NCJ Number
203636
Date Published
November 2003
Length
55 pages
Annotation
This study reviewed what is known about terrorists' use of alternative financing mechanisms.
Abstract
The study assessed the nature of terrorists' use of key alternative financing mechanisms for earning, moving, and storing terrorists' assets; determined what is known about the extent of terrorists' use of alternative financing mechanisms; and identified the challenges that the U.S. Government faces in monitoring terrorists' use of alternative financing mechanisms. The study examined relevant documentation and interviewed officials from various Federal agencies and the intelligence community. Information was also provided by various nongovernmental organizations, industry and charitable associations, researchers, and the United Nations. Fieldwork was conducted in Belgium and France. The study found that for financial transactions terrorists aim to operate in relative obscurity through mechanisms that involve close-knit networks and industries that lack transparency. Terrorists earn funds through profitable crimes that involve commodities such as contraband cigarettes, counterfeit goods, and illicit drugs. They also obtain funds through systems such as charitable organizations that collect large amounts of money in donations from both witting and unwitting donors. To move assets, terrorists favor mechanisms that enable them to conceal or launder their assets through nontransparent trade or financial transactions, such as the use of charities, informal banking systems, bulk cash, and commodities that may serve as forms of currency. To store assets, terrorists may use similar commodities, because they are likely to maintain value over a longer period of time and are easy to buy and sell outside the formal banking system. The extent of terrorists' use of alternative financing mechanisms is unknown. This report recommends that the Director of the FBI collect and analyze data on terrorists' use of alternative financing mechanisms; that the Secretary of the Treasury and the Attorney General produce the planned report based on current law enforcement investigations on precious stones and commodities; and that the IRS Commissioner establish interim procedures for sharing information on charities with State charity officials. Various agency comments are appended.