July 13, 2021 • 29 mins
How much does a terror attack cost? Where do violent extremists get their money from? And could you be contributing to Daesh funds by mistake? Adnan lifts the lid on the murky world of terrorism financing as well as discovering just what’s being done to cut off the cash supply – including getting some inside information from INTERPOL.
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Episode Transcript
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Adnan Sarwar (00:00):
Before we begin, this is a podcast about terrorism, which means
we do talk about acts of terror and extreme violence,
sometimes in quite a lot of detail. So you might
find some of the following material upsetting. Hello, I'm Adnan
Sarwar. This is Taking Apart Terror, and is this anyway
(00:21):
to earn a living?
Jihadi John (00:23):
To the prime minister of Japan, you have proudly donated
100 million to kill our women and children, to destroy the
homes of the Muslims. So the life of this Japanese citizen
will cost you 100 million.
Adnan Sarwar (00:39):
Jihadi John, one of Daesh's most brutal executioners, demanding millions
of dollars to save the life of the prisoner in
the orange T- shirt kneeling in front of him in
the video this was taken from. Whatever your organization's business,
it does not come without a cost. And ransom money
is just one of this organization's revenue streams. And that
(01:00):
is what we are looking at this time, how much do
Daesh's operations cost? And where does that money come from?
Or as we've asked in the title of this episode,
who funds terror? To answer that question, I'm joined by
three people who have spent a great deal of time
studying violent extremism and how it works. Firstly, two of
(01:22):
our regular panelists, Director of International Centre for the Study
of Radicalisation and Political Violence at King's College, Dr Shiraz
Maher. Hey Shiraz.
Dr Shiraz Maher (01:31):
Hi. Thanks for having me.
Adnan Sarwar (01:32):
And Naureen Chowdhury Fink, Executive Director of The Soufan Center
in New York. Hey Naureen.
Naureen Chowdhury Fink (01:38):
Hi Adnan. Great to see you.
Adnan Sarwar (01:40):
And our guest expert this time is Tracy Durner, Director
of Financial Integrity and Inclusion at the Global Center on
cooperative security. Hello Tracy.
Tracy Durner (01:50):
Hi Adnan. Thank you for having me.
Adnan Sarwar (01:52):
Okay, Tracy, let me start with you. We all know
that an organization like Daesh needs money, but how much
money does it really need and what does it exactly
spend it on?
Tracy Durner (02:01):
Yeah. So when most people think about terrorism financing, they're thinking about
the costs that are associated with launching an attack, right?
But that's actually just one aspect of it and an
increasingly small one, actually. So putting aside kind of the
ideological and political aspects, the most basic goal of a
terrorist group is to sustain their operations and expand their
(02:21):
reach. So the typical way we describe this is as
a four stage cycle; raise, move, store and use funds.
And since the goal of terrace groups is long term,
they're thinking about financial management in the same way that
any business would. Where, diversifying funding streams, kind of keeping
track of their books and in this case, concealing the
(02:42):
location of assets so they're not confiscated by authorities.
Adnan Sarwar (02:45):
Naureen, this might sound like an odd question, but how
much does a terrorist attack cost?
Naureen Chowdhury Fink (02:51):
The cost of a terrorist attack can vary between, the
cost of a knife or a machete or the cost
of IEDs and military grade hardware. So I think we've
seen increasingly lower cost and lower tech attacks, such as
many of the ones we've seen in Europe and certainly
the UK. So the attacks themselves may cost quite little,
(03:13):
but the cost of terrorism is quite high when you want
to pay for personnel, accommodations, transit, communications, and things like that.
Adnan Sarwar (03:23):
Shiraz, we know Daesh has got money, but how much has
it actually got?
Dr Shiraz Maher (03:27):
So ISIS had tremendous resources when it was standing as
a territorial caliphate straddling Syria and Iraq, but it also
had a large financial sort of commitment base as well.
It had fighters on the ground who it had to
sustain and increasingly their families. It also had to provide
a degree of provision for the people in its territory.
(03:48):
So it was both a very rich organization, but it
was one that probably had more commitments and outgoings than
in inverted commas, " a traditional organization." And someone described it
to me is the world's newest petrostate.
Adnan Sarwar (04:01):
So that's a country that gets most of its income
from oil. Is that right Tracy, is oil their main earner?
Tracy Durner (04:07):
So in its comparatively brief span of territorial rise and
fall, it accrued a pretty significant amount of wealth. It
came primarily from three main sources. So the first and
the one you hear a lot about is oil, oil
products, and its supply chain. This hit a peak in
the summer months of 2014, when they captured some Iraqi
oil wells. At that point, you heard that they were
(04:29):
taking in somewhere around one to 2 million dollars per
day, which amounted to about 500 million in the total
of 2015. But that number did drop significantly through military
interventions that targeted the supply chain. The second big source
of wealth was taxes and fees. Daesh taxed its population,
it levied fees for services, charged tolls on roads and
(04:52):
goods passing through its territory. The estimates for this do
vary and were heavily influenced by how much territory it
controlled, but roughly hovered around 400 million a year. And
they also had some significant windfalls in looting and robbery.
So about 500 million in cash from bank vaults when
it took Mosul, but also non- cash items, things like
(05:14):
pillaging food crops and controlling factories to help fund and
build the things they required. And then there's some smaller
resource streams, kidnapping for ransom is a big one. There's
not a lot of data here, but estimates are around
20 to 30 million dollars per year. Another one you
heard a bit about was antiquities. So Daesh controlled a
(05:36):
number of archeological sites, and there was the belief that
these things might be sold on the black market. More
recent analysis indicates that they were selling permits to help
loot those and charging taxes on transport fees. And then
the last and the one that supports terrorist groups around
the world are donations. So be it people who sympathized
with their cause, or even states that were interested in
(05:59):
kind of a conflict by proxy.
Adnan Sarwar (06:02):
Naureen, from what Tracy was saying about these revenue streams
and the biggest one was oil. Who's buying oil from Daesh?
