Tricks of the terrorist finance trade

Analysis
By Patrick Jost
Consultant, RISC Global

The hunt for evidence of terrorist finance is a painstaking business

The principles of terrorist finance are relatively straightforward - and relatively ageless.

The distinction between "pre-9/11" and "post-9/11" is nearly meaningless.

That day was horrible beyond words - but the mechanisms which financed 9/11 were nothing new: abuse of charities, identity theft, the use of jurisdictions with poor regulations.

Terrorism is, after all, not expensive. 9/11 probably cost under £500,000, and that's a very high-end estimate.

There are two key things to keep in mind when thinking about terrorist finance. The first is that there are not going to be a lot of transactions, and it is unlikely that there will be any large transactions (the largest 9/11 transaction was for about £30,000).

The second thing to keep in mind is that "terrorist money" is usually going to be clean money.

Terrorists do, in fact, frequently commit crimes to finance their activities; they have to launder the money from these activities.

But they also take money that is "completely" clean (as in earned from legitimate activities) and use that. What we see, then, is not "dirty money becoming clean" - as happens when criminals launder their proceeds - but clean money becoming dirty.

That is the key distinction between criminal financial investigations and this one.

The external connection

Inevitably, there will be talk of the possibility of money coming from overseas.

Keeping things local means keeping things simple Tracing the bombers' financial footprint Terrorist finance: what to look for

It has been well documented that both al-Qaeda and al-Tawhid - the Iraq-based group led by Jordanian Abu Musab al-Zarqawi - have significant presences in various European countries.

Once it is accepted that an "al-Qaeda-like organisation" or "organisation sympathetic to al-Qaeda" committed the attacks, the rest is almost purely academic discussion.

But the London bombings did not need any "foreign assistance" - with the possible exception of the explosives, although that now appears less likely. In fact, British bombers would have been ideal: they would, for example, have known how to get around on the Underground.

Keeping things local means keeping things simple.

The 9/11 hijackers had to get US visas - one potential hijacker, Ramzi Binalshibh, failed to do so. Not having to gain entrance to foreign countries or engage in periods of instruction certainly made a "local" attack much simpler.

The same applies to funding. If the attackers were already in Britain presumably they already had some kind of support, so extra (and possibly external) funds would not be needed.

How to proceed?

It is highly unlikely that you could start with a financial transaction and work from that. It will be necessary to identify suspects or accomplices, and use them as the starting point for financial investigations.

The investigation is therefore likely to focus on small, otherwise innocuous looking transactions which nonetheless build a pattern and lead to suspects.

This will lead to specific and general means by which the attacks were financed. As more is learned about the financial networks, it will be possible not necessarily to prevent attacks but to make it increasingly difficult for terrorists to move money without possible detection.

Even though an attack may not be prevented, the preparations for an attack may be disrupted, thereby preventing the attack itself.

Patrick Jost has extensive experience of analysing and advising on terrorist finance issues both in the public sector for the US government and in the private sector. He now works with UK consultancy RISC Global to provide counter-terrorist finance services.

This is the second feature in a series of three on the money trail which could lead to the London bombers' supporters. The third is to be published later this week.