys. 

Although al-Sadaqah was exposed by my published research33 and in major outlets like the Wall 

Street Journa/, 34 it continues to seek funds for its Bitcoin address on social media, showing that 

the group probably controls its private key. 

This response differs from the terror funding activity discovered in the early years after the 

September 11 attacks. Previously, when they worked exclusively through the conventional 

banking system, terrorist-supporting charities that were detected by law enforcement or exposed 

in the press often had their funding channels quickly neutralized.35 

Mixing Cryptocurrencies with Conventional Illicit Financing Schemes 

Cryptocurrencies can be part of a mix of deceptive financial tools to obscure donors' intentions of 

terrorist funding. Last year, a Long Island, NY woman tried to send money to the Islamic State by 

acquiring fraudulent loans and credit cards36 She used the credit cards to purchase $62,000 worth 

of cryptocurrencies that she laundered into fiat money and sent as wire transfers to contacts in 

Pakistan, China, and Turkey. The fact that she sent funds through a banking infrastructure to her 

contacts instead of directly via cryptocurrencies shows that jihadist groups, while experimenting 

with digital currency, remain more comfortable with conventional financial tools. 

Illicit finance investigators should also keep in mind that the cryptocurrency space is replete with 

scams. Sometimes, cyber criminals impersonate terrorists as a ploy to gain funding from 

extremists. In late August 2018, an independent researcher uncovered a site on the darknet called 

Sadaqa Coins claiming to be a marketplace for crowdfundingjihadist projects.37 The site sought 

donations in Bitcoin, Ethereum, and Monero and claimed that funds would pay for weapons, sniper 

gear, vehicles, and computer equipment. However, one darknet technical expert reviewing the site 

32 Riyadh Mohammed, "ISIS Has a New Favorite Social media Network," The Fiscal Times, November 5, 2015. 

(http://www .thefiscaltimes.com/20 I 5/1 I i03i1SIS-llas-N ew-F avorite-Sociai-Media-Network) 33 Yaya Fanusie, "Terrorist Networks Eye Bitcoin as Cryptocurrency's Price Rises," The Cipher Brief, December 

21, 201 7. (https:/ /www. thecipherbrief.com/miicle/exclusive!international/terrori st-networks-eye-bitcoincryptocurrencys-price-rises) 

34 Brett Forrest and Justin Scheck, "Jihadists See a Funding Boon in Bitcoin," The Wall Street Journal, February 20, 

20 I 8. (https:/iwww. wsi-com/at1icles/jihadists-see-a-funding-boon-in-bitcoin-I 5 I 9131601) 35 U.S. Department of the Treasury, Press Release, "Fact Sheet: Designations of Somalia and Bosnia-Herzegovina 

Branches of Al-Haramain Islamic Foundation," March II, 2002. 

(https:l /fas.org/im/news/2002/03/ dot0311 02fact.html) 36 U.S. Department of Justice, Press Release, "Long Island Woman Indicted for Bank Fraud and Money Laundering 

to Support Terrorists," December 14, 2017. (httos:/lwww.justice.gov/usao-edny/prilong-island-woman-indictedbank-fraud-and-money-laundering -support -tcn·otists) 37 Benjamin Strick, "Meet The World's First Jihadi Cryptocurrency Crowdsource Site On The Dark Web: 

SadaqaCoins," Medium, August 23, 2018. (h!tps://mediu[11.Com{@jJenjamindbrowtlL!lill.:i.ihadi:.£I:YplocutTen.D': 

crowdsource-platform-on-dark-web-263edf8885b7) 

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assessed that it was most likely a scam and unrelated to real jihadist groups. 38 As scams increase, 

it will be crucial for investigators to determine if cryptocurrency campaigns are truly linked to 

known jihadist networks. 

Recommendations 

The above cases make a few things clear. One, terrorist organizations are looking to add 

cryptocurrency donations to their funding streams. Two, their efforts thus far have not be very 

fruitful, probably because cryptocurrencies' technical complexities, extremists' preference for 

cash, and the traceability of most blockchain protocols deter wider usage. 

This is to be expected. Although cryptocurrencies have grown the past few years as a speculative 

asset class,39 their daily use for purchasing goods and services is minimal.40 Terrorist adoption of 

cryptocurrencies simply mirrors that of the general public. This also means that if public 

cryptocurrency adoption increases, terrorist groups will probably begin to transact more in digital 

tokens. 

But cryptocurrencies and blockchain technology are not innately illicit and should not be feared. 

Like most technological innovations, they can be utilized for good or ill, depending on the user. 

Our adversaries, both state41 and non-state actors, are building blockchain-based tools to advance 

their interests. The U.S. must keep up with this technology and address new risks emerging from 

an evolving financial ecosystem. Below are some actions that policymakers and the tech industry 

should take to mitigate risk. 

Counter-Threat Financing Units Must Learn Blockchain Analysis. All units in U.S. government 

agencies that investigate terrorist funding should become proficient in analyzing cryptocurrency 

transactions. Public blockchain transactions can usually be viewed on "block explorer" websites.42 

Although cryptocurrency users operate pseudonymously, investigators can review the flows 

recorded on the blockchain for insight into suspects' behavior and their financial relationships. 

While cryptocurrencies are not expected to displace conventional means of terror financing 

anytime soon, terrorists will likely use them if they grow more accepted for real-world goods and 

services. Therefore, all agencies with counter-threat financing groups should have dedicated 

analysts who specialize in blockchain analysis. Today, investigators have at their disposal not only 

free block explorer websites, but also various blockchain forensics firms they can leverage for 

38 Chris Monteiro, "There are still no credible dark web jihadi sites," Pirate dot London, August 25,2018. 

(https://pirate.london/there-are-sti !1-no-credible-dark-web-j ihadi-sites-b2bcfl fbf22d) 39 Nathaniel Popper, "Here's Some Cryptocurrency. Now Please Use It," The New York Times, July 1, 2018. 

(httos://www .nytimes.com/20 18/07/0 11technology/ciyptocurrency-rippl e.html) 40 Kenny Li, "Today's Big Problem with Cryptocurrency Adoption," Hackemoon, July 21,2018. 

Olttps://hackernoon.com/todavs-big-problem-with-cryptocurrency-adoption-7c9ab96a7779) 41 Yaya Fanusie, "Blockchain Authoritarianism: The Regime In Iran Goes Crypto," Forbes, August 15,2015. 

(https://www. forbes.com/sites/yayafanusie/20 18/08/15/blockchain -authoritarianism-the-regime-in-iran-goescrypto/#605c8f0e3dc6) 

42 Ofir Beigel, "A list of8 Block explorers and what are they exactly?" 99 Bitcoins, July 3, 2018. 

(https://99bitcoins.comlblock-explorer-blockchain-browser/) 

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analysis. To mitigate any terrorist use of cryptocurrencies, the U.S. and its partners must get smart 

on the world of the blockchain. 

Financial Authorities Should Engage More Cryptocurrency Exchanges. U.S. financial 

regulators and law enforcement must increase their engagement with cryptocurrency exchanges, 

which are where most people purchase digital currency. Many exchanges have ramped up their 

anti-money laundering compliance the past few years,43 but many smaller exchanges trade in a 

greater variety of alternative tokens, including so-called "privacy coins."44 Many of these newer 

exchanges also use more experimental software allowing fully decentralized, peer-to-peer 

trading45 that Jacks customer identification verification. 46 These decentralized exchanges currently 

have very little volume and some experts say they may not become widely used in the 

cryptocurrency space for quite a few years.47 However, if decentralized exchanges flourish as fully 

anonymous platforms, they will be more attractive to those seeking to use cryptocurrency for illicit 

purposes. Thus, the cryptocurrency space appears to be evolving into two ecosystems: one growing 

more AML-compliant and one going more underground, developing less transparency.48 

At FDD's Center on Sanctions and Illicit Finance, we have been facilitating conversations between 

government policymakers and blockchain technology leaders on illicit finance risks and national 

security threats. Many within the industry want to keep terrorists and other bad actors off their 

platforms. Financial authorities should work with those firms to protect citizens from terrorism 

without stifling technological innovation. 

Cryptocurrency Enthusiasts Should Flag Illicit Wallets. Cryptocurrency addresses are easily and 

randomly software-generated, making them too numerous for a single investigative team to 

identify all suspect transactions. Law-abiding cryptocurrency exchanges are ineentivized to 

prevent illegal transactions on their platforms, but do not have the capacity to identify all illicit 

addresses on every blockehain. And while blockchain forensics firms offer tools for exchanges to 

flag illicit activity, these tools are usually proprietary, focusing on just a handful of blockehain 

systems. Moreover, known illicit addresses operating on different blockchains are not shared freely 

among all exchanges and law enforcement agencies. 

43 Yaya Fanusie and Tom Robinson, "Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency 

Services," Foundation for Defense of Democracies and Elliptic, January 12, 2018. 

<h!JJ?:iiwww.defenddemocracy.org/contentiuploadsidocumentsiMEMO Bitcoin Laundcring.pdD 44 Yaya Fanusie, "Good Crypto, Bad Crypto: Block chain Projects Gaining Legitimacy While Spawning an 

Underground," Forbes, July 12, 2018. (https:/iwww.forbes.com/sitesiyayafanusie/2018/07 /12/good-Ciypto-badcrypto-blockchain-projects-gaining-legitimacy-while-spawning -an-underground/#38!3ca4b I 078) 45 Nathan Sexer, "State of Decentralized Exchanges, 20 18," Consensys, January 31, 2018. 

(https:i/media.consensys.net/state-of-decentralized-exchanges-20 18-276dad340c79) 46 Gary Basin, "The State of Decentralized Exchanges," Hackernoon, June 21, 2018. (https:i/hackernoon.com/thestate-of-decentralized-exchanges-235064446ab0) 

47 Gary Basin, "Decentralized Exchanges-FinCEN, Payment Channels, and Custody, Oh My!" Hackernoon, July 4, 

2018. (https:/ihackernoon.com/decentralized-exchanges-fi ncen-payment -channels-and-custody-oh-my1ae3d83bc42a) 

48 Yaya Fanusie, "Good Crytpo, Bad Crypto: Blockchain Projects Gaining Legitimacy While Spawning an 

Underground," Forbes, July 12, 2018. (ll!1Qs:/iwww.forbes.com/sitesiyayafan~sie/2018/07/12./gQQ.Q.:gy,plit:hi!!l:: 

cwto-blockchain-projects-gaining-legitimacy-while-spawning-an-undcrground/#2579dbc41078) 

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To address this gap, enthusiasts who care about the integrity of the cryptocurrency industry should 

flag activity associated with terrorists and other illicit actors. There should be one repository, 

perhaps developed by entrepreneurs in the private sector, where everyday users can flag illicit 

addresses from various blockchain systems. Of course, such a site should be built with protocols 

that review and vet submissions for credibility before publishing them. Such a resource would 

make it easier for investigators to fmd illegal activity and help everyday cryptocurrency users stay 

clear of problematic wallets. In fact, such a resource could be built as a blockchain-based platform, 

where registered users who credibly report illicit activity are rewarded with a cryptocurrency 

token. This could be applied not only to flag terrorist transactions, but also to hinder coins 

associated with ransomware and cyber criminals from moving throughout the blockchain. 

Conclusion 

Cold hard cash is still king, but jihadist groups are building diverse portfolios. Illicit actors adopt 

new technologies earlier than the broader public. When paper checks, credit cards, and PayPal 

each emerged, criminals exploited them early on. There are enough case studies of jihadist groups 

experimenting with cryptocurrencies to suggest that law enforcement and the intelligence 

community must prepare for terrorists to try to exploit digital tokens as the technology spreads. 

On behalf of the Foundation for Defense of Democracies and its Center on Sanctions and Illicit 

Finance, thank you for the opportunity to testify. I look forward to your questions. 

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Congressional Testimony 

Survey of Terrorist Groups and 

Their Means of Financing 

Oren Segal 

Director, Center on Extremism 

Anti-Defamation League 

Hearing before the 

House Committee on Financial Services 

Subcommittee on Terrorism and Illicit Finance 

Washington D.C. 

September 7, 2018 

Working to stop the defamation of the 

jewish people and to secure justice and 

fair treatment for all since 1913 
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Chairman Pearce, Ranking Member Perlmutter, and distinguished Members of the 

Subcommittee: thank you on behalf of the Anti-Defamation League for the opportunity to testifY 

before you today. 