Naureen Chowdhury Fink (06:10):
I believe at one time China was buying extensively from
them, also regional neighbors needing to purchase oil. So I think that
they did not appear to have a shortage of clients.
At one point in 2015 I think, they were raking
in 2 billion. That roll of money is really important
because the narrative of ISIS was that it's creating a
(06:32):
state, which means it also cares for its citizens. So
not only is it selling oil and minting money and things like that, but
it did have to provide some kind of hospital, some
kind of medical care, some kind of justice.
Adnan Sarwar (06:43):
Can I just ask you about the kind of things
that Daesh was selling, apart from the oil, the antiquities,
we saw them stealing history and selling it. How much
were they making?
Naureen Chowdhury Fink (06:56):
It's a very opaque process, right? I mean, we've seen
this previously, whether it's through auction houses, private buyers, a
lot of these sales are cloaked in secrecy. So it's
difficult to know whether it is really delivering the big
money, but then as Tracy and I were pointing out,
you don't need a lot of big money wins, you
need a steady funding stream, and we don't know how
(07:19):
much they have. On Facebook, Twitter, you can actually find
sites where people are still looting sites, people are selling
artifacts. One of the things we talked about in terms
of narratives is they were really smart in many ways,
when they blew up Palmyra, not only did they make
a symbolic statement about their dominance over the region and
(07:39):
over the art and culture and identity, but also, they
literally got a lot of pieces to sell.
Adnan Sarwar (07:47):
Palmyra, maybe you remember those headlines. In 2015 and 2017, Daesh
occupied this ancient Syrian city, a UNESCO World Heritage site,
full of priceless artifacts from its unique blend of Greek,
Roman, Persian and Islamic history. They set about destroying those
(08:08):
treasures and publicly beheaded its 82 year old head of
antiquities, Khaled al- Asaad, when he refused to reveal where
he had hidden an important statue. And as Naureen says,
what they didn't destroy, they looted. The world's horror at
their actions led to the UN Security Council adopting the
(08:29):
historic Resolution 2347, which condemns the unlawful destruction of cultural
heritage in armed conflicts. The international community vowed to work
even harder to crack down on the illegal trade in
artifacts. And one of the organizations at the center of this
effort is Interpol and Corrado Catesi, the head of the
(08:49):
Works of Art Unit. I got a chance to talk
to him and ask him, what is it that's making
this fight more difficult? Well, first of all, that the
world is not taking it seriously enough?
Corrado Catesi (09:05):
This field sometimes is considered as a knife crime. They used
to say in the movie that a crazy collector, addicted collector wants
to have incredible objects of art to enjoy in his
private collection. (inaudible) the illicit (inaudible) of cultural
properties are a serious crime that affect all regions of
(09:26):
the world. Sometimes police agencies, as well as customs are
not totally aware about the crimes. Normally I'm very confident
with drugs, guns, human trafficking, but when I impact in
this field, in the illicit (inaudible) cultural property, especially the police
(09:47):
are not so confident. For this reason it's real important to raise
awareness about this topic, especially that the illicit (inaudible) cultural
property can finance normally, organized crime and may finance terrorists.
Adnan Sarwar (10:02):
So does he have any idea of the scale of
the problem?
Corrado Catesi (10:05):
No one can really give a perfect number about this
phenomenon. When you are finding tomb in archeological sites, you
never know how many objects you can find in archeological
areas. Well, an archeological object, you have to consider not only the value
of the objects, the type of objects, but when these
(10:26):
illicit activity is carried out in the field, everything around
is destroyed, especially the documentation, what the object can tell
us about the former civilization. For sure what we are
assisting is in different online sales, that a lot of
(10:47):
objects coming from the Mesopotamic era, it means an incredible
era where our civilization was born. It's difficult to find
the objects in the illicit market right now, we still
don't know where the best part of these objects are.
If these objects are in some deposit waiting for a better
(11:10):
time, if these objects were already smuggled into their countries,
if the objects are already sold and are still waiting
a better time to appear again in the market. Normally,
anyway, the final buyers are private collectors. A lot of
the buyers are not asking the document that should be
(11:34):
asked when you buy an object of art, as a requested
by (inaudible) convention. The people buy the objects without
taking care about the provenance, it's something that the people
should do always.
Adnan Sarwar (11:53):
So Tracy, whether they were making money from say oil
or antiquities or ransoms, where are they keeping it? Did
they put it in a hole in the desert or in
a bank?
Tracy Durner (12:03):
It's in part both, we do anticipate that they have
a large cash reserve that's being held likely in the
remaining core conflict zones, or has been smuggled out truly
in the form of cash and gold, and is currently
being held with trusted couriers or operatives. But they did
still need to move and use that money. So when
they did, you're right, they were using bank accounts, wired
(12:25):
transfers. Another really important source was money service businesses or
remittance providers. So these are entities that are trust based,
in many cases they are unregistered or unlicensed or in
some cases struggle from weak oversight. And it was through
these channels that they were able to transfer funds and
it can be those transfers that are most difficult to detect.
Adnan Sarwar (12:48):
Okay. So let's talk about detection then, how do we
find this money that's moving around and how do we
stop it? Naureen, I've heard of something called CFT. What
is that?
Naureen Chowdhury Fink (12:56):
CFT is countering the financing of terrorism. So it's a
lot of the legal, political, and practical frameworks we're talking
about. There is ATF, Anti- terrorism financing. CTF, countering terrorist
financing. Yes. So we could play Bingo all day with
the acronyms. But in essence, it's a mix of laws,
(13:18):
sanctions, private sector initiatives, to make sure that terrorist groups
are being denied financing or material support.
Adnan Sarwar (13:27):
Tracy, are there patterns banks are looking for in this?
Tracy Durner (13:31):
Absolutely. Yeah. Banks have what are called, red for lag indicators.
