Terrorist organizations need money to operate. Weapons and ammunition are expensive. Major international operations require substantial investments for personnel, training, travel and logistics. Organizations must have substantial fundraising operations, as well as mechanisms for moving funds to the organization and later to terrorist operators. These functions entail considerable risk of detection by authorities, but also pose major challenges to both the terrorists and intelligence agencies. This working document offers an analysis of the sources of financing of the Al-Qaeda network including some of its affiliated groups. The development of Al-Qaeda’s financing has been similar to the evolution of its operational structure. The organization is currently under significant financial pressure. However, the number and magnitude of terrorist attacks attributed to Al-Qaeda in a number of countries implies that the network continues to have access to substantial financial resources to support its activities. The international community has so far not succeeded in cutting off many of Al-Qaeda’s sources of financing; the organisation continues to access funding from wealthy benefactors, legitimate business and criminal activities.
Since its foundation in 1988, Al-Qaeda has used various methods to obtain funding. Currently, its cells, branches and affiliated groups are obliged to act autonomously; many of them have, to a great extent, to finance themselves, including by means of ordinary crime. These groups have also had to resort to hawala (a trust-based informal banking system) and cash couriers to move money or operate on the margins of the formal financial system. There are also other methods that are used by terrorist groups to transfer funds with little risk of detection. International trade is particularly vulnerable, due to its size and the complexity of methods of payment. The emergence of new methods of payment through new developments in information technology present additional risks for the authorities as these enable terrorists to move money with total anonymity.
However, terrorist organisations have to defray both the costs of carrying out an attack and the more substantial structural costs of maintaining the organisation and disseminating its ideology. In addition to purchasing weapons, vehicles, explosive material and detonators to be used in attacks, terrorist groups need to anticipate other needs, such as: 1. Subsistence living costs for its members and sometimes also their families. These expenses are considerable, despite the terrorists’ generally frugal life styles. Costs vary according to the proximity of terrorists to their targets. The costs of activities in Western Europe will be considerably higher than those in African or Asian countries. 2. A terrorist cell also needs for its members reliable channels of communication, including highly secret channels to its leadership, from which it receives its instructions. Although communications costs have been reduced considerably through the use of mobile telephones, pre-paid cards and e-mail (often sent from Internet cafés), the procurement and use of communication tools can entail significant expenses.
3. Training new recruits constitutes a large investment for terrorist groups, both in terms of ideological indoctrination as well as the procurement of practical items to prepare for attacks. Although part of the general preparation can be carried out in terrorist training camps, some specific operations may require specialist skills (such as piloting planes)which can only be achieved with expensive training.
4.Travel costs for group members in preparation of an attack and acquiring false documentation papers, which may also involve travel. Further travel is required to meet other members of the network, to meet senior members of the hierarchy or to meet individuals able to provide material or financial support.
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