Since 1913, the mission of the ADL has been to "stop the defamation of the Jewish people and to 

secure justice and fair treatment for all." For decades, ADL has fought against bigotry and antiSemitism by monitoring and exposing extremist groups and movements who spread hate and 

commit acts of violence. Through our Center on Extremism, widely recognized as a leading 

authority on extremism, terrorism and hate in the United States, ADL plays a prominent role in 

exposing extremist movements and activities, while helping communities and government 

agencies alike to combat them. ADL's team of experts, analysts and investigators use cuttingedge technology to track and disrupt extremist and terrorist activity, and provide law 

enforcement officials and the public with extensive resources, including analytic reports on 

extremist trends. Among those tools: the Hate Symbols Database1 and our proprietary, 

interactive and customizable H. E.A. T. Map2, which provides details on extremist and antiSemitic incidents nationwide that can be filtered by region and type 

Assisting Law Enforcement 

ADL is the country's largest non-governmental provider of training for law enforcement on hate 

crimes, extremism and terrorism. We also deliver training geared to build trust between police 

and the people and communities they serve. Each year, ADL experts deliver customized, indepth training to more than 15,000 federal, state, and local law enforcement personnel at a wide 

range of agencies. 3 

ADL's dual role-a.~ a preeminent anti-hate organization and as a strong and trusted partner of 

law enforcement-gives us the credibility to offer trainings and other products that strongly 

influence the ways in which law enforcement officers address hate and extremism, and interact 

with the communities they serve. ADL provides law enforcement with information, expertise, 

and actionable intelligence to prevent, disrupt, and respond to those extremists who cross the line 

from espousing hateful ideologies to committing or inciting violent, criminal acts, thus protecting 

the Jewish community and all Americans. ADL's Advanced Training School, a highly-acclaimed 

three-day seminar on domestic and international terror threats, has trained more than 1,100 

senior law enforcement executives since its inception in 2003. 

1 Anti-Defamation League, Hate on Disp/ayTM Hate Symbols Database (https://www.adl.org/education-andresomces/resource-knowledge-base/hate-symbols) 

2 Anti-Defamation League, ADL H.E.A. T. Map: Hate. Extremism, Anti-Semitism, Terrorism 

(https://www.adl.org/heat-map) 

3 Anti-Defamation League, "Who We Are: Law Enforcement Trainings"' (https:/lwww.adl.org/who-we-arelourorganization/signaturc-programs/law~enforcement-tminings) 
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Relationship with the Tech Industry 

Over the past decade, ADL has worked closely with various parts of the tech industry with 

regard to terrorist and extremist exploitation of their platforms, as well as the spread of 

cyberhate. Our relationships have led to notable successes in mitigating the exploitation of 

platforms by various extremist and terrorist groups and movements. In addition, working with 

industry officials, ADL developed the ADL Cyber-Safety Action Guide\ a user-friendly online 

platform where consumers can learn how and where to report bigoted, bullying, or hateful speech 

to the major internet providers and social media platforms. ADL has also convened a Working 

Group on Cyberhate to develop recommendations for the most effective responses to 

manifestations of hate and bigotry online. The Working Group includes representatives of the 

internet industry, civil society, the legal community and academia. The Working Group input 

and guidance has been invaluable and is reflected in a set of Best Practices5 that provides useful 

and important guideposts for all those willing to join in the effort to address the challenge of 

cyberhate. 

The Extremist and Terrorist Threat Array 

The United States is a large, populous country with over 320 million people who belong to a 

wide range of political, social, and religious causes, some of them with a history of extremism 

and violence. At any given moment in time, Americans face the threat of extremist-related crime 

and violence from not just one but a number of different sources, including white supremacists, 

anti-government extremists, domestic Islamist extremists and left-wing extremists. Ignoring any 

of these threats invariably results in consequences for the American people. 

Extremist Murders in the United States 

One of the ways to understand the extremist threat array facing the United States is to examine 

extremist-related murders, including those committed in terrorist acts. 

Every year, adherents of a variety of extreme movements kill people in the United States.; the 

ADL's Center on Extremism tracks these murders, with data stretching back to 1970. Over the 

past ten years (2008-2017), domestic extremists of all kinds have killed at least 387 people in the 

United States. Of those deaths, approximately 71 percent were at the hands of right-wing 

extremists such as white supremacists, sovereign citizens and militia adherents. 

These statistics, available in our latest murder report, "Murder and Extremism in the United 

States in 2017,'>6 illustrate that extremist-related killings comprise only a small fraction of the 

total number of homicides in the United States each year. Nevertheless, because oftheir nature, 

they can often have an outsized impact, affecting entire communities--or even the entire 

country-in ways many other deaths do not. Perhaps the clearest recent illustration is the 2017 

4 Anti-Defamation League, ADL Cyber-Sajety Action Guide, (https://www.adl.org/adl-cyber-safety-action-guide) 5 Anti-Defamation League, "Best Practices for Responding to Cyberhate" (https://www.adl.orglbest-practiccs-forresponding-to-cyberhate) 

6 Anti-Defamation League, Murder and Extremism in the United States in 2017: An ADL Center on Extremism 

Report, January 17,2018 (https://www.adl.org/rnedia/10827/download) 

2 
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murder of Heather Heyer, murdered by white supremacist James Alex Fields, Jr. during the 

Unite the Right rally in Charlottesville, Virginia. Heyer's death garnered international attention 

and served as a wake-up call to the dangers posed by a re-energized white supremacist 

movement. 

In 2017, extremists killed at least 34 people in the United States, a welcome decline from the 

much higher totals for 2016 and 2015, but still the fifth deadliest year since 1970.7 Unlike 2016, 

a year dominated by the Pulse nightclub shootings in Orlando, Florida, which was committed by 

an Islamist extremist, the majority of2017 extremist murders were committed by right-wing 

extremists, primarily white supremacists, as has typically been the case most years. 

The white supremacist murder tally includes several killings linked to the alt righrl, the newest 

segment of the white supremacist movement, which expanded its operations in 2017 from the 

internet into the physical world-raising the probability that we will see more such violent acts 

in the future. 

An Islamist extremist committed the single deadliest incident in 2017: the New York City 

vehicular homicide attack, which killed eight people on a downtown bike path. Adherents of 

several different extremist movements, including white supremacists, anti-government 

extremists, and black nationalists, have also used vehicles to commit attacks in the United States 

in the past several years. 

It is important to note that these incidents represent merely the most visible extremist violence 

and crime in the United States: for each person actually killed by an extremist, many more arc 

wounded or injured in attempted murders and assaults. Every year, police uncover and prevent a 

wide variety of extremist plots and conspiracies with lethal intentions. Moreover, extremists 

engage in a wide variety of other crimes related to their causes, from threats and harassment to 

white collar crime. 

Right-Wing Terrorism 

In some cases, extremist murders are committed as acts of domestic terror. ADL's Center on 

Extremism defines terrorism as a pre-planned act or attempted act of significant violence by one 

or more non-state actors in order to further an ideological, social or religious cause, or to hann 

perceived opponents of such causes. Significant violent acts can include bombings or use of 

other weapons of mass destruction, assassinations and targeted killings, shooting sprees, arsons 

and fire-bombings, kidnappings and hostage situations and, in some cases, armed robberies. 

Domestic terrorism consists of acts or attempted acts of terrorism in which the perpetrators are 

citizens or permanent residents of the country in which the act takes place.9 

7 Anti-Defamation League, "Chapter 3: The Murders," Murder and Extremism in the United States in 2017: An ADL 

Center on Extremism Report, January 17, 2018 Q1tlps://www.adl.orglresources!Ell..orts/p1Ur\l;:r,and-extremism-inthe-united-statcs-in-20 !?#the-murders) 8 Anti-Defamation League, "All Right: A Primer about the New White Supremacy," 

(https://www.adl.orglrcsources;backgrmmdcrs/alt-right-a-primer-about-the-new-white-supremacy) 

9 Anti-Defamation League, "Glossary Terms: Domestic Terrorism" (https:i/www.adl.org/rcsources/glossaryl'rms/domes.tis-tetTOrisrn) 

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For more than 150 years, right-wing terrorism has been an unwelcome feature of the American 

landscape. Today, however, most Americans don't realize its frequency or scope. 

In recent years, far more attention has been given to the threat oflslamist terror-which has been 

linked to such horrific acts as the Orlando and San Bernardino shooting sprees. Yet the very real 

specter oflslamist terror in the United States exists alongside the equally serious threat of terror 

from right-wing extremist groups and individuals. 

Islamist extremists and right-wing extremists have generated shooting sprees, bombings, and a 

wide variety of plots and conspiracies at roughly similar rates. Since 9111, ADL has tracked 127 

Islamist extremists in the United States involved in 98 terrorist plots or attacks and 161 rightwing extremists involved in 94 plots or attacks. 10 Both ideologies pose threats so significant that 

to ignore either would be to invite tragedy. Yet right-wing violence typically receives much less 

media-and governmental-attention than Islamist violence does. 

To illustrate the persistent threat of right-wing terrorism in the United States, ADL's Center on 

Extremism compiled a list of I 50 right-wing terrorist acts, attempted acts, plots and conspiracies 

from the past 25 years (1993-2017) for a report entitled, "A Dark and Constant Rage: 25 Years 

of Right-Wing Terrorism in the United States."11 

These include terrorist incidents from a wide variety of white supremacists, from nco-Nazis to 

Klansmen to racist skinheads, as well as incidents connected to anti-government extremists such 

as militia groups, sovereign citizens and tax protesters. The number of acts attributed to each 

extremist sub-group is nearly identical: 64 terror incidents arc related to white supremacists, 

while 63 are related to anti-government extremists. Wben most people picture right-wing 

terrorism, they tend to think of white supremacists, but anti-government extremists such as 

militia groups and sovereign citizens pose just as much of a threat. The danger posed by violent 

anti-abortion extremists and other, smaller right-wing groups that resort to violence must also be 

taken into consideration. 

White Supremacists 

White supremacist ideology in the United States today is dominated by the belief that whites are 

doomed to extinction by a rising tide of non-whites who are controlled and manipulated by the 

Jews-unless white supremacists act to prevent this ostensible "white genocide." This core belief 

is exemplified by slogans such as the so-called Fourteen Words: "We must secure the existence 

of our people and a future for white children."12 White supremacists are often motivated to 

violence by this racist conviction. 

10 Anti-Defamation League, A Homegrown Threat: Lslamist Extremist Plots in the United Stoles, May I, 2018 

(https:l/www.adl.org/media/11160/download) 

11 Anti-Defamation League, A Dark and Constant Rage: 25 Years of Right-Wing Terrorism in the United States, 

May 22,2017 

(https://www.adl.org/sites/default/files/documents/CR 5154 25YRS%20RightWing%20Terrorism V5.pdD 12 Anti-Defamation League, "14 Words," Hate on Display TM Hate Symbols Database 

(https://www.adl.org/education/references/hate-symbols/14-words) 

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America's white supremacist movement is in the midst of a resurgence with a new generation of 

energized followers driving its growth and activity. 13 The growth of the alt right segment of the 

white supremacist movement since 2015, abetted by the current political climate, has brought 

tens of thousands of new recruits to the white supremacist movement, most of whom are young 

and many of whom are relatively well-educated. 

Most white supremacists do not belong to organized hate groups, but rather participate in the 

white supremacist movement as unaffiliated individuals. Thus, the size of the white supremacist 

movement is considerably greater than just the members of related hate groups. 

The white supremacist movement has a number of different components, including I) nco-Nazis; 

2) racist skinheads; 3) "traditional" white supremacists; 4) Christian Identity adherents; 5) white 

supremacist prison gangs; and 6) the alt right. 14 

White supremacists engage in a variety of terrorist plots, acts and conspiracies. However, white 

supremacists also have a high degree of involvement with traditional forms of criminal activity 

as well as ideologically-based criminal activity. Most of the murders committed by white 

supremacists are done for non-ideological reasons. However, even if such murders are ignored, 

white supremacists still account for the majority of lethal extremist violence in the United States. 

Most of the recent growth of the white supremacist movement is attributable to the rise of the alt 

right since 2015. The newest segment of the white supremacist movement brought many new 

faces to the movement, people not previously involved in extremist causes, as well as a new 

subculture derived from online forums such as 4chan and rcddit as well as from the misogynistic 

"manosphcre."15 While the growth of the alt right has energized the movement, it has also had 

somewhat of a destabilizing effect, as the alt right actually threatens to steal recruits from some 

of the more veteran segments of the white supremacist movement. 

The alt right was the organizing force behind the white supremacist "Unite the Right" rally in 

Charlottesville, Virginia, on August 11-12,2017, which attracted some 600 extremists from 

around the country and ended in deadly violcncc.16 These shocking events served as a wake-up 

call for many Americans, and shone a spotlight on the country's resurgent white supremacist 

problem. 