There is a set of things that they determine that
will flag a transaction. They have an obligation to report
that as a suspicious transaction to a financial intelligence unit,
who looks into it and furthers it for investigation if
it's credible. With regards to terrorism financing, it's often not
(13:53):
a single indicator, but rather a pattern of indicators, that
is what would be a trigger for a credible terrorism
financing investigation. But part of the challenge is that our
banks are not terrorism experts, nor are they necessarily built
to be that, terrorism is a really dynamic environment and
understanding emerging trends and patterns is something that requires building
(14:16):
capacity within the financial institutions. In some cases, it is
costly and banks are, as Naureen said, becoming increasingly risk
averse because the cost of maintaining that compliance, the risks
in getting fined for not being compliant, just don't outweigh
the benefit and the financial profit of engaging these clients.
Adnan Sarwar (14:37):
Shiraz, I just wanted to know whether banks are bringing
in terrorism experts to find out what patterns terrorists are
using in their banks?
Dr Shiraz Maher (14:49):
I do know of qualified PhD students from departments such
as my own, who have gone on to work at
banks, in fact I have a very, very good friend
who was for a short while affiliated with my center
as well, who's gone on to work for a major
bank in the United States, looking at some of this stuff, tracing
some of these transactions. Tracy was mentioning there is this
(15:10):
series of behaviors or patterns of activity that might alert suspicion, which
then triggers a sort of more formal human led sort
of examinations and explorations.
Adnan Sarwar (15:20):
I'm always seeing adverts telling me to do more with
my money and grow my money. And looking at Daesh,
they were looking at being around for a long, long
time. Were they sophisticated like that? Were they doing a
lot with their money?
Dr Shiraz Maher (15:33):
Well, I'm not sure in terms of, investments or things
like that, in the way that you and I might
seek to grow our money. I mean, they've certainly looked
at cryptocurrencies.
Adnan Sarwar (15:43):
Tracy, Shiraz is talking about cryptocurrencies. If they're using cryptocurrencies
and the dark web and all these secure kind of
technologies, can we even stop them? Can we find their
money? Do we know what they're doing with it?
Tracy Durner (15:55):
Yeah. You're starting to see an uptick of cryptocurrency use
with Daesh. I think there was a lot of concern
about it early, but most recently, what you're seeing is
reports of foreign terrorist fighters and their family members that
are trying to raise funds using cryptocurrency wallets. I think
that affords both opportunities and challenges. So once a terrorist
(16:18):
organization starts utilizing financial channels, they are more likely to
get caught up in our existing web. The challenge there
is you often have to know what you're looking for.
It can be a bit of a needle in a
haystack. What can do is help put together and connect
the dots in an investigation. So when law enforcement or
(16:39):
intelligence agencies have a suspect, they can go to the
financial sector who has a wealth of information about who
they're transacting with, how they're engaging, where they're located and
where those transactions are going. That can help us build
a bigger picture to understand how a terrorist group is
operating and where its network and reach is.
Adnan Sarwar (16:57):
I'd guess that most people don't want to support Daesh, but sometimes you just don't know where your money's going.
Naureen, how do we make sure we don't somehow end
up providing them with cash by mistake?
Naureen Chowdhury Fink (17:07):
I think for an average person, it's important to remember
that if you think funds or things that you're doing
might help a terrorist group like Daesh, then be cautious
because you don't have to just be funding an attack,
if you think you want to be helpful and send
(17:27):
blankets to ISIS children, that is an act of material
support to a terrorist group. So I think it's about
raising awareness and being a bit cautious about where your
money is going. I know many in the Muslim community
during Ramadan will be thinking about Zakat, will be thinking
(17:49):
about charitable donations, these are all incredibly important, and there
are fantastic charities out there that are doing important work,
but just be aware that terrorists also know that people
tend to want to do good, right? So they will
exploit and abuse seemingly good, charitable endeavors. So check the money.
Adnan Sarwar (18:11):
Shiraz, Naureen's point about Ramadan and the Muslim brotherhood and
Zakat and all these feelings you have, you want to
help people, are governments stopping false charities?
Dr Shiraz Maher (18:22):
Governments have had a huge challenge in actually trying to
address and combat this issue. I remember talking to someone
at the Charity Commission here in the UK, not long
after the Syrian conflict began, I'd say we were about
four or five years into it. And they said something
like, 300 new charities had been registered in that period
(18:44):
of time, that was specifically dedicated to the Syrian conflict.
And you can imagine the attempt to try and produce
compliance and oversight and sort of had rigorous tracing of
where that money was going. So there was clearly a
fairly challenging process there in place for regulatory bodies, such
(19:05):
as the charity commission. And you're right to acknowledge, events
such as Ramadan, which are particularly important of course, in
the Muslim calendar as being times of giving for the
Muslim community. And so that's accentuated the challenge faced by
regulatory bodies.
Tracy Durner (19:21):
If I can add to that, I think the abuse of nonprofit
organizations continues to be a threat for certain portions of
charities. I think another thing that we are noticing is
an uptick in use of crowdsourcing and particularly social media
as a form of fundraising. So donors may very well
(19:42):
be unwittingly supporting what they think is a campaign to
provide medical services but in fact is benefiting a terrorist
organization. It's important to kind of keep in mind the
scale of this, the number of entities that are engaged
are a really, really small portion of the nonprofit sector.
And so the mechanisms that we are putting in place
really have to be calibrated towards the entities that are
(20:05):
vulnerable on the basis of their characteristics and activities, as
opposed to imposed upon the sector overall. And the reason
for that is that we run the risk of creating
kind of really arduous or complicated barriers that hinder the
delivery of these critical services provided by nonprofit organizations, which
in turn, undercuts our goals of kind of advancing broader,
(20:26):
good governance, human rights, and peace and stability, which is
essential to undermining the appeal of terrorist organizations in the
first place.
Adnan Sarwar (20:35):
CFT extends to the fight against the trade in antiquities.
One of the excuses that buyers use is that they
didn't know something was stolen, even though it doesn't have
the right documentation. Corrado Catesi and his Interpol unit are
also trying to make sure that no one unwittingly contributes
to the coffers of terrorism.
Corrado Catesi (20:54):
We created in 1995, by the Interpol Stolen Works of Art
Database that is fed by information coming from our national
police organization through our National Central Bureau. Nowadays, we have in
our Interpol, Stolen Works of Art Database, 51, 000 objects coming from
(21:17):
154 countries. Inside these 51,000 objects, at least 5, 000 objects are
coming from Iraq, Syria, Afghanistan, and the people before buying
an objects should check inside our database. Also because it's
(21:37):
for free, they have only to request through our website
to have the username and password that will allow them to
check against our database that you see before buying an
object. If this object is coming from an illicit activity
or not. Of course, if the object is not inside
(22:00):
in our database, it doesn't mean that the object it
is not stolen because perhaps it was not communicated to
Interpol or as is the case of the archeological objects,
the object was illicit excavated and the illicit provenance is not
known because nobody knows about these objects. Only the diggers
(22:24):
know that they illicit excavated in some archeological areas. But
what we are trying to tell everywhere and every times,
that the people before buying an object should check against
the Interpol database, as well as in some other national
register to check the illicit provenance of the objects, to be
(22:47):
sure that buying these objects, they are not financing organized
crime or terrorists.
Adnan Sarwar (23:01):
This is an ongoing thing with the international community, trying
to fight all of these sources of cash. Naureen, what
are the biggest obstacles facing us when it comes to CFT?
Naureen Chowdhury Fink (23:10):
So I think political will, and I'll say opacity are
two key impediments. I think political will is important because
there are international laws and sanctions in place. And in
a lot of states, these are only minimally implemented. And
then I come back to something Tracy mentioned is these
are small amounts go going through informal channels, they're often
(23:32):
difficult to trace, and you have to think about the
cost benefit as well, right? To what extent are you
going to penalize everybody? And then how do you prove
that they knew what they were funding? And a lot
of our international policy frameworks early on, really focused on
the terrorist act. So you could get in trouble for
funding an act of terrorism, but nowadays, we've had some
(23:56):
sea changes in the international legal and policy framework. It's
because we know that a group like ISIS for their
funding, the attack itself may be a small amount, but
they may need funding to hire fighters. The focus has
shifted beyond funding a specific terrorist attack to funding terrorism
much more broadly.
Adnan Sarwar (24:16):
So we've moved away from somebody basically giving somebody cash
to do something within the framework of terrorism, to the
general support of terrorism. Tracy, you did some research into
east Africa. What I want to know about this money
that Daesh created and saved up in the Middle East,
(24:36):
is it moving to Africa?
Tracy Durner (24:38):
In part. So what you see right now is a
lot of vying for attention among the various affiliates. However,
a good portion of those affiliates, where there have been
some financial transactions between core and affiliates, many of them
are self- financing and are continuing to be self- financing.
You are seeing as Daesh loses territory, it's trying to
(25:02):
conceal its money and diversify its revenue streams, so you
are starting to see some investments in legitimate business. In
particular, that includes gold markets in central Africa, but it
does also include currency exchanges, automobile dealers, a couple of
other businesses that they are looking to invest their money
(25:24):
and make money, as well as concealing it.
Adnan Sarwar (25:26):
If I can just go around the house with each
of you finally, and just ask you, what are you
concerned about when it comes to money with this organization
going into the future, Shiraz?
Dr Shiraz Maher (25:38):
For me, I think the electronic phase of this going
forwards is only going to grow. I think it's pretty clear
that there's to be a much more enhanced engagement by
all aspects of society, with things like cryptocurrencies and governments
haven't yet fully grappled with this, from the benign perspective,
(26:00):
let alone from the more malignant aspects. And I think
that's going to be an area ... we've seen organizations like
ISIS, continually innovate and continually be early adopters of all
kinds of disruptive technologies, and to be very, very effectively
and the use of sort of malevolent creativity with new
(26:21):
things that become available to them. So I would say
this is an area where we've got to continue to
invest some resource in terms of intellectual capital and policy
response to ensure that they're not yet again at the
forefront of exploiting another thing.
Adnan Sarwar (26:37):
Naureen, what would you say you were worried about in
terms of financing for this organization going forwards?
Naureen Chowdhury Fink (26:43):
My concern is that unnuanced ill- conceived counter- terrorism policies
and CFT measures will inadvertently drive the funds into places
that are harder to find. We will inadvertently hurt the
activity that we most need, humanitarian action. And because it
(27:03):
will be so diffused, we won't have actually targeted the
financing. My other concern, as you say, is that we
have one playbook, but different countries are not really implementing
it in the same way. And so I think we
need more concerted international action to address this, especially as
we see other groups like the far right and violent
(27:26):
far right movement learn some of these lessons about how
ISIS raised money, how Al- Qaeda mobilized, and we will
see likely some similar mobilization and we will need to
make sure our playbook then is fit for purpose.
Adnan Sarwar (27:41):
Tracy, same question. Are you worried about the future of
money with this organization?
Tracy Durner (27:45):
The UN has estimated that Daesh has a reserve of
about a hundred million dollars, which is by no means a small
amount, particularly given that it's lost its overhead costs, right?
It no longer has to pay as many salaries and
maintain roads. So what it can do with that a hundred million
dollars is potentially more concerning. I think in that regard,
(28:06):
what worries me is that their propaganda machine is still
active, that it is still producing and potentially attracting supporters,
and so it is moving to a financial model that
is hard to disrupt because it is decentralized, because it
is dispersed and that it is, as Naureen said, likely
to go underground. And so the potential that Daesh has
(28:29):
to serve as a continued agitator and disruptor of conflicts
around the world remains really concerning to me.
Adnan Sarwar (28:38):
Complex ways of sourcing money, complex strategies to cut off
the supply of that cash. I'd like to thank Tracy
Durner, Naureen Chowdhury Fink, Shiraz Maher, and Corrado Catesi, for
sharing their knowledge and experience, to shed some light on
how Daesh generates money and what we are doing to stop it. That's
it for this edition of Taking Apart Terror, find us
(29:00):
wherever you get your podcasts and follow or subscribe so
you get every episode, including the next one, when we
look at the ways that violent extremists communicate and we
ask, do terrorists use apps? I'm Adnan Sarwar, until the
next time, goodbye.