In 2017-2018, the alt right has continued to move from online activism into the real world, 

forming real world groups and organizations and engaging in tactics such as targeting college 

campuses. ADL's Center on Extremism documented an increase by 77 percent of white 

13 Oren Segal, "Reports of the All-Right's Demise Have Been Greatly Exaggerated" Hujfington Post, June 12, 2018 

(https://www.adl.org/news/on-edireports-of-the-alt-righls-demise-have-been-grcatly-ex~ted) 

14 Anti-Defamation League, "Defining Extremism: A Glossary ofWhite Supremacist Terms, Movements and 

Philosophies" (https:/lwww.adl.org/cducationlresources/glossmy-tennsldefining-extrcmism-white-supremacy) 

"Anti-Defamation League, When Women are the Enemy: The Intersection of Misogyny and White Supremacy, July 

24, 2018 (hltps:llwww.adl.org!media/11707/download) 16 Anti-Defamation League, "Have Hate, Will Travel: The Demographics of Unite lhe Right" 

(https://www~adl.org!blog!havc-hate-will-trave.!:the-demogrnphics-of-unite-the-right) 

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supremacist propaganda efforts on college campuses during the 2017-2018 academic year. 17 

From September 1, 2017 to May 31,2018, the Center documented 292 cases of white 

supremacist propaganda on college campuses-including fliers, stickers, banners, and posterscompared to 165 during the 2016-17 academic year. 

As the alt right received increased media scrutiny, it suffered from dissension and disunity, most 

notably the departure of many alt right cheerleaders who, though possessing a number of 

extreme views, did not advocate explicit white supremacy (these defectors are often referred to 

as the "alt lite"). 18 The post-Charlottesville backlash against the alt right hurt many of its leading 

spokespeople but has not resulted, as some have claimed, in a decline in the movement as a 

whole. 19 

Other white supremacists-nco-Nazis, traditional white supremacists, racist skinheads, white 

supremacist religious sects, and white supremacist prison gangs--have also continued their 

activities. Some white supremacists, such as nco-Nazis, seem to have been buoyed by the alt 

right to some extent, while others-most notably racist skinheads-may experience a loss of 

potential recruits at the hands of the alt right. 

Anti-Government Extremists {Tbe "Patriot" Movement) 

Although the term "anti-government extremism" can be used generically to refer to any fringe 

movement with an antipathy towards the government, or even the idea of government itself, in 

the United States the term is usually used to describe a specific set of right-wing extremist 

movements and groups that share a conviction that part or all of the U.S. government has been 

taken over by a conspiracy and is therefore not legitimate. Collectively, these movements and 

groups are often referred to as the "Patriot" movement.20 

The most important segments of the "Patriot" movement include the militia movement, the 

sovereign citizen movement and the tax protest movement. Though each sub-movement has its 

own beliefs and concerns, they share a conviction that part or all of the govcmment has been 

infiltrated and subverted by a malignant conspiracy and is no longer legitimate. 

The overlap between the white supremacist movement and "Patriot" groups has diminished over 

time; today there are people of color within the "Patriot" movement, particularly within the 

17 Anti-Defamation League, "White Supremacist Propaganda Nearly Doubles on Campus in 2017-18 Academic 

Year" (https:i /www .adl.org/rcsources!reports/white-supremacist-propagand;l-ncarly-doubles-on·campus-in-20 17-18-

academic-year) 

18 Anti-Defamation League, "From All Right to All Lite: Naming the Hate," July I 8, 2017 

(https:iiwww.mll.org/resourceslbackgrounderslfrom-alt-right-lo-alt-lite-naming-the-hate) 

19 Oren Segal, "The Alt-Right Isn't Going Away," The Forward, July 5, 2018 

(https:i/forward.com/opinion/404501/the-alt-right-isnl-going-away.i) 

20 Anti-Defamation League, "Defining Extremism: A Glossary of Anti-Government Extremist Tenns, Movements 

and Philosophies" (https:l/www.adl.org/education!resources/glossary-terms/fletining-extre.mism-anli-governmenl) 

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sovereign citizen movement, which in recent years has been able to recruit thousands of AfricanAmericans to its ranks.21 

Currently, the two most important anti-government extremist movements are the militia 

movement and the sovereign citizen movement. The militia movement, which dates back to 

1993, is centered on anti-government conspiracy theories about the relationship between the 

federal government and an ostensible global conspiracy to create a tyrannical one-world 

government (often referred to as the "New World Order") that seeks to disarm and enslave 

Americans. Militia movement adherents claim to be fighting against this global conspiracy and 

its collaborators within the federal government much like their forefathers fought against the 

British during the American Revolution. 

Also part of the militia movement are the Three Percenters and the Oath KcepersP 

The term "Three Percenter" derives from the erroneous belief that only three percent of colonists 

fought against the British during the Revolutionary War---but achieved liberty for everybody. 

Three Perccnters view themselves as modern day versions of those revolutionaries, fighting 

against a tyrannical U.S. government rather than the British. With anyone able to declare 

themselves a Three Percenter, the concept allowed many people to join who were not suited, 

physically or by inclination, to engage in the traditional paramilitary activities of the militia 

movement. 

Oath Keepers are a fairly large and loosely-organized anti-government extremist group started by 

attorney E. Stewart Rhodes that emerged as part of a resurgence of the militia movement in 

2008-09. They particularly seek to spread the anti-government ideology of the militia movement 

among, and to seek recruits from, former and active duty military personnel, law enforcement 

officers and first responders. However, such a background is not required for membership. 

The sovereign citizen movement dates back to 1970 in its earliest incarnation and is larger than 

the militiarnovement.23 Sovereign citizens believe that a conspiracy dating back to the 1860s 

infiltrated and subverted the govcrurnent of the United States, replacing its laws and legal 

systems with versions designed to allow repression and tyranny. This conspiracy purportedly 

replaced the original "de jure" government with a new, illegitimate "de facto" goverurnent. 

Sovereign citizens believe that they can declare their "sovereignty" and return to the preconspiracy government, after which the "de facto" government has no authority or jurisdiction 

over them. Sovereign citizens thus believe they can ignore laws, rules, regulations and taxes; as a 

result, the movement has a high association with criminal activity, violent and non-violent. 

21 Anti-Defamation League, "The Lawless Ones: The Resurgence of the Sovereign Citizens Movement" 

(httrs:l/wv.w.;!dl.org/ sitesldcfaultifi lesldocu_mentslassetsiJJ4fLcombating-hate1Lawless-Oncs-20 12-Edition-WEBfinaL pdf) 22 Anti-Dcfumation League, The Oath Keepers: Anti-Government ExtremL,ts Recruiting Military and Police, 

September 18, 2015 (https://www.adLorg/resoureesiprofiles/tl1c-oath-keepcrs) 23 Anti-Defamation League, 11ze Lawless Ones: 11ze Resurgence of the Sovereign Citizen Movement, 2012 

(https:/lwww.adl.orgisiles/default/files/docQmentsla§~tslpdt/coml;>l!llng-hateiLawless-Ones-2012-Edition-WEBfinaLpd!) 

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Because of a history of violent confrontations between sovereign citizens and law enforcement, 

including deadly shootouts, the movement represents a significant risk to officer safety. 

Though the sovereign citizen movement began in the United States, it spread to Canada in the 

1990s and to other English-speaking countries in the 2000s and is even present in small numbers 

in Europe. Spurred by the recession and foreclosure crisis of 2008-2009 and enabled by the rise 

of social media, the sovereign citizen movement experienced considerable growth over the past 

ten years, with corresponding rises in sovereign citizen violence, "paper terrorism" harassment 

tactics and white collar scams and frauds. It has also grown considerably within the AfricanAmerican community during the same time frame--ironic for a movement many of whose 

pioneers were white supremacists. 

Islamist Extremism 

One of the most striking elements oftoday's domestic threat picture is the role that a growing 

number of American citizens and residents motivated by radical interpretations of Islam have 

played in criminal plots to attack Americans in the United States and abroad. Over the past ten 

years, about 24 percent of victims killed by domestic terrorists were at the hands of domestic 

Islamist extremists. 24 

We have seen a notable increase in the number of U.S. citizens, lawful permanent residents and 

others with documentation who have become involved in Islamist extremist-related plots. Of the 

127 individuals involved in Islamist extremist-inspired plots since 2002, 66 were born in the 

United States-approximately 52 percent ofthc totaJ.25 Twenty-five of those individuals, or 

roughly 20 percent, were naturalized citizens, and 23 were lawful permanent or temporary 

residents-approximately 18 percent. Five of the individuals were foreign citizens, and eight 

were in the United States without documentation. This means that 90 percent of the individuals 

involved in plots were U.S. citizens, lawful permanent or temporary residents, or in the United 

States with documentation. 

Islamist extremist terrorist acts in the United States since 9/11 have evolved in tandem with 

major global developments, including technological advancements, wars, civil unrest, and an 

ever-shifting global political landscape. When analyzing terror plots in the United States, it's 

important to understand historical context. 

Immediately following the attacks of September 11, 2001, al-Qaeda became a much-cited 

inspiration for terror plots. Between 2002 and 2008, 33 individuals were arrested for 

involvement in 16 plots, with at least two individuals on average involved in each plot. This is 

likely because people were radicalizing through physical networks at the time, such as tiunily, 

friends, co-religionists and others. 

24 Anti-Defamation League, Murder and Extremism in the United States in 2017: An ADL Center an Extremism 

Repart, January 17, 2018 (https:/i\nvw.adl.org/me<liail0827/download) 25 Anti-Defamation League, A Homegrown Threat: Islamist Extremist Plots in the United States, May I, 2018 

(https://www.adl.org/medial!ll60/download) 

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Beginning in 2008, individuals more often plotted attacks on their own rather than as part of 

cells. By 2010, the number of individuals almost equaled the total number of plots for that year; 

between 2014 and 2017, 51 people were involved in 4 7 plots. In both 2016 and 2017, the number 

of plots matched the number of individuals involved. And the focus on soft targets has increased 

significantly since 2014. 

Self-radicalized lone actors pose a particular challenge to combat, in that they are often harder to 

trace, and they do not operate under the direction of any designated terror group, which means 

their motivations tend to be less clear, and their actions less predictable. 

For years, U.S. foreign policy strategies prioritized al-Qaeda targets and significantly weakened 

the group by eliminating much of its core leadership, including Osama bin Laden. Al-Qaeda 

became increasingly decentralized, which may have contributed to the decrease in domestic plots 

between 2011 and 2014. 

However, as al-Qaeda weakened, Islamic State (IS) rose from its ashes in Iraq, and in 2011, 

began to spread into Syria at the start of that country's civil war. After taking Mosul in June 

2014, IS made international headlines and gained notoriety as both a local insurgency and 

international terror group. 

Unsurprisingly, IS was cited as the inspiration for 20 of the 21 domestic terror attack plots in the 

U.S. in 2015, including the San Bernardino shooting. 

The sharp rise in plots from 2014 to 2015 illustrates IS's profound influence on people living in 

the United States. Twenty of the 25 individuals involved in 2015 plots were United States 

citizens. The remaining five were either lawful permanent or temporary residents or naturalized 

citizens. 

Left-Wing and Black Nationalist Violence 

While in no way comparable to the nature and magnitude of the threat posed by right-wing and 

white supremacist groups, far left-wing violence does still occur in the United States, though at 

far lower levels than during its heyday from 1965-1985. Here we use the term "far left" very 

broadly, to include anarchists as well as violent black nationalists, even though some of those 

groups themselves might claim not to be part of the left, as well as single-issue extremists such 

as animal rights and environmental extremists, typically emerging from the extreme wings of 

mainstream movements. Such groups and individuals have been responsible for a relatively 

small number of terrorist incidents over the past ten years, far smaller than those committed by 

either Islamist extremist or right-wing extremist actors. 

Of particular note has been a rise of violence related to black nationalism in the past several 

years, generally as a response to police shootings perceived as wrongfuL Several shootings and 

one vehicular assault have been directed against police officers by such extremists. In 2016, two 

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incidents in particular have caused concern: shootings responsible for the deaths of eight police 

officers in Dallas and Baton Rouge.26 

In July 2016, Micah Xavier Johnson, who had ties to black nationalist groups such as the New 

Black Panther Party, killed five police officers and injured nine others in Dallas, Texas, in an 

ambush attack aimed at police who were maintaining public order at a Black Lives Matter 

protest That same month, Gavin Eugene Long ambushed and shot six police officers, three of 

them fatally, in Baton Rouge. Long, like Johnson, was an adherent of black nationalism and a 

military veteran, as well as a member of the anti-government sovereign citizen movement Both 

incidents appear to have been motivated by anger in response to police shootings of African 

American men. 

Extremist Funding in the United States 

Contrary to common public perception, most extremist movements in the United States are 

largely self-funded, with individuals and groups funding their own activities (violent or 

otherwise), though online fundraising does play a role. It's important to note that funding levels 

for any extremist movement does not necessarily correlate with their ability to promote or even 

perpetrate violence. 

Because Islamist extremists' actions are more broadly identified as terrorist activities, their 

fundraising streams are generally deemed illegaL That is not the case for right-wing extremists, 

whose actions arc less likely to be considered by law to be terrorist activities. 

As outlined below, certain funding modalities-like Bitcoin, for example are particularly 

vulnerable to exploitation by extremists. And online payment and money transfer services 

require government support and increased public vigilance to help them prevent their systems 

from being exploited by extremists. Financial institutions have a vested interest in protecting 

their brand and their good name--and to preserve all of these, they need to increase their due 

diligence and actively cut off bad actors from across the extremist spectrum. 

Anti-government extremists 

The anti-government movement is very much about self-funding with few revenue streams. 

Militia groups, for example, arc largely self-funded, with people putting their own money into 

their movement activity, purchasing their own weapons and uniforms, and paying their own way 

to the events they organize and attend. 

In general, the sovereign citizen movement is similarly self-funded. There are, however, some 

unique elements to sovereign citizen funding. For example, sovereign citizen groups and gurus 

sell many manuals and guides that teach their ideas and tactics. The prices range from hundreds 

to thousands of dollars. These are sold online as well as in person-on their own sites, or 

sometimes on third party sellers, although less common. 

26 Anti-Defamation League, Murder and Extremism in the United States in 2016, February 16,2017 

(https://www.adl.org/sites/default/files/documents/MurderAndExtremismlnUS20!6.pd!) 

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Sovereign citizens also commonly hold seminars and training sessions, for which they charge 

(often substantial) fees for people to come to learn ideas and tactics. The sovereign citizen 

movement is also well-known for perpetrating a variety of sca~s and frauds-from mortgage 

fraud to investment scams to immigration fraud and more. Some of these schemes can take in 

millions or even tens of millions of dollars, most of which is used for the benefit of the 

scammers. 

White Supremacists 

ADL is frequently asked, "Where do white supremacists get their money?" 

Implicit in this question is the assumption that white supremacists raise a substantial amount of 

money, an assumption fueled by mmors and speculation about white supremacist groups being 

funded by sources such as the Russian government, far right conservative foundations or 

secretive wealthy backers. 

The reality is less sensational but still important. As American political and social movements 

go, the white supremacist movement is particularly poorly funded. Small in numbers compared 

to mainstream causes and containing many adherents of little means, the white supremacist 

movement has an inherently weak base for raising money. 

Moreover, ostracized because of its extreme and hateful ideology, not to mention its connections 

to violence, the white supremacist movement does not have easy access to many common 

methods of raising and transmitting money. This lack of access to funds and funds transfers 

limits what white supremacists can do and achieve. 

Recent developments, particularly in crowdfunding, provided a small number of white 

supremacists of high visibility within the movement additional revenue streams-mostly small 

but sometimes significant. However, mainstream crowdfunding sites are now much more likely 

to prevent white supremacists from exploiting their platforms, while "alternative" crowdfunding 

sites established by extremists themselves have mostly failed. 

As outlined in ADL's recent report titled, "Funding Hate: How White Supremacists Raise Their 

Money,"27 the main sources of white supremacist funding include: 

Self-funding: 

Most white supremacists fund their own activities in the movement-whatever those activities 

may be. This is not surprising; most white supremacists do not belong to any organized group 

and have little to rely upon other than their own resources. If they want to attend a white 

supremacist event somewhere, they must travel there themselves, or find a ride with others. They 

often must pay for their own tattoos, clothing, paraphernalia and weaponry. Because many white 

27 Anti-Defamation League, Funding Hate: How White Supremacists Raise their Money, December 5, 2017 

(https:/lwww.adl.org/media/l 0761 /download) 

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supremacists are not economically advantaged, such self-funding does not generate much money 

as a whole. 28 

Organizational funding: 

Most white supremacist groups, as well as other white supremacist entities such as websites, do 

solicit voluntary donations, regardless of whether they have membership dues. For example, the 

Arkansas-based Knights Party, a Klan group, solicits donations of from $5 to $500 through an 

online store. Fundraising campaigns for limited and specific purposes-such as raising money to 

pay the legal fees of an arrested white supremacist-often have a greater chance of success than 

broader or more generic entreaties. 29 

Most of these groups seeking dues and donations can't easily use electronic forms of payment, 

because companies like PayPal make an effort to prevent white supremacists from using their 

services. The Knights Party, for example, allows people to "purchase" donations online but they 

must send checks or money orders by mail. The National Policy Institute, the "think tank" of alt 

right ideologue Richard Spencer, complains on its site that "each of our online donation 

processors has been successively torpedoed by Silicon Valley," and asks that people send 

traditional check or money order. 

Criminal Activity: 

White supremacists engage not only in ideological crimes such as hate crimes or terrorist plots, 

but also a wide variety of traditional crimes-including crimes intended to obtain money, such as 

drug dealing, robberies and thefts. White supremacist prison gangs, many of which can be 

described as organized crime syndicates, are particularly noteworthy for such activities, but this 

type of criminal behavior can be found to some degree across much of the white supremacist 

movement.30 

Most such criminal activity, however, is designed primarily to benefit the person or persons 

engaging in the crime, rather than a white supremacist group or the white supremacist causes as a 

whole. As such, criminal activity is not a major source of funding for white supremacism as a 

movement. 

Online funding platforms: 

The most significant new type of funding for the white supremacist movement has been 

crowdfunding or crowdsourcing, which can be used by both individuals and groups. Essentially 

28 Anti-Defamation League, "Chapter 2: Self-Funding," Funding Hate: How White Supremacists Raise their Money, 

December 5, 2017 (https://www.adl.org/resources/reportslfunding-hate-how-white-supremacists-raise-theirmoney#self-funding) 

29 Anti-Defamation League, "Chapter 3: Organizational Funding," Funding Hate: How White Supremacists Raise 

their Money, December 5, 2017 (https://www.adl.org/resources/reports/funding-hate-how-white-suprernacists-raisetheir-moncy#organizational-fundingl 

30 Anti-Defamation League, "Chapter 4: Criminal Activity," Funding Hate: How White Supremacists Raise their 

Money, December 5, 2017 (https://www.adl.org/resourceslreportslfunding-hate-how-white-supremacists-raise-theirmoney#criminal-activity) 

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an extension of social media, crowdfunding consists of using dedicated internet platforms such 

as GoFundMe, Patrcon, FundRazr, Indiegogo and Kickstarter, among others, to solicit and raise 

money for specific products, projects or general support from among a wide base of people. 

Today, crowdfunding is used to finance an amazing range of activities, from moviemaking to 

wrestling camps.31 

White supremacists quickly discovered for themselves the usefulness of such platforms. One 

early effort by white supremacists occurred on Indiegogo, where white supremacist Kyle Hunt 

launched a fund drive in 2014 to produce "Stop White Genocide" banners for planned White 

Man March events across the country. With 50 backers contributing money, Hunt quickly raised 

over $3,500, well over his stated goal of $2,000. A similar campaign to purchase an aerial 

"March Against White Genocide" sign (i.e., one pulled by a plane) was also successful. 

Canadian white supremacist Veronica "Evalion" Bouchard successfully raised more than $1,600 

on Indiegogo in 20 16 for a "new studio set up" to use to make racist videos. 

However, as mainstream crowdfunding websitcs became aware of white supremacist 

exploitation of their platforms, they have increasingly moved to shut such extremists out. Some 

white supremacists and other extremists have attempted to create their own alternative 

crowdsourcing platforms, but most of these have failed or are in the process of failing, which 

means that crowdfunding may not become a sustainable source of revenue for white 

supremacists in the short to medium term. 

Bitcoin and crypto-currencies: 

White supremacists routinely encounter problems with money transfers and payment processing. 

Sites like PayPal and Google Wallet routinely deny them access and even getting a credit card 

payment processor is not always easy. As a result, the swift electronic transfer of money enjoyed 

by most people is by no means a given for white supremacists. For many, money is transferred 

using the slow and old-fashioned ways of check, money order or cash sent by mail. 

In recent years, however, the electronic crypto-currency Bitcoin, which can be used for digital 

payments, has become an attractive alternative for some white supremacists, including 

Stormfront, the oldest and largest white supremacist website on the internet. The site claims that 

Bitcoin is its preferred payment method and provides its Bitcoin address to would-be 

contributors. In August 2017, Matt Parrott of the Traditionalist Worker Party, a neo-Nazi group, 

announced a "sweeping shift toward relying on blockchain-driven teclmologies [i.e., cryptocurrencies like Bitcoin or Ethereum] instead of the traditional corporate internet." The group had 

already been getting at least some donations through Bitcoin since 20 15.32 

31 Anti-Defumation League, "Chapter 5: The New Kid on the Block: Crowdfunding," Funding Hate: How White 

Supremacists Raise their Money, December 5, 2017 (https://www.adl.org/resources/reports/funding-hate-how-whitesupremacists-raise-their-money#the-new-kid-on-the-block-crowdfunding) 

32 Anti-Defumation League, "Chapter 6: Bitcoin and Cryptocurrencies," Funding Hate: How White Supremacists 

Raise their Money, December 5, 2017 (https://www.adl.org/resources/reports/funding-hate-how-white-supremacistsraisc-thcir~money#bitcoin-and-crvptocurrencies) 

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One odd aspect of Bitcoin is that, while the crypto-currency is anonymous in the sense that it 

does not transmit personally identifying information, it is quite transparent in that all transactions 

using Bitcoin arc permanently and publicly stored. This means that if one knows the identifier 

for Bitcoin "wallets" belonging to extremists, one can actually examine transactions for those 

wallets. In October 2017, journalists Will Car less and Aaron Sankin did just that, with help from 

a Twitter bot, @NeonaziWallets, which posts information related to certain identified Bitcoin 

wallets. They revealed that Stormfront's Bitcoin wallet was worth more than $30,000, while that 

of the nco-Nazi website Daily Stormer was ten times that amount Perhaps most surprisingly, 

their report revealed that white supremacist hacker Andrew Auernhcimer has received more than 

a million dollars in Bitcoin currency, a staggering amount for a white supremacist It should be 

noted that Aucrnheimcr's appeal extends beyond the white supremacist movement into several 

other movements or subcultures and that he is not at all representative of white supremacist use 

ofBitcoin. 

However, some white supremacists have had problems even trying to use Bitcoin and other 

cryptocurrencics. Here the problem has been not Bitcoin per se, which anybody can use, but 

processors of electronic Bitcoin payments, at least some of whom are not necessarily willing to 

lend their services to white supremacists. As a result, the Daily Stormer website currently must 

have Bitcoin donations mailed to its post office box, the same as any donations by cash, check or 

money order. Thus Bitcoin is not necessarily a panacea for white supremacists. 

Exploitation of Social Media 

Extremists make up only a small segment of our population, but the internet amplifies their 

voices. Most extremists are unaffiliated with organized groups, but the internet has enabled 

isolated extremists to become more active and involved in virtual campaigns. 

As internet proficiency and the usc of social media have become universal, so too have the 

efforts of terrorist and extremist movements to exploit these technologies to increase the 

accessibility of materials that justify and sanction violence. Terrorist and extremist movements 

use online and mobile platforms to spread their messages and to actively recruit adherents who 

live in the communities they target The resurgence and fast spread of both the militia and 

sovereign citizen movements in 2008-2009, for example, was enabled in large part by social 

media, as was the spread of IS and alt right propaganda since. 

Today, individuals can easily find sanction and reinforcement online for their extreme opinions 

or actions, in some cases neatly packaged alongside bomb-making instructions. This enables 

adherents like white supremacist mass shooter Dylann Roof to self-radicalize without face-toface contact with an established terrorist group or celL Extremists and terrorists take full 

advantage of this virtual audience, regularly publishing detailed instructions for lone wolf terror 

attacks using knives, as well as cars, trains, and other modes of transportation, and in some cases 

providing lists of suggested targets, as welL 

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Approximately half of the 150 terrorist incidents described in a 2017 ADL report on 25 years of 

right-wing terrorism were perpetrated by lone wolf offenders.33 And right-wing terror plots or 

attacks have involved more people, on average, than Islamist extremist plots or attacks, which 

have increasingly been carried out by lone actors. 34 

Today, as a result of the internet, it is easier than ever for someone to become steeped in 

extremist ideologies, even to the point of being willing to commit acts of great violence, without 

ever being involved in an organized extremist group. 