Before we begin, this is a podcast about terrorism, which means
we do talk about acts of terror and extreme violence,
sometimes in quite a lot of detail. So you might
find some of the following material upsetting. Hello, I'm Adnan
Sarwar. This is Taking Apart Terror, and is this anyway
(00:21):
to earn a living?
Jihadi John (00:23):
To the prime minister of Japan, you have proudly donated
100 million to kill our women and children, to destroy the
homes of the Muslims. So the life of this Japanese citizen
will cost you 100 million.
Adnan Sarwar (00:39):
Jihadi John, one of Daesh's most brutal executioners, demanding millions
of dollars to save the life of the prisoner in
the orange T- shirt kneeling in front of him in
the video this was taken from. Whatever your organization's business,
it does not come without a cost. And ransom money
is just one of this organization's revenue streams. And that
(01:00):
is what we are looking at this time, how much do
Daesh's operations cost? And where does that money come from?
Or as we've asked in the title of this episode,
who funds terror? To answer that question, I'm joined by
three people who have spent a great deal of time
studying violent extremism and how it works. Firstly, two of
(01:22):
our regular panelists, Director of International Centre for the Study
of Radicalisation and Political Violence at King's College, Dr Shiraz
Maher. Hey Shiraz.
Dr Shiraz Maher (01:31):
Hi. Thanks for having me.
Adnan Sarwar (01:32):
And Naureen Chowdhury Fink, Executive Director of The Soufan Center
in New York. Hey Naureen.
Naureen Chowdhury Fink (01:38):
Hi Adnan. Great to see you.
Adnan Sarwar (01:40):
And our guest expert this time is Tracy Durner, Director
of Financial Integrity and Inclusion at the Global Center on
cooperative security. Hello Tracy.
Tracy Durner (01:50):
Hi Adnan. Thank you for having me.
Adnan Sarwar (01:52):
Okay, Tracy, let me start with you. We all know
that an organization like Daesh needs money, but how much
money does it really need and what does it exactly
spend it on?
Tracy Durner (02:01):
Yeah. So when most people think about terrorism financing, they're thinking about
the costs that are associated with launching an attack, right?
But that's actually just one aspect of it and an
increasingly small one, actually. So putting aside kind of the
ideological and political aspects, the most basic goal of a
terrorist group is to sustain their operations and expand their
(02:21):
reach. So the typical way we describe this is as
a four stage cycle; raise, move, store and use funds.
And since the goal of terrace groups is long term,
they're thinking about financial management in the same way that
any business would. Where, diversifying funding streams, kind of keeping
track of their books and in this case, concealing the
(02:42):
location of assets so they're not confiscated by authorities.
Adnan Sarwar (02:45):
Naureen, this might sound like an odd question, but how
much does a terrorist attack cost?
Naureen Chowdhury Fink (02:51):
The cost of a terrorist attack can vary between, the
cost of a knife or a machete or the cost
of IEDs and military grade hardware. So I think we've
seen increasingly lower cost and lower tech attacks, such as
many of the ones we've seen in Europe and certainly
the UK. So the attacks themselves may cost quite little,
(03:13):
but the cost of terrorism is quite high when you want
to pay for personnel, accommodations, transit, communications, and things like that.
Adnan Sarwar (03:23):
Shiraz, we know Daesh has got money, but how much has
it actually got?
Dr Shiraz Maher (03:27):
So ISIS had tremendous resources when it was standing as
a territorial caliphate straddling Syria and Iraq, but it also
had a large financial sort of commitment base as well.
It had fighters on the ground who it had to
sustain and increasingly their families. It also had to provide
a degree of provision for the people in its territory.
(03:48):
So it was both a very rich organization, but it
was one that probably had more commitments and outgoings than
in inverted commas, " a traditional organization." And someone described it
to me is the world's newest petrostate.
Adnan Sarwar (04:01):
So that's a country that gets most of its income
from oil. Is that right Tracy, is oil their main earner?
Tracy Durner (04:07):
So in its comparatively brief span of territorial rise and
fall, it accrued a pretty significant amount of wealth. It
came primarily from three main sources. So the first and
the one you hear a lot about is oil, oil
products, and its supply chain. This hit a peak in
the summer months of 2014, when they captured some Iraqi
oil wells. At that point, you heard that they were
(04:29):
taking in somewhere around one to 2 million dollars per
day, which amounted to about 500 million in the total
of 2015. But that number did drop significantly through military
interventions that targeted the supply chain. The second big source
of wealth was taxes and fees. Daesh taxed its population,
it levied fees for services, charged tolls on roads and
(04:52):
goods passing through its territory. The estimates for this do
vary and were heavily influenced by how much territory it
controlled, but roughly hovered around 400 million a year. And
they also had some significant windfalls in looting and robbery.
So about 500 million in cash from bank vaults when
it took Mosul, but also non- cash items, things like
(05:14):
pillaging food crops and controlling factories to help fund and
build the things they required. And then there's some smaller
resource streams, kidnapping for ransom is a big one. There's
not a lot of data here, but estimates are around
20 to 30 million dollars per year. Another one you
heard a bit about was antiquities. So Daesh controlled a
(05:36):
number of archeological sites, and there was the belief that
these things might be sold on the black market. More
recent analysis indicates that they were selling permits to help
loot those and charging taxes on transport fees. And then
the last and the one that supports terrorist groups around
the world are donations. So be it people who sympathized
with their cause, or even states that were interested in
(05:59):
kind of a conflict by proxy.
Adnan Sarwar (06:02):
Naureen, from what Tracy was saying about these revenue streams
and the biggest one was oil. Who's buying oil from Daesh?
Naureen Chowdhury Fink (06:10):
I believe at one time China was buying extensively from
them, also regional neighbors needing to purchase oil. So I think that
they did not appear to have a shortage of clients.