International Terror Finance and U.S. Foreign Policy 

State Sponsors of Terror 

The U.S. government currently designates four state sponsors of terrorism: Iran, North Korea, 

Sudan, and Syria.35 However, Iran is far and away the most prolific of these three, providing 

extensive official support through its Islamic Revolutionary Guard Corps (I.R.G.C.) to such 

U.S.-designated Foreign Terrorist Organizations as Hamas, Hizballah, Kata'ib Hizballah, Saraya 

al-Ashtar, and others.36 According to Treasury Under Secretary for Terrorism and Financial 

Intelligence Sigal Mandelker in June, Iran "provides upwards of $700 million a year to 

Hizballah."37 

Successive American administrations, both Democratic and Republican, have pursued sanctions 

designations to expose and address Iran's state sponsorship of terrorism. The U.S. Treasury 

Department has continued this effort with a spate of recent designations, including two rounds of 

recent sanctions designed to show that the Central Bank of Iran is knowingly involved in 

facilitating the I.R.G.C. 's financial crimes such as money laundering and bank fraud in order to 

transfer funds in support of international terrorism.38 

33 Anti-Defamation League, A Dark and Constant Rage: 25 Year.' of Right-Wing Terrorism in the United States, 

May 22,2017 

(https://www.adl.org/sitesldefuult/files/documents/CR 5154 25YRS%20RightWing%20Terrorism VS.pdD 34 Anti-Defamation League, "Chapter 3: Islamist Extremist Plots 2001-2017," A Homegrown Threat: !s/amist 

Extremist Plots in the United States, May I, 2018 (https://www.adl.org/resources/reports/a-homegrown-threatislamist-extremist-plots-in-the-united-states#islamist-extremist -plots-200 1-20 17) 35 U.S. State Department, "State Sponsors of Terrorism," accessed September 5, 2018 

(https://www.state.gov/j/ct/list!c 14151.htm) 36 U.S. State Department, "Chapter 3: State Sponsors ofTerrorisrn," Country Reports on Terrorism 2016, July 2017 

(htlps:/ /www.state. gov/j/ ct!rls/crt/20 16/2 7223 5.htm) 37 U.S. Treasury Department, "Under Secretary Sigal Mandclker Speech before the Foundation for the Defense of 

Democracies," June 5, 2018 (https://home.treasury.gov/news/prcss-releases!sm0406) 38 U.S. Treasury Department, "United States and United Arab Emirates Disrupt Large Scale Currency Exchange 

Network Transferring Millions of Dollars to the IRGC-QF," May 10,2018, (https://home.treasury.gov/news/pressreleaseslsm0383) & U.S. Treasury Department, "Treasury Targets Iran's Central Bank Governor and an Iraqi Bank 

Moving Millions of Dollars for IRGC-Qods Force," May 15, 2018 (https://homc.treasury.gov/news/pressreleaseslsm0385) 

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Incomplete Lists of Terrorist Groups 

One of the most fundamental challenges in combating international terror finance is simply 

getting our allies on the same page as us with regard to which international violent extremist 

groups should be classified as terrorists. In October, the House of Representatives passed 

H. Res. 359-which ADL endorsed-calling on the European Union to designate Hizballah in 

its entirety as a terrorist group.39 The European Union insists on designating only the military 

wing ofHizballah as a terrorist group, even though Hizballah's own leaders explicitly reject the 

notion that it has separate military and political wings, and despite the fact that failing to 

designate Hizballah as a whole makes it easier for the group to engage in logistical and 

propaganda activities in Europe. 

Likewise, not a single Latin American government has designated Hizballah as a terrorist group, 

despite the fact that the group murdered 85 people and injured hundreds when it carried out the 

1994 car bombing of the AMIA Jewish community center in Buenos Aires. 

The six Arab monarchies in the Gulf jointly announced their conclusion in 2016 that Hizballah is 

a terrorist organization, and all six of these states joined the U.S. in two rounds of multilateral 

joint designations in the last year against terrorist operatives associated with Hizballah, al-Qaeda, 

or the Islamic State. However, as my colleague David Weinberg testified in the House this April, 

neither Oman nor Kuwait has issued a comprehensive public list of banned terrorist 

organizations. 40 Qatar's list to this effect still has enormous and inexcusable gaps. 41 And 

although some Gulf states such as Saudi Arabia take a tough line against Iranian-backed 

extremists, not one of the six Gulf monarchies has designated any of the Palestinian terrorist 

organizations that target Israel - such as Hamas or Palestinian Islamic Jihad, which are backed by 

Iran -as a terrorist group.42 

Safe Havens for Terror Financiers 

Finally, stopping the flow of terrorist finance abroad requires cracking down on safe havens and 

ensuring that U.S.-designated terror financiers cannot enjoy legal impunity abroad. 

Just this week, the U.S. government announced plans to further cut military aid to Pakistan over 

its continued tolerance of terrorist operatives on its territory.43 For example, Pakistan has 

39 Congress.gov, "H.Res.359- Urging the European Union to designate Hizballah in its entirety as a terrorist 

organization and increase pressure on it and its members," Text Engrossed in House, October 25, 2017 

(https:l/www.congress.gov/bill/l 1 Sth-congress/house-resolution/359/text) 40 David Weinberg, "Grading Counterterrorism Cooperation with the G.C.C. States," Testimony before the House 

Committee on Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade and Subcommittee on the 

Middle East and North Africa, April 26, 2018 (https:/lwww.adl.org/media!lll40/download) 41 David Weinberg, "Qatar's Swiss Cheese Terrorism List," ADL Blog, April ll, 2018 

(https://www.adl.org/news/op-edlqatars-swiss-cheese-terrorism-list) 

42 David Weinberg, "Grading Counterterrorism Cooperation with the G. C. C. States," Testimony before the House 

Committee on Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade and Subcommittee on the 

Middle East and North Africa, April26, 2018 (https://w;vw.adl.org/media!lll40/dovmload) 43 Saphora Smith and Reuters, "Trump admin cancels $300M aid to Pakistan over terror record," NBC News, 

September 2, 2018 (https:/ /www. nbcnews.com!news/world/trump-admin-cancels-300m-aid-pakistan-over-terrorrecord-n905786) 

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continued to tum a blind eye to the military, political, and financial leaders ofLashkar-e-Taiba, 

the U.S.-designated Foreign Terrorist Organization based in Pakistan responsible for the 2008 

Mumbai attacks that killed at least 166 people.44 Six Americans were murdered in that attack, 

including at the Nariman House Jewish community center in Mumbai. 

My colleague David Weinberg testified in April that Kuwait's top public university appeared to 

be listing three individuals on its faculty who are designated by the U.S. as funders of alQaeda.45 Likewise, he noted that Qatar still appears to be hosting Hussam Badran, whom Israel 

identified as the mastermind of numerous Hamas terrorist attacks in the early 2000s that killed 

over I 00 people and injured over 500 more. Since moving to Qatar, Badran has reportedly 

engaged in funding terrorism through gold and jewelry smuggling to Hamas terrorist cells in the 

West Bank. 46 

Likewise, it is especially important for Latin American governments to tackle the threat posed by 

Hizballah because, according to the State Department, the Tri-Border Area at the nexus of 

Paraguay, Argentina, and Brazil has "continued to be attractive to individuals seeking to engage 

in terrorist financing, as the minimal police and military presence along these borders allowed 

for a largely unregulated flow of people, licit and illicit goods, and money."47 Hizballah is 

generally considered to be the main perpetrator in this regard, and it also uses its networks in 

Latin America to provide illicit procurement and operational support to Iran's I.R.G.C.48 

Legislative and Administrative Policy Recommendations 

Bully Pulpit 

The right to free speech is a core value, but the promotion of hate should be vehemently rejected. 

Simply put, you cannot say it enough: America is no place for hate. The Administration must 

send loud, clear, and consistent messages that violent bigotry is unacceptable- and ensure that 

the FBI and the Civil Rights Division will enforce relevant federal laws and vigorously 

investigate and prosecute hate crimes. 

Improved Coordination 

The Department of Justice should host periodic interagency meetings to promote cross-agency 

collaboration and to address prevention of and response to extremism and hate violence. This 

44 U.S. State Department, "Amendments to the Terrorist Designation ofLashkar e-Taiba," April 2, 2018 

(https:llwww.state. gov/r/pa/prs/ps/20 18i041280 125.htm) 45 David Weinberg, "Grading Cotmterterrorism Cooperation with the G.C.C. States," Testimony before the House 

Committee on Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade and Subcommittee on the 

Middle East and North Africa, April 26, 2018 (https:l/www.adl.org/media/11140/download) 46 Israel Defense Forces, "When Hamas Tries to Establish a Terror Network- We Stop Them," July 3, 20I5 

(https:llwww.idf.il/en/minisites/hamas/when-hamas-tries-to-establish-a-terror-network-we-stop-thcrn!) 

47 U.S. State Department, "Chapter 2: Country Reports: Western Hemisphere," Country Reports on Terrorism 2016, 

July 2017, (https:/lwww.statc.gov/j/ctlrls/crt/20 161272234.htm) 48 Emanuele Ottolenghi, State Sponsors of Terrorism: An Examination of Iran's Global Terrorism Network, 

Testimony before the House Homeland Security Committee Subcommittee on Counterterrorism and Intelligence, 

April I 7, 20I8 (https://docs.house.govlmeetings/HM!HM05/20I 8041711 08155/HHRG-1 I 5-HM05-WstateOttolenghiE-20 I 80417.pdD 

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initiative should involve both lead enforcement agencies and agencies working to expand antibias and hate crime prevention training and outreach - including Department of Education, 

Department of Homeland Security, the Federal Bureau oflnvestigation (FBI), and the 

Department of Health and Human Services (HHS). 

Recognizing Domestic Terrorism 

The nature of domestic extremist movements is substantially different enough from foreign 

terrorist organizations that creating designed domestic terrorist organization lists is not practical 

or desirable and presents potential constitutional issues under the First Amendment. However, it 

is both practical and desirable to finally pass a domestic terrorism statute that explicitly 

recognizes and punishes domestic terrorism as a crime, calls upon the federal government to 

collect statistics on domestic terrorism and other forms of extremist-related criminal activity, and 

ensures training for law enforcement on domestic terrorism. Such a statute should focus on 

specific criminal acts and not cross the line to punishing First Amendment protected expression. 

Countering Violent Extremism 

The Administration and Congress should do all in their power to promote trust and encourage 

stronger relationships to counter attempts by both international terrorist organizations and 

domestic hate and extremist groups to recruit disaffected Americans. The Administration should 

fully resource and staff efforts at both security and non-security Executive branch agencies to 

implement programs aimed at preventing and intervening in the process of radicalization to 

violence. DHS should clarify its funding criteria and demonstrate that it is committed to funding 

the full range of programs - domestic and international designed to counter all forms of violent 

extremism, not just those associated with Islamist extremism. 

Community Resilience Programming 

Congress and state legislatures should authorize and appropriate grants for research and services 

to better understand the drivers of extremist hate and fund evidence-based programming to 

counter it. Some opportunities are available for research, but far from enough; there is no 

comprehensive strategy and program to counter the trends we arc seeing online and in our 

communities. State, local, and community leaders must create opportunities throughout the 

lifecycle of hate-from awareness to intervention to rehabilitation and victims services-in 

support of comprehensive, evidence-based, whole-of-society programs that counter all facets of 

hate and extremism. Recent ADL-supported programs that nurture these sorts of partnerships 

include the Mayors' Compact to Combat Hate, Extremism, and Bigotry; the Strong Cities 

Network; and Communities Overcoming Extremism: The After Charlottesville Project 

Dialogue Between Civil Society and Tech Sector 

In the last several years, civil society and the technology sector have partnered on a range of 

projects to ensure public sector approaches adapt for the digital era Governmental efforts to 

address hate and extremism have been little more than opportunities to hold joint events, and are 

far from collaborative partnerships. Policymakers should pursue genuine partnerships with the 

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technology sector to ensure the government can better counter extremism online, and to help 

technology companies find solutions to emerging challenges. 

Inclusive and Comprehensive Terms of Service 

Tech companies must continue to improve their terms of service, especially in relation to 

extremism. This commitment should include creating strong and robust prohibitions on extremist 

content. Platforms should fine-tune their approaches to dealing with such extremism. In addition 

to having clear and transparent terms of services, platforms must vigorously enforce these 

guidelines for the benefit of their users. This should include more rigorously policing their 

platfom1s to avoid providing services to U.S.-listed Specially Designated Global Terrorists. 

Continue Utiliung Terrorist Designations Abroad 

The Treasury and State Department's authority to designate terrorist financiers and operatives is 

a particularly powerful tool in certain regards. Even when designated entities are not directly 

exposed to the U.S. financial sector, such designations signal to outside actors to avoid 

dangerous transactions and alert security officials in other countries to potential threats. Notably, 

the United States has not sanctioned a single Hamas financial operative since 2015, despite a 

regrettably rich target environment in this regard throughout the Middle East. The U.S. 

government should also continue to strategically use these designations at times to isolate 

ideological purveyors of hatred and extremism if they are also engaged in sanctionablc 

offensives, such as former mentor to Osama bin Laden Abdulmajeed al-Zindani, who was 

sanctioned by the United States and U.N. in 2004.49 

Press U.S. Allies to Designate All Terrorist Groups 

Congress and the Executive branch can each take constructive steps to encourage U.S. allies to 

designate major terrorist groups. This includes urging European and Latin American 

governments to designate Hizballah in its entirety as a terrorist organization and urging Gulf 

governments to designate Hamas and Palestinian Islamic Jihad. Congress can continue to 

highlight these issues with such bills as H. Res. 359 specifically on the E.U.-Hizballah issue that 

passed the House last year,50 as well as through public letters to foreign governments and in your 

conversations with foreign leaders. 

49 U.S. Treasury Department, "United States Designates Bin Laden Loyalist," February 24, 2004 

(https://v.•ww.treasurv.gov/press-ccnter/press-releases/Pa!!es/jsll90.aspx); & United Nations Security Council, 

"Narrative Summaries ofReasons for Listing: QDi.l56 Abd al-Majid Aziz al-Zindani," designated February 27, 

2004, narrative summary posted July 23, 2009 and updated June l 0, 2013 

(https://www.un.org!sc/suborg/en/sanctions/1267/aq sanctions lislfsummaries/individual/abd-al-majid-aziz-alzindani) 

5

° Congress.gov, "H.Res.359 - Urging tbe European Union to designate Hizbal!ah in its entirety as a terrorist 

organillltion and increase pressure on it and its members," Text Engrossed in House, October 25, 2017 

(httrs://www.congress.govlbill/ll5th-congress/house-resolutionl359/text) 

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Pass Key Terror Finance Bills 

The ADL has endorsed two bipartisan pieces oflegislation on international terror finance that 

this Committee should help enact into law. The first is H.R. 5132, the Iranian Revolutionary 

Guard Corps Economic Exclusion Act, which was introduced in March and was referred at that 

time to several Committees, including House Financial Services. 51 The bill would strengthen 

existing U.S. sanctions against companies controlled by the I.R.G.C. and impose additional 

sanctions on foreign persons that provide material support to the I.R.G.C. ADL has also endorsed 

H.R. 2712, the Palestinian International Terrorism Support Prevention Act of2017.52 This bill 

imposes sanctions on foreign persons or governments that provide material support to Hamas or 

Palestinian Islamic Jihad. The bill was introduced in May of last year and was referred to the 

House Financial Services Committee as well as the House Committee on Foreign Affairs; the 

latter marked up the bill and approved it in November, but this Committee has yet to act on it. 

Dry Up Terror Finance Safe Havens Abroad 

However worthwhile designating international terror financiers may be, the United States also 

needs to be prepared for the reality that there are certain jurisdictions in which such individuals 

enjoy legal impunity. In such cases, Members of Congress should encourage the Secretary of 

State to invoke article 6(j) of the Export Administration Act of 1979, publicly naming those 

jurisdictions that turn a blind eye to terror financiers and to other terrorist facilitators based in 

their country. This would in tum require the licensing of dual use items being exported from the 

United States to such countries, in order to ensure that U.S. foreign trade is not exploited to allow 

sensitive technologies to fall into the hands of terrorists and their facilitators abroad. It would 

also provide such countries with an added incentive to abandon their negligent conduct. 

Seek to Extradite Terror Facilitators Enjoying Legal Impunity Abroad 

The United States should pursue legal action when host governments are unprepared to do so and 

the United States has potential jurisdiction, such as against the perpetrators of crimes that touch 

the U.S. financial system or against terrorists who help to murder Americans abroad. For 

example, the United States has filed charges against one of the perpetrators of Hamas' s 200 I 

Sbarro pizzeria bombing, Ahlam Tamimi, who is enjoying legal impunity in Jordan despite being 

on America's Most Wanted Terrorist list on charges of murdering two American citizens and 

injuring at least four other Americans in that attack. 53 The United States could seek to file and 

unseal similar charges against Hussam Badran in Qatar, whom Israel has identified as one of the 

masterminds of that attack and a Hamas financier, among other roles. 5

4 Both Congress and the 

51 Congress.gov "H.R5132- Iranian Revolutionary Guard Corps Economic Exclusion Act," Introduced in House on 

March I, 2018 (https://www.congress.gov/bill/115th-congress/house-bill/5132/texl) 52 Congress.gov, "H.R2712- Palestinian International Terrorism Support Prevention Act of2017," Introduced in 

House on May 25, 2017 (hllps:/iwww.congress.gov/bill/115th-congresslbouse-bill/2712/text) 53 Federal Bureau oflnvestigation, "Ahlam Ahmad al-Tamimi," Most Wanted Terrorists, accessed September 5, 

2018 (https://www.tbi.gov/wantedlwanted terroristslahlam-ahmad-al-tamimi) 54 David Weinberg, "Grading Counterterrorism Cooperation with the G. C. C. States," Testimony before the House 

Committee on Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade and Subcommillee on the 

Middle East and North Africa, April26, 2018 (https://www.adl.org/media/11140/download) 

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Administration could add public and private pressure for Tamimi and Badran's timely 

extradition for their alleged roles in the murder of American Jews. 

Improve federal response to hate crimes 

The federal government has an essential leadership role to play in confronting hate crimes, 

extremism, and acts of violence motivated by prejudice. It cannot do so if it scapegoats 

Muslims, refugees, and other marginalized communities through policy and executive action. At 

a time ofincrcascd incidents of bias, harassment, and hate violence, the Administration's policies 

and actions have a direct impact on whether individuals will trust police enough to report crimes, 

including hate crimes. Special attention needs to be paid to strong enforcement of hate crime 

laws, underreporting of hate crimes by law enforcement to the FBI and by communities, and 

training for law enforcement on recognizing and responding to hate crimes. DOJ should establish 

an interagency task force to coordinate hate crime prevention initiatives and responses across the 

executive branch and the federal government should help law enforcement agencies improve 

data collection and training on how to effectively address hate crimes and their victims. 

Conclusion 

Seventeen years after the September II terrorist attacks, we very much hope that these 

hearings-and any that come after them-will acknowledge and highlight the extraordinary, 

successful efforts of federal, state, and local law enforcement officials to prevent and deter 

terrorism on our shores. But police and counterterrorism officials do not work in a vacuum; they 

cannot do their job without community relationships, cooperation, trust, and a shared sense of 

responsibility for public safety. ADL will continue to advocate -in Congress and in the 

courts-for law enforcement officials to have investigative tools sufficient to deter and prevent 

terrorism, while appropriately balancing national security and individual rights. 

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MURDER AND EXTREMISM 

IN THE UNITED STATES IN 2017 

An AD L Center on Extremism Report 

KEY 

FINDINGS ____ _ 

INTRODUCTION _____ _ 

THE 

PERPETRATORS--· 

THE 

1 

2 

6 

MURDERS _____ ~_ 11 

THE 

INCIDENTS _____ . __ 13 

NOTES ON 

METHODOLOGY AND SOURCES____ 15 
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INTRODUCTION 

Extremism was a constant subject in the headlines in 2011, from protests to politicians and 

radical interpretations of Islam to the radical right But extremists from a varieiy of groups and 

movements committed a variety of murders-some highly publicized and others largely invisibleleaving their violent marks on the American landscape. 

By the preliminary tally of the Anti-Defamation League's Center on Extremism, 34 people were 

killed by domestic extremists in 2017. Compared to 2016, which totaled 71 extremist-related 

killings, and 2015, which produced 69 such deaths, the deadly tally for 2017 was markedly lower. 

Still, 2017 was still the fifth deadliest year since 1970 for domestic extremist-related killings. 

These statistics illustrate that extremist-related killings comprise only a small fraction of the total 

number of homicides in the United States each year. Nevertheless, because of their nature, they 

can often have an outsized impac~ affecting entire communities-or even the entire country-in 

ways many other deaths may not Perhaps the clearest example of that from 2017 was the murder 

of Heather Heyer in Charlottesville, Virginia, in August by white supremacist James Alex Fields, Jr, 

during a white supremacist rally in that city. Heyer's death received national attention and for many 

served as a wake-up call to the dangers posed by a re-energized white supremacist movement 

It is important to note that the deaths described here represent merely the tip of a pyramid of 

extremist violence and crime in the United States; for each person actually killed by an extremist, 

many more are wounded or injured in attempted murders and assaults. Every year, police uncover 

and prevent a wide varieiy of extremist plots and conspiracies with lethal intentions. Moreover, 

extremists engage in a wide varieiy of other crimes related to !heir causes, from threats and 

harassment to white collar crime. 
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I NTR 0 0 U GTIO N 

The main reason the extremist murder statistics lor 2017 are significantly lower than in 2015 

and 2016 is the absence of large extremist-related shooting sprees. In 20 16, Omar Mateen 

killed 49 people at the Pulse nightclub in Orlando, Florida In 2015, white supremacists and 

Islamic extremists engaged in three significant shooting sprees that left 28 dead. In contrast 

the deadliest extremist-related shooting incident in 2017, which took place in Fresno, California 

involved a murder followed by a shooting spree that left three more dead-a tragic and deadly 

incident, but simply not at the same scale of some of the mass shootings of 2015-2016. There 

were actually more deadly incidents in 2017 (19) than in 2016 (13), though far fewer than in 

2015 (32). 

The deadliest extremist-related incident in 2017 was unusual in that it did not involve firearms 

or bombs but rather a vehicle. This was the October 31 terrorist attack by Sayfullo Saipov in 

New York City that involved vehicular homicide on a pedestrian walkway and bike path, with 

eight deaths. Given that the murder of Heather Heyer also involved a vehicle, the most highlypublicized Islamic extremist and while supremacist-related murders in 20 17 each usod vehicles 

as weapons-another unwelcome first for the United States. 
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INTRODUCTION 

MURDER AND EXTREMISM IN THE U.S. 

Ten Deadliest Acts of Violence by U.S. Domestic fx!remists {1968-2017) 

4 
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INTRODUCTION 

These attacks follow a number of vehicular attacks elsewhere in the world, including Spain, 

France, and Great Britain, but the United States has seen its share of such attacks in recent years. 

In November 2016, a vehicular and stabbing attack at Ohio State Universily in Columbus by an 

Islamic extremist resulted in 13 injured people. In September 2016, a black nationalist, Marc 

Laquon Payne, was charged for attempting to kill police officers in Phoenix by ramming them with 

his car; he injured three. In July 2015, an anti-government sovereign citizen drove through a 

crowd at a Fourth of July fireworks show in Oak Ridge, Tennessee, killing one person and injuring 

eight more. Thus, in the past three years, people from four different extremist movements have 

tried to use vehicles as deadly weapons in the United Stales. 
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THE 

PERPETRATORS 

Extremists from a variety of different movements were involved in murders in 2017, 

including various types of white supremacists, anti-government extremists, Islamic extremists, and 

black nationalists, as well as one adherent of the all lite. Sometimes extremists adhere to or are 

influenced by more than one extremist movement; in such cases, extremists are categorized here 

by the ideology that seems to be the most important to them. 

Usually such categorizations are straightforward, but occasionally incidents emerge that are much 

harder to characterize. Perhaps no better example exists than Jeremy Christian, who is accused 

of stabbing to death two people and severely injuring a third as they tried to defend two teenaged 

girls-one Muslim and the other African-American-in a confrontation reportedly initiated by 

Christian in Portland, Oregon in May. Based on comments made by Christian, descriptions of him 

by people familiar with him, as well as his social media postings, Christian emerges as a volatile, 

angry man who appears to have fueled his rage with ideas from a variety of sources. Christian 

frequently expressed hatred of people on the left, and showed up at right-wing events in the 

Portland area, but had been a supporter of Democratic presidential candidate Bernie Sandersseemingly because he thought Sanders would smash the establishment Most of Christian's 

influences seem to have been right-wing in nature and include some from the white supremacist 

movement and others from anti-government extremists such as sovereign citizens and the militia 

movement It is clear that Christian belongs somewhere on the extreme right but ifs difficult to 

categorize him precisely. For purposes of this report, his murders have been categorized as while 

supremacist in nature, but others could look at the available evidence and possibly come to a 

different conclusion. 

In some instances, not enough evidence has emerged to be able to categorize a particular murder 

as extremist-related. The most noteworthy such case from 2017 was the May stabbing murder 

of Richard W. Collins Ill, an African-American student at Bowie Stale University in Maryland, 

allegedly by a white University of Maryland student, Sean Urbanski. After his arrest, Urbanski 

was widely characterized as a white supremacist based on his membership in a racist Facebook 

group called 'All-Reich Nation.' However, that Facebook group included people who were not 

white supremacists as well as people who were, and .no other specific information has emerged 

suggesting Urbanski had ties to the white supremacist movement 

In October 2017, Urbanski was charged with a hate crime in connection with the murder. This 

was a result of the police investigation, which uncovered what one prosecutor described as 'lots 

of digital evidence' of a racial motive. This evidence, if revealed or presented in court, may in the 

future provide confirmation of an extremist tie on the part of Urbanski, but based on presently 

available information, the Collins murder does not appear in this report 
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THE PERPETRATORS 

Even without incidents such as the Collins murder, white supremacists were responsible for the 

majority of extremist-related killings in 2017, as is usually the case each year, though it was 

not true for 2016. White supremacists were responsible for 18 of the 34 murders documented 

in 2017. A right-wing anti-government extremist committed one murder (see below), while an 

adherent of the all lite-an offshoot of the all right that rejects explicit white supremacy while 

all righfs other hateful views of Muslims, immigrants, LGBTO individuals, the left, and 

especially women-committed another. 