At one point in 2015 I think, they were raking
in 2 billion. That roll of money is really important
because the narrative of ISIS was that it's creating a
(06:32):
state, which means it also cares for its citizens. So
not only is it selling oil and minting money and things like that, but
it did have to provide some kind of hospital, some
kind of medical care, some kind of justice.
Adnan Sarwar (06:43):
Can I just ask you about the kind of things
that Daesh was selling, apart from the oil, the antiquities,
we saw them stealing history and selling it. How much
were they making?
Naureen Chowdhury Fink (06:56):
It's a very opaque process, right? I mean, we've seen
this previously, whether it's through auction houses, private buyers, a
lot of these sales are cloaked in secrecy. So it's
difficult to know whether it is really delivering the big
money, but then as Tracy and I were pointing out,
you don't need a lot of big money wins, you
need a steady funding stream, and we don't know how
(07:19):
much they have. On Facebook, Twitter, you can actually find
sites where people are still looting sites, people are selling
artifacts. One of the things we talked about in terms
of narratives is they were really smart in many ways,
when they blew up Palmyra, not only did they make
a symbolic statement about their dominance over the region and
(07:39):
over the art and culture and identity, but also, they
literally got a lot of pieces to sell.
Adnan Sarwar (07:47):
Palmyra, maybe you remember those headlines. In 2015 and 2017, Daesh
occupied this ancient Syrian city, a UNESCO World Heritage site,
full of priceless artifacts from its unique blend of Greek,
Roman, Persian and Islamic history. They set about destroying those
(08:08):
treasures and publicly beheaded its 82 year old head of
antiquities, Khaled al- Asaad, when he refused to reveal where
he had hidden an important statue. And as Naureen says,
what they didn't destroy, they looted. The world's horror at
their actions led to the UN Security Council adopting the
(08:29):
historic Resolution 2347, which condemns the unlawful destruction of cultural
heritage in armed conflicts. The international community vowed to work
even harder to crack down on the illegal trade in
artifacts. And one of the organizations at the center of this
effort is Interpol and Corrado Catesi, the head of the
(08:49):
Works of Art Unit. I got a chance to talk
to him and ask him, what is it that's making
this fight more difficult? Well, first of all, that the
world is not taking it seriously enough?
Corrado Catesi (09:05):
This field sometimes is considered as a knife crime. They used
to say in the movie that a crazy collector, addicted collector wants
to have incredible objects of art to enjoy in his
private collection. (inaudible) the illicit (inaudible) of cultural
properties are a serious crime that affect all regions of
(09:26):
the world. Sometimes police agencies, as well as customs are
not totally aware about the crimes. Normally I'm very confident
with drugs, guns, human trafficking, but when I impact in
this field, in the illicit (inaudible) cultural property, especially the police
(09:47):
are not so confident. For this reason it's real important to raise
awareness about this topic, especially that the illicit (inaudible) cultural
property can finance normally, organized crime and may finance terrorists.
Adnan Sarwar (10:02):
So does he have any idea of the scale of
the problem?
Corrado Catesi (10:05):
No one can really give a perfect number about this
phenomenon. When you are finding tomb in archeological sites, you
never know how many objects you can find in archeological
areas. Well, an archeological object, you have to consider not only the value
of the objects, the type of objects, but when these
(10:26):
illicit activity is carried out in the field, everything around
is destroyed, especially the documentation, what the object can tell
us about the former civilization. For sure what we are
assisting is in different online sales, that a lot of
(10:47):
objects coming from the Mesopotamic era, it means an incredible
era where our civilization was born. It's difficult to find
the objects in the illicit market right now, we still
don't know where the best part of these objects are.
If these objects are in some deposit waiting for a better
(11:10):
time, if these objects were already smuggled into their countries,
if the objects are already sold and are still waiting
a better time to appear again in the market. Normally,
anyway, the final buyers are private collectors. A lot of
the buyers are not asking the document that should be
(11:34):
asked when you buy an object of art, as a requested
by (inaudible) convention. The people buy the objects without
taking care about the provenance, it's something that the people
should do always.
Adnan Sarwar (11:53):
So Tracy, whether they were making money from say oil
or antiquities or ransoms, where are they keeping it? Did
they put it in a hole in the desert or in
a bank?
Tracy Durner (12:03):
It's in part both, we do anticipate that they have
a large cash reserve that's being held likely in the
remaining core conflict zones, or has been smuggled out truly
in the form of cash and gold, and is currently
being held with trusted couriers or operatives. But they did
still need to move and use that money. So when
they did, you're right, they were using bank accounts, wired
(12:25):
transfers. Another really important source was money service businesses or
remittance providers. So these are entities that are trust based,
in many cases they are unregistered or unlicensed or in
some cases struggle from weak oversight. And it was through
these channels that they were able to transfer funds and
it can be those transfers that are most difficult to detect.
Adnan Sarwar (12:48):
Okay. So let's talk about detection then, how do we
find this money that's moving around and how do we
stop it? Naureen, I've heard of something called CFT. What
is that?
Naureen Chowdhury Fink (12:56):
CFT is countering the financing of terrorism. So it's a
lot of the legal, political, and practical frameworks we're talking
about. There is ATF, Anti- terrorism financing. CTF, countering terrorist
financing. Yes. So we could play Bingo all day with
the acronyms. But in essence, it's a mix of laws,
(13:18):
sanctions, private sector initiatives, to make sure that terrorist groups
are being denied financing or material support.
Adnan Sarwar (13:27):
Tracy, are there patterns banks are looking for in this?
Tracy Durner (13:31):
Absolutely. Yeah. Banks have what are called, red for lag indicators.