Thus 20 of the 34 extremist-related murders in the United Slates in 2017, or 59%, were related 

lo right-wing extremism. This can be compared to 2016, in which only 1 7% of extremist murders 

were related to right-wing extremism-though, again, 2016 was an aberration. Over the past 1 0 

years (2008-17), domestic extremists have been responsible for at least 387 murders; of these, 

274 (71 %) were committed by right-wing extremists of one type or another. 
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THE PERPETRATORS 

Some of the murders involving right-wing extremists made headlines around the world, such as 

the murder of Heather Heyer, allegedly by James Fields, during an all right rally in Charlottesville, 

Virginia, or the May 20 1 7 Tampa, Florida murders reportedly confessed to by Devon Arthurs, 

one of four roommates who were all members of Atomwaffen, a neo-Nazi group. Arthurs, who 

had recently converted to Islam (though apparently not a radical form of Islam), reportedly 

became angry that his roommates made fun of his conversion and he shot two of them. A 

fourth roommate, Brandon Russell, who was not present at the time of the shootings, 

subsequently pleaded guilty to unrelated federal explosives charges after bomb-making 

materials belonging to him were discovered during the murder investigation. 

Several murders involving right-wing extremists appear to have stemmed from arguments over 

their extremist beliefs or affiliations. In July 2017, Lane Maurice Davis, an all lite conspiracy 

theorist, was accused of stabbing his father to death at their home on Sam ish Island, Washington, 

following an argument with his parents over Davis's beliefs and conspiracy theories. Across the 

country, a teenager from Reston, Virginia, was charged with shooting and killing his girlfriend's 

parents in December after they convinced their daughter to break up with him because of the 

teenager's white supremacist beliefs. 

James Fields and Lane Davis also stand out as adherents of the all right and all lite, respectively 

(the latter movement diverging from the former in 20 17). Prior to 2017, the all right was 

overwhelmingly an online phenomenon, with people expressing opinions in online venues 

ranging from 4chan and Reddit to Twitter and Facebook, as well as more obscure sites and 

platforms. Energized by the 2016 presidential election and the media attention given to the 

movement, all right adherents (and, after the split, all lite adherents, too) increasingly involved 

themselves in the real world as well as the virtual realm, forming actual groups such as Identity 

Evropil., while engaging in a variety of real-world activities ranging from protests and rallies such 

as the August 'Unite the Right' event in Charlottesville to racist fliering campaigns targeting 

college campuses in the United States and Canada. 

With the expansion to real world activities, it was inevitable that some alt right and all lite 

adherents would engage in violent acts, like previous extremists before them. Another such act 

involved James Harris Jackson, a Maryland white supremacist and fan of the alt right website 

Daily Stormer. Jackson travelled to New York to launch a series of attacks against AfricanAmerican men. On March 30, he used a sword to fatally stab a homeless African-American 

man, Timothy Caughman, in what Jackson later admitted to police was a 'practice run' for a 

planned violent spree in Times Square. Jackson, who turned himself in to police before killing 

anybody else has been charged with murder as an ad of terrorism. 

It is quite likely that the future will see yet more violent acts stemming from the ranks of the alt 

right and the all lite as more of their adherents move their activities into the real world. 
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THE PERPETRATORS 

Islamic extremists were responsible for nine of the 34 killings (26%) documented in 201 7, with 

eight of those stemming from the bike path attack by Sayfullo Saipov. The other incident was the 

February 2017 murder of a transit security guard in Denver, Colorado, allegedly by Joshua Andrew 

Cummings, a convert to Islam who had once been reported to the Department of Homeland 

Security by members of a local mosque as possibly becoming radicalized. After his arrest for 

the murder, Cummings told a journalist tha~ !hough he subsequently pledged allegiance to the 

terrorist group ISIS, the murder ofthe security guard had not been committed on behalf of ISIS 

but rather for the 'pleasure of Allah,' a somewhat inscrutable statement This murder is presently 

categorized in this report as a non-ideological murder rather than an ideological murder, though 

that may change if more information emerges. 

Over the past 1 0 years, Islamic extremists have been responsible for at least 99 of the 387 

documented extremist-related murders (26%). What is most remarkable about these murders is 

that the overwhelming majority were committed in just a handful of relatively high-casualty attacks, 

as opposed to the much more numerous but usually smaller-scale deadly incidents involving other 

types of extremists. 

Finally, five ofthe 34 murders ( 1 5o/o) were committed by black nationalists (for purpose of simplicity, 

the Center on Extremism includes both black nationalists and anarchists in the broader category 

of 'left-wing extremism,' while acknowledging that black nationalists include some adherents 

who don't necessarily fit neatly within that category). In April 2017 in Fresno, California, Kori Ali 

Muhammad was accused of allegedly murdering a security guard at a hotel, then several days 

later embarking on a shooting spree that seemed to target white people as victims. Muhammad 

was charged with killing three people in that spree, bringing his total to four deaths, before police 

were able to arrest him. Muhammad's father subsequently said his son believed in a war between 

whites and blacks. The following month in Dallas, Texas, Derick Lamont Brown, a member of the 

Huey P. Newlon Gun Club and former Dallas chairman of the New Black Panther Party, shot and 
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10 

THE PERPETRATORS 

killed his godfather, with whom he shared a residence, then wounded a neighbor and an EMT 

before fatally shooting himself after police arrived at the scene. 

These deadly events followed the 2016 murders of eight police officers in Dallas and Baton 

Rouge at the hands of black nationalists; the attempted vehicular murders of police in Phoenix 

by Payne, described above; a shootout with police in Belleville, Illinois, in June 2016 initiated 

by Angelo Brown, !he head of the Revolutionary Black Panther Party; and the 2014 plot by 

two black nationalists in St louis, Missouri, to kill police officers and bomb the Gateway Arch. 

Taken together, these incidents represent the most significant black nationalist-related violence 

since !he early 1 gsos and should be something of a concern as a possible emerging extremist 

threat though one that is so far still far smaller than threats posed by right-wing extremists and 

Islamic extremists. 
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THE 

MURDERS 

The 34 extremist-related murders in 2017 represented a significant decline after four 

straight years of rising deaths but were still above the average number of yearly murders in recent 

decades (29). 

In contrast to the previous two years, 2017 saw fewer victims killed by firearm; only 20 of the 34 

murders (59%) were committed using firearms as a weapon, a significant drop from 2016 (93%) 

and 2015 (80%), and substantially lower than the 1 0-year average (72%). However, the bike 

path murders show that guns and bombs are not the only ways extremists bent on destruction 

can be deadly. Guns, vehicles and stabbing weapons accounted for all the documented murders 

in 2017; no murders emerged related to bombs, beatings, or other means. 

Ideology seems to have played a primal)' or secondary role in 17 of the 34 murders (50%), but 

this figure includes the Sam ish Island and Reston murders as non-ideological, though some could 

argue that ideology played at least a seconda!)' role in these domestic disputes. In nine of the 34 

murders (26%), hate-related motives seem to have played a primary or seconda!)' role. 

Many extremist-related murders each year, as in 2017, are essentially non-ideological killings, 

which can include killings stemming from factional disputes, murders of suspected informants, as 

well as murders committed by extremists in the pursuit of traditional criminal motives. In another 

domestic dispute, in Leadwood, Missouri in February, neither ideology nor hate seems to have 

played a part when Frank Ancona, the head of the Traditionalist American Knights of the Ku Klux 

Klan, was murdered, allegedly by his wife and fellow Klan member, Malissa Ancona, and her son. 

In another non-ideological killing, David Atchison of Aztec, New Mexico, seems to have had two 

obsessions-school shootings and white supremacy. He opened fire at a local high school, killing 

two students before taking his own life. 

Two non-ideological murders occurred during an escape attempt from a prison bus in June, when 

two Georgia, inmates-one of them a member of the Ghostface Gangsters, a white supremacist 

prison gang-overpowered two corrections officers, Christopher Monica and Curtis Billue, took 

one of their guns, and killed the officers. They were subsequently recaptured in Tennessee and 

now face the death penalty for the murders. 

Extremists of any sort can pose a safety risk to corrections officers and police officers, as the 

deaths of Monica and Billue tragically illustrate. There have been numerous murders of corrections 

officers by extremists over the years, while almost every year at least one police officer is killed 

by an extremist. 

2017 was no exception. The sole murder committed by an anti-government extremist in 2017 

was the deliberate targeting of a police officer in one of the year's most cold-blooded killings. In 

May, Deputy Sheriff Mason Moore of Broadwater County, Montana, attempted a traffic stop in May 
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12 

THE MURDERS 

on a car carrying two anti-government extremists, Lloyd Barrus and his son, Marshall Barrus. The 

stop led to a car chase and shootout in which the depuly was wounded. After seeing the officer's 

vehicle come to a stop, the two men made a U-lurn, drove back to the police cruiser and allegedly 

fired dozens of rounds at the officer, killing him. Authorities eventually located the Barruses and, 

following a high speed chase, a second shootout occurred, in which Marshall Barrus was killed 

and his father arrested. Authorities subsequently learned that !he two had apparently discussed 

a 'suicide mission' against police and had even wanted to bring Marshall Barrus's children with them. 

The 2017 incident was not the firs! shoo tout with law enforcement for Lloyd Barrus. In the early 

2000s, Barrus, another son, and a third person were involved in a car chase and standoff in Death 

Valley, California, during which their gunfire forced down a California Highway Patrol helicopter. 

No one was killed in that earlier encounter. 

There is one extremist-related officer death not included in this report's statistics. An Orlando, 

Florida, man, Markeith Lloyd, was charged with killing his pregnant girlfriend, Sade Dixon, in 

December 2016, and Orlando police officer, Lt Debra Clayton, in January 2017 while she was 

trying to arrest him. During court appearances in early 2017, Lloyd used language that strongly 

indicated an association with the sovereign citizen movement. However, because the sovereign 

citizen movement has so thoroughly penetrated jails and prisons across the United Stales, it is no! 

clear if Lloyd had any association with the movement before his arrest or whether he, like countless 

others, only became exposed to the movement after his arrest and began using its pseudo-legal 

arguments in filings and court appearances. If evidence emerges that Lloyd had connections to the 

movement prior to the murders, he will be added lo ADL's extremist murder statistics. 
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13 

THE 

INCIDENTS 

The 2017 extremist-related murders preliminarily documented by ADL include: 

• RESTON, VIRGINIA, DECEMBER 22, 2017. An accused while supremacist teenager (as a 

juvenile, his name is being withheld until/unless he is formally charged as an adult) is reported 

to have killed the parents of his girlfriend before shooting himself, reportedly because they had 

convinced their daughter to break up with him because of his ostensible white supremacist beliefs. 

• AZTEC, NEW MEXICO, DECEMBER 14, 2017. White supremacist David Atchison disguised 

himself as a student in order to conduct a school shooting at a local high school, where he killed 

two students before killing himself. 

• NEW YORK CITY, OCTOBER 31, 2017. An Islamic extremist, Sayfullo Saipov, is accused of 

driving a rental truck down a bike path in New York City, killing eight people and injuring 11 

others before being shot and arrested by police. Saipov reportedly claimed allegiance to ISIS. 

• GREELEY, COLORADO, AUGUST HI, 2017. Kelly Raisley, believed to be a member or 

associate of the 211 Crew white supremacist gang, was arrested on first-degree murder 

charges for the murder of his uncle, Randy Gene Baker. Baker's wife and sister were similarly 

arrested. The motive was apparently personal. 

CHARlOTTESVIllE, VIRGINIA, AUGUST 12, 2017. White supremacist James Alex Fields, 

Jr, from Maumee, Ohio, was charged with first-degree murder and other crimes for deliberately 

ramming his vehicle into a crowd of protesters opposing the white supremacist "Unite the Right' 

rally being held in the city that weekend, injuring 19 people and killing one, Heather Heyer. 

SAM ISH ISLAND, WASHINGTON, JULY 14, 2017. An alt lite conspiracy theorist and vlogger, 

Lane Maurice Davis, allegedly murdered his father following an argument over Davis's beliefs. 

Century Correctional Institution, Florida, June 1 9, 2017. Robert Hun~ an inmate with white 

supremacist tattoos, some common to prison gangs, is accused of stabbing to death an AfricanAmerican inmate, Jorge Slaughter. 

• PUTNAM COUNTY GEORGIA, JUNE 13, 2017. Ricky Dubose, a member of the Ghostface 

Gangsters white supremacist prison gang, and another inmate, Donnie Russell Rowe, 

reportedly killed two corrections officers while trying to escape from a prison bus. They were 

later recaptured. 