There is a set of things that they determine that
will flag a transaction. They have an obligation to report
that as a suspicious transaction to a financial intelligence unit,
who looks into it and furthers it for investigation if
it's credible. With regards to terrorism financing, it's often not
(13:53):
a single indicator, but rather a pattern of indicators, that
is what would be a trigger for a credible terrorism
financing investigation. But part of the challenge is that our
banks are not terrorism experts, nor are they necessarily built
to be that, terrorism is a really dynamic environment and
understanding emerging trends and patterns is something that requires building
(14:16):
capacity within the financial institutions. In some cases, it is
costly and banks are, as Naureen said, becoming increasingly risk
averse because the cost of maintaining that compliance, the risks
in getting fined for not being compliant, just don't outweigh
the benefit and the financial profit of engaging these clients.
Adnan Sarwar (14:37):
Shiraz, I just wanted to know whether banks are bringing
in terrorism experts to find out what patterns terrorists are
using in their banks?
Dr Shiraz Maher (14:49):
I do know of qualified PhD students from departments such
as my own, who have gone on to work at
banks, in fact I have a very, very good friend
who was for a short while affiliated with my center
as well, who's gone on to work for a major
bank in the United States, looking at some of this stuff, tracing
some of these transactions. Tracy was mentioning there is this
(15:10):
series of behaviors or patterns of activity that might alert suspicion, which
then triggers a sort of more formal human led sort
of examinations and explorations.
Adnan Sarwar (15:20):
I'm always seeing adverts telling me to do more with
my money and grow my money. And looking at Daesh,
they were looking at being around for a long, long
time. Were they sophisticated like that? Were they doing a
lot with their money?
Dr Shiraz Maher (15:33):
Well, I'm not sure in terms of, investments or things
like that, in the way that you and I might
seek to grow our money. I mean, they've certainly looked
at cryptocurrencies.
Adnan Sarwar (15:43):
Tracy, Shiraz is talking about cryptocurrencies. If they're using cryptocurrencies
and the dark web and all these secure kind of
technologies, can we even stop them? Can we find their
money? Do we know what they're doing with it?
Tracy Durner (15:55):
Yeah. You're starting to see an uptick of cryptocurrency use
with Daesh. I think there was a lot of concern
about it early, but most recently, what you're seeing is
reports of foreign terrorist fighters and their family members that
are trying to raise funds using cryptocurrency wallets. I think
that affords both opportunities and challenges. So once a terrorist
(16:18):
organization starts utilizing financial channels, they are more likely to
get caught up in our existing web. The challenge there
is you often have to know what you're looking for.
It can be a bit of a needle in a
haystack. What can do is help put together and connect
the dots in an investigation. So when law enforcement or
(16:39):
intelligence agencies have a suspect, they can go to the
financial sector who has a wealth of information about who
they're transacting with, how they're engaging, where they're located and
where those transactions are going. That can help us build
a bigger picture to understand how a terrorist group is
operating and where its network and reach is.
Adnan Sarwar (16:57):
I'd guess that most people don't want to support Daesh, but sometimes you just don't know where your money's going.
Naureen, how do we make sure we don't somehow end
up providing them with cash by mistake?
Naureen Chowdhury Fink (17:07):
I think for an average person, it's important to remember
that if you think funds or things that you're doing
might help a terrorist group like Daesh, then be cautious
because you don't have to just be funding an attack,
if you think you want to be helpful and send
(17:27):
blankets to ISIS children, that is an act of material
support to a terrorist group. So I think it's about
raising awareness and being a bit cautious about where your
money is going. I know many in the Muslim community
during Ramadan will be thinking about Zakat, will be thinking
(17:49):
about charitable donations, these are all incredibly important, and there
are fantastic charities out there that are doing important work,
but just be aware that terrorists also know that people
tend to want to do good, right? So they will
exploit and abuse seemingly good, charitable endeavors. So check the money.
Adnan Sarwar (18:11):
Shiraz, Naureen's point about Ramadan and the Muslim brotherhood and
Zakat and all these feelings you have, you want to
help people, are governments stopping false charities?
Dr Shiraz Maher (18:22):
Governments have had a huge challenge in actually trying to
address and combat this issue. I remember talking to someone
at the Charity Commission here in the UK, not long
after the Syrian conflict began, I'd say we were about
four or five years into it. And they said something
like, 300 new charities had been registered in that period
(18:44):
of time, that was specifically dedicated to the Syrian conflict.
And you can imagine the attempt to try and produce
compliance and oversight and sort of had rigorous tracing of
where that money was going. So there was clearly a
fairly challenging process there in place for regulatory bodies, such
(19:05):
as the charity commission. And you're right to acknowledge, events
such as Ramadan, which are particularly important of course, in
the Muslim calendar as being times of giving for the
Muslim community. And so that's accentuated the challenge faced by
regulatory bodies.
Tracy Durner (19:21):
If I can add to that, I think the abuse of nonprofit
organizations continues to be a threat for certain portions of
charities. I think another thing that we are noticing is
an uptick in use of crowdsourcing and particularly social media
as a form of fundraising. So donors may very well
(19:42):
be unwittingly supporting what they think is a campaign to
provide medical services but in fact is benefiting a terrorist
organization. It's important to kind of keep in mind the
scale of this, the number of entities that are engaged
are a really, really small portion of the nonprofit sector.
And so the mechanisms that we are putting in place
really have to be calibrated towards the entities that are
(20:05):
vulnerable on the basis of their characteristics and activities, as
opposed to imposed upon the sector overall. And the reason
for that is that we run the risk of creating
kind of really arduous or complicated barriers that hinder the
delivery of these critical services provided by nonprofit organizations, which
in turn, undercuts our goals of kind of advancing broader,
(20:26):
good governance, human rights, and peace and stability, which is
essential to undermining the appeal of terrorist organizations in the
first place.
Adnan Sarwar (20:35):
CFT extends to the fight against the trade in antiquities.
One of the excuses that buyers use is that they
didn't know something was stolen, even though it doesn't have
the right documentation. Corrado Catesi and his Interpol unit are
also trying to make sure that no one unwittingly contributes
to the coffers of terrorism.
Corrado Catesi (20:54):
We created in 1995, by the Interpol Stolen Works of Art
Database that is fed by information coming from our national
police organization through our National Central Bureau. Nowadays, we have in
our Interpol, Stolen Works of Art Database, 51, 000 objects coming from
(21:17):
154 countries. Inside these 51,000 objects, at least 5, 000 objects are
coming from Iraq, Syria, Afghanistan, and the people before buying
an objects should check inside our database. Also because it's
(21:37):
for free, they have only to request through our website
to have the username and password that will allow them to
check against our database that you see before buying an
object. If this object is coming from an illicit activity
or not. Of course, if the object is not inside
(22:00):
in our database, it doesn't mean that the object it
is not stolen because perhaps it was not communicated to
Interpol or as is the case of the archeological objects,
the object was illicit excavated and the illicit provenance is not
known because nobody knows about these objects. Only the diggers
(22:24):
know that they illicit excavated in some archeological areas. But
what we are trying to tell everywhere and every times,
that the people before buying an object should check against
the Interpol database, as well as in some other national
register to check the illicit provenance of the objects, to be
(22:47):
sure that buying these objects, they are not financing organized
crime or terrorists.
Adnan Sarwar (23:01):
This is an ongoing thing with the international community, trying
to fight all of these sources of cash. Naureen, what
are the biggest obstacles facing us when it comes to CFT?
Naureen Chowdhury Fink (23:10):
So I think political will, and I'll say opacity are
two key impediments. I think political will is important because
there are international laws and sanctions in place. And in
a lot of states, these are only minimally implemented. And
then I come back to something Tracy mentioned is these
are small amounts go going through informal channels, they're often
(23:32):
difficult to trace, and you have to think about the
cost benefit as well, right? To what extent are you
going to penalize everybody? And then how do you prove
that they knew what they were funding? And a lot
of our international policy frameworks early on, really focused on
the terrorist act. So you could get in trouble for
funding an act of terrorism, but nowadays, we've had some
(23:56):
sea changes in the international legal and policy framework. It's
because we know that a group like ISIS for their
funding, the attack itself may be a small amount, but
they may need funding to hire fighters. The focus has
shifted beyond funding a specific terrorist attack to funding terrorism
much more broadly.
Adnan Sarwar (24:16):
So we've moved away from somebody basically giving somebody cash
to do something within the framework of terrorism, to the
general support of terrorism. Tracy, you did some research into
east Africa. What I want to know about this money
that Daesh created and saved up in the Middle East,
(24:36):
is it moving to Africa?
Tracy Durner (24:38):
In part. So what you see right now is a
lot of vying for attention among the various affiliates. However,
a good portion of those affiliates, where there have been
some financial transactions between core and affiliates, many of them
are self- financing and are continuing to be self- financing.
You are seeing as Daesh loses territory, it's trying to
(25:02):
conceal its money and diversify its revenue streams, so you
are starting to see some investments in legitimate business. In
particular, that includes gold markets in central Africa, but it
does also include currency exchanges, automobile dealers, a couple of
other businesses that they are looking to invest their money
(25:24):
and make money, as well as concealing it.
Adnan Sarwar (25:26):
If I can just go around the house with each
of you finally, and just ask you, what are you
concerned about when it comes to money with this organization
going into the future, Shiraz?
Dr Shiraz Maher (25:38):
For me, I think the electronic phase of this going
forwards is only going to grow. I think it's pretty clear
that there's to be a much more enhanced engagement by
all aspects of society, with things like cryptocurrencies and governments
haven't yet fully grappled with this, from the benign perspective,
(26:00):
let alone from the more malignant aspects. And I think
that's going to be an area ... we've seen organizations like
ISIS, continually innovate and continually be early adopters of all
kinds of disruptive technologies, and to be very, very effectively
and the use of sort of malevolent creativity with new
(26:21):
things that become available to them. So I would say
this is an area where we've got to continue to
invest some resource in terms of intellectual capital and policy
response to ensure that they're not yet again at the
forefront of exploiting another thing.
Adnan Sarwar (26:37):
Naureen, what would you say you were worried about in
terms of financing for this organization going forwards?
Naureen Chowdhury Fink (26:43):
My concern is that unnuanced ill- conceived counter- terrorism policies
and CFT measures will inadvertently drive the funds into places
that are harder to find. We will inadvertently hurt the
activity that we most need, humanitarian action. And because it
(27:03):
will be so diffused, we won't have actually targeted the
financing. My other concern, as you say, is that we
have one playbook, but different countries are not really implementing
it in the same way. And so I think we
need more concerted international action to address this, especially as
we see other groups like the far right and violent
(27:26):
far right movement learn some of these lessons about how
ISIS raised money, how Al- Qaeda mobilized, and we will
see likely some similar mobilization and we will need to
make sure our playbook then is fit for purpose.
Adnan Sarwar (27:41):
Tracy, same question. Are you worried about the future of
money with this organization?
Tracy Durner (27:45):
The UN has estimated that Daesh has a reserve of
about a hundred million dollars, which is by no means a small
amount, particularly given that it's lost its overhead costs, right?
It no longer has to pay as many salaries and
maintain roads. So what it can do with that a hundred million
dollars is potentially more concerning. I think in that regard,
(28:06):
what worries me is that their propaganda machine is still
active, that it is still producing and potentially attracting supporters,
and so it is moving to a financial model that
is hard to disrupt because it is decentralized, because it
is dispersed and that it is, as Naureen said, likely
to go underground. And so the potential that Daesh has
(28:29):
to serve as a continued agitator and disruptor of conflicts
around the world remains really concerning to me.
Adnan Sarwar (28:38):
Complex ways of sourcing money, complex strategies to cut off
the supply of that cash. I'd like to thank Tracy
Durner, Naureen Chowdhury Fink, Shiraz Maher, and Corrado Catesi, for
sharing their knowledge and experience, to shed some light on
how Daesh generates money and what we are doing to stop it. That's
it for this edition of Taking Apart Terror, find us
(29:00):
wherever you get your podcasts and follow or subscribe so
you get every episode, including the next one, when we
look at the ways that violent extremists communicate and we
ask, do terrorists use apps? I'm Adnan Sarwar, until the
next time, goodbye.
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