PORTLAND, OREGON, MAY 26, 2017. Police charge right-wing extremist Jeremy Christian 

with stabbing to death two men and severely injuring a third who were coming to the defense 

of two teenaged girls, one African-American and the other wearing a hijab, whom Christian was 

reportedly harassing. 
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14 

THE INCIDENTS 

• TAMPA, FLORIDA, MAY HI, 2017. White supremacist Devon Arthurs allegedly shot to death 

two of his roommates for making fun of his recent conversion to Islam. All three, and a fourth 

roommate, were members of Atomwaffen, a neo-Nazi group. 

• BROADWATER COUNTY, MONTANA, MAY 1!.\, 2017. Anti-government extremists Lloyd 

Barrus and Marshall Barrus are accused of killing a Broadwater County sheriffs deputy as part 

of a 'suicide mission~ Marshall Barrus was killed by police in a subsequent shoolout and Lloyd 

Barrus was arrested. 

• DALLAS, TEXAS, MAY 1, 2017. Black nationalist Derick Lamont Brown killed his godfather, 

with whom he shared a house, and wounded a neighbor and a paramedic before killing himself 

after police arrived. 

• FRESNO, CALIFORNIA, APRil iS, 2017. Kori Ali Muhammad, a black nationalist, allegedly 

killed a motel security guard then, several days later, embarked upon a shooting spree that 

killed three more people before police were able to arrest him. 

• NEW YORK CITY, NEW YORK, MARCH 30, 2017. Maryland white supremacist James 

Harris Jackson travelled to New York City to attack African-American men in order to stop 

white women from engaging in interracial relationships. He is charged with fatally stabbing a 

homeless man before turning himself in to police. 

NORTH JUDSON, INDIANA, MARCH 3, 2017. Aryan Circle member Edward Blackburn 

allegedly shot and killed another man who was reportedly dating his ex-girlfriend. 

lEADWOOD, MISSOURI, FEBRUARY !l, 2017. Frank Ancona, head of the Traditionalist 

American Knights of the Ku Klux Klan, was shot to death; his wife and fellow Klan member, 

Malissa Ancona, and her son have been charged for the murder. 

• DENVER, COLORADO, FEBRUARY 1, 2017. Joshua Andrew Cummings reportedly shot and 

killed a transit security guard in Denver. Cummings, a convert to Islam described by people who 

knew him as possibly becoming radicalized, claimed after his arrest that he had pledged his 

allegiance to ISIS after three days of fasting behind bars but that the murder was not done on 

behalf of ISIS. 

• SAN ANTONIO, TEXAS, JANUARY 29, 2017. Ashton Lucas Lomas was charged with capital 

murder after allegedly robbing and shooting to death Martin Gonzales over an alleged dispute 

Gonzales had with another person. Lomas and others charged in the case appear to be 

members or associates of the Aryan Brotherhood of Texas. 

• LAFAYETTE, INDIANA, .lANUARY Hi, 2017. Wesley Andrew Hampton, a self-declared while 

supremacist and another defendant allegedly robbed and murdered a man In a home invasion. 
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15 

NOTES ON 

METHODOLOGY AND SOURCES 

The Anti-Defamation league's Center on Extremism has compiled a list of over 1,000 

murders/killings by perpetrators associated with domestic extremist movements of all types since 

1970--essenlially the post-Civil Rights era. These are primarily murders committed by American 

extremists on U.S. soil, though a few cases involving American extremists murdering other 

Americans abroad (such as at Jonestown) are also included. 

Because extremist connections to some murders can take months or years to. be revealed, 

statistics for the most recent years will inevitably be revised upward in future years. For example, 

ADL:s report on extremist-related murders in 2016 counted 69 murders; within a year, ADL had 

uncovered two more extremist-related murders for 2016 and revised its numbers accordingly. 

Similar upward revision is likely to occur in the future for the 2017 statistics presented here. 

The incidents are derived primarily from public sources, leading to some limitations regarding 

cross-era or cross-movement comparisons. Regarding cross-era comparisons, generally speaking, 

information on extremist-related killings from the 1970s and 1980s is more difficult to obtain than 

for later years; thus it may not be meaningful to compare or contrast figures from the earlier era 

with figures from the 1 990s or later. 

The main limitation of cross-movement comparisons is that extremist connections to killings are 

easier to determine for some movements than for others. For example, white supremacists, who 

frequently sport many racist and white supremacist tattoos, or who may be documented as white 

supremacists by gang investigators or corrections officials, are often more easily identifiable. In 

contrast, it may be more difficult for police or media to identify, say, anti-government extremist 

associations that a suspect might have. This issue comes up most often with non~ideological 

killings rather than ideologically-motivated ones. It is fair to say that non-ideological murders 

committed by extremists other than white supremacists are probably underrepresented here. 

In addition, because murders that occur behind bars often get little or no reporting by the 

media, and are lypically not publicized by prison officials, prison-based violence by all extremist 

movements is definitely under-represented. 

As with any such list, the inclusion or exclusion of certain borderline cases may be a judgment call 

based on the best evidence available, judgments with which others may possibly disagree. 
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Written Statement for 

The Suhcom.mittee on Terrorism and Illicit Finance 

Survey of Terrorist Groups and Their Means of 

Financing 

By Mr. Ali H. Soufan 

Founder of The Soufan Center 

Wednesday, 5 September, 2018 

Testimony ilJ be presented bifi;re the House Financial Services Committee, Subcommittee on Terrorism and Illicit Finance on 

Friday, September 7, 2 018. 
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About The Soufan Center 

re1~ 

l~~ 

The Soufan Center (TSC) is a nonprofit organization dedicated to serving as a resource 

and forum for research, analysis, and strategic dialogue related to global security issues 

and emergent threats. TSC fills a niche-role by producing independent, quality research 

and hosting proactive conversations in order to effectively equip thought leaders, policy 

makers, governments, bi- and multilateral institutions, media, and those in the non-profit 

and academic communities to engage in strategic security-related practices. Our work 

focuses on a broad range of complex security issues~from international and domestic 

terrorism, to humanitarian crisis analysis, to refugee and immigrant issues, and more. 

The Soufan Center is a 501 c3 non-profit organization 

About Ali Soufan 

Ali Soufan is the Founder of The Soufan Center. Mr. Soufan is a former FBI Supervisory 

Special Agent who investigated and supervised highly sensitive and complex international 

terrorism cases, including the East Africa Embassy Bombings, the attack on the USS 

Cole, and the events surrounding 9/11. He is the Chief Executive Officer of The Soufan 

Group and Founder of The Soufan Center. 

The Soufan Center ! 156 V\Test 56th Street, Suite 1002, New York, I\""Y,IOOI9 j hun:/ lthesottHmcentt'r.org/ 2 
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rs~ ru 

"The Evolving Nature of Terrorism and the Current Groups Around 

the World which Pose the Greatest Threats to the National Security of 

the United States" 

Testimony of Mr. Ali Soufan, 

Founder of The Soufan Center 

Before the Committee on Financial SetVices 

Subcommittee on Terrorism and Illicit Finance 

United States House of Representatives 

Friday, September 7, 2018 

Chairman Pearce, Ranking Member Perlmutter, distinguished members: Thank you for 

hearing my testimony today. 

During this session on terrorist financing, you will hear a great deal about the means by 

which terrorists fund their organizations- taxation and extortion, sales of stolen oil and 

looted artifacts, opium, organized crime, donations, ransoms. These are all vital 

mechanisms to understand, and my fellow witnesses represent some of the leading experts 

in this field. 

In my testimony, however, I would like to take a step back, and invite members to consider 

the wider geopolitical factors that together afford terrorists the opportuni?J to raise money. I 

am speaking of the many conflicts around the world in which such groups participate -

especially those in Syria, North Africa, and Yemen. 

Terrorists use these wars to boost their resources in several ways. Let me briefly highlight 

two. 

First, they systematically embed themselves in the messy specifics of each conflict, to the 

point where it becomes difficult to separate them from legitimate local combatants. 

The Soufan Center I 156 \Vest 56th Street, Suite 1002, New York, NY,l0019 I hup:/ /ihesonfanccnter.org/ 3 
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They may use this cover to create front organizations through which to funnel funds. One 

example was Ahrar al-Sham, which means Free People of the Levant. As its name 

suggests, Ahrar al-Sham wanted to be seen as a nationalist group, rather than a radical 

jihadi one. In reality, it cooperated with al-Nusra and its leader was a man whom the 

Treasury Department called al-Qaeda's "representative in Syria."1 Yet the rebranding 

stuck: the group reportedly received funds and material from sources in the gulf states and 

Turkey all American allies. 1 The logic behind such support is as old as conflict itself: 

"My enemy's enemy is my friend." But in this case, it represents an extremely dangerous 

line of thinking. 

Today, in the complex civil war in Yemen, Saudi Arabia and its allies find themselves, in 

eflect, on the same side as al-Qaeda in the Arabian Peninsula (AQAP). AQAP has 

strengthened its ties to Yemen's Sunni tribes and militias, to the point where it would be 

difficult, if not impossible, to support those groups without indirectly supporting al-Qaeda. 

Last month, the Associated Press reported that the Saudi-led coalition had resorted to 

paying AQAP to retreat from strategic holdings, in the process allowing them to retain their 

weapons and stolen assets.2 This is worrying, especially given active U.S. support for the 

coalition. 

Second, terrorist groups benefit from heavy-handed foreign interventions. In the Middle 

East today, Saudi Arabia has set itself up as the Sunni counterweight to Iran. But in so 

doing, both regional powers have prolonged already bloody conflicts and lent them a 

vicious sectarian edge. 

Bloodshed plays into the jihadis' overall game-plan, which has always been about exploiting 

these conflicts and weaponizing sectarianism. In the chaos of war,jihadi groups have seized 

territory across the region, opening the door to all kinds of fundraising opportunities, from 

taxation and extortion to outright robbery. Regional conflicts have also provided a 

recruitment bonanza. For example, around 45,000 foreign fighters from around the globe 

joined the so-called Islamic State in Iraq and Syria. Another example, as one AQAP 

I (20!7, August 5). Mapping Militant Org-anizations. Ahrar al-Sham. Retrieved Septemher S, 2018, from 

http;// web.stanford.edu/ group/ mappingmilitants/ cgi-bin/ groups/ view I 523 

'.Michael, M. (2018, August 7). AP. AP Investigation: US allies, al-Qgida battle rebels in remen. Retrieved September 5, 

2018, from https://www.apnews.com/f38788a5fi ld74Gl78c77cb43fi 12d50da/Yemcn:-US-allies-spin-deals-with-alQaida~in-war~onwrebels 

The Soufan Center l 156 West 56th Street, Suite 1002, New York, NY,l00l9 I hup:/ lfh~~sonfancentl'Lorg/ 4 
122 

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ro~ 

l"~ 

commander has been quoted as saying, with respect to the frontline in Yemen, "If we send 

20 [fighters], we come back with 100."3 Indeed, AQAP has grown from around 1,000 

members when the conflict began4 to around 7,000 today.s 

Seventeen years ago, almost to the day, the United States was attacked by a terrorist 

organization of around 400 members, based primarily in Afghanistan. \'Ve responded 

swiftly, and we defeated that version of al-Qaeda. Today, however, a new jihadi threat has 

emerged around the world. It consists of many different radical organizations, deeply 

embedded in local conflicts. That has made them difficult to target. 

But there is a common factor linking these groups, including the so-called Islamic State 

(ISIS) as well as every ai-Qaeda franchise. That factor is the ideology of salafi jihadism that 

manifests itself in the narrative of bin Ladenism. We must dedicate ourselves to destroying 

that narrative. Only when we do so will we finally defeat them. 

Thank you once again for hearing my testimony. 

3 Michael, M. (2018, August 7). AP.AP Investigatwn: US allies, a/-Qgida batt!£ rebels in Yemen. Retrieved September 5, 

2018, from https:/ /www.apncws.com/f'38788a561 d7 4·ca78c77 cb43612d50da/Yemen:-US-allies-spin-deals-with-alQaida-in-war-on-rebels 

4 (2014, April). U.S. Department of State. Country Reports on Terrorism 2013. Retrieved September 5, 2018, from 

https:/ /www.stale.gov/j/ct/rls/crt/2013/224829.htm 

5 (20 IS, July 27). United Nations. Twenty-second report of the Analytical Support and Sanctions Monitoring Team submitted 

punuant to resolution 2368 (2017) concerning ISIL (Da'esh), Al-Qgida and associated &uiwidua/s and entities. Retrieved 

September 5, 2018, from 

http: I I www. un.org/ en/ ga/ search/view _doc.asp?symbol =S/20 18/ 7Qj&referer= I english/ &Lang= E 

The Soufan Center ! 156 \Vest 56th Street, Suite 1002, New York, NY, l00l9 I bttn://!h('soufanccnt<.~r.org/ 5