Key Reflections
* Terrorist financing needs to be seen from the organisational/group level as well as the operational cell and individual levels.
* If one can limit or control the amount of money that a terrorist organisation has access to, one can limit the scope and scale of their terrorist activity. This is a constant battle.
* Terrorists have exploited the pandemic for fundraising activities including selling fake personal protective equipment (PPE) online in an effort to raise money.
* Some terrorist groups have several different and overlapping areas of money management because they are generating revenues from a variety of different sources.
* There are many barriers to the effective terrorist use of cryptocurrency. Currently, it is being used more for extremism financing, the foundational precursor from which terrorism develops.
* The Taliban and other groups that operate within Afghanistan’s borders are all looking for ways to raise money off the Afghan economy. That includes narcotics production, drug trafficking, and taxation.
Transcript:
SG – Dr. Sajjan Gohel
JD – Jessica Davis
SG: Hello, and welcome to DEEP Dive, brought to you by NATO’s Defence Education Enhancement Programme. I’m your host, Dr. Sajjan Gohel. Each episode, we speak to experts and practitioners in international security and defence, counter-terrorism, and geopolitical current events to gain insight into the most pressing matters of global affairs.
In this episode, we speak to Jessica Davis, the President of Insight Threat Intelligence, and President of the Canadian Association for Security and Intelligence Studies. Jessica had an 18-year career in the Canadian government, with senior roles at Canada’s financial intelligence unit, FINTRAC and the Canadian Security Intelligence Service (CSIS). Jessica is the author of Women in Modern Terrorism: From Liberations Wars to Global Terrorism and the Islamic State, as well as Illicit Money: Terrorist Financing in the 21st Century.
Jessica Davis, thank you for being here on NATO Deep Dive.
JD: Thanks so much for having me.
SG: You’ve written extensively on terrorism financing. What interests you about this? And what got you focused on it in the first place?
JD: I think my foray into terrorist financing came about a bit circuitously. So, I was actually working at Global Affairs, Canada, when I saw a job advertisement for our Financial Intelligence Unit FINTRAC. And there was a lot that really intrigued me about financial intelligence. I think, first of all, I don’t think I’d really heard about it before. And I had already done a fair bit of work in the intelligence field. And this was really something quite a bit different. So, most of my work previously had been with the Canadian Armed Forces, exploiting other kinds of intelligence, like signals intelligence, or human intelligence. So, when I heard about this thing, financial intelligence, it really piqued my interest.
So, I applied for that job and went over to FINTRAC, and the world of terrorist financing opened for me. I had been interested in terrorism writ large for some time, I’ve done a fair bit of research in terms of women’s participation in terrorist activity. But this whole terrorist financing thing was really new to me. And I was immediately thrown into the deep end in terms of analysing transactions and trying to figure out what the so what of all the financial intelligence was. So, that was how I got my start in it. And as my knowledge of financial intelligence and terrorist financing deepened, I began to realise how integral it is in terms of our understanding of terrorism, because fundamentally terrorist organisations need money to sustain themselves. Everything that they do costs money. And the same thing is true for terrorist cells, and even to a certain extent for lone actors.
So, as my knowledge of terrorist financing and Financial Intelligence deepened, I came to see how integral, it really is to our understanding. And, you know, from a counter terrorist financing perspective, it really becomes a question of, if you can limit or control the amount of money that a terrorist organisation has access to, you can really limit the scope and scale of their terrorist activity, which is fundamentally what we’re all trying to do in terms of counter-terrorism.
SG: Very interesting. And you mentioned about the role of women in terrorism. So, I want to touch upon that a little later, because we’ve increasingly seen women playing an important role with terrorist groups, including in terms of providing support, which entails financial support and fundraising as well. If we were going to break down how terrorists use their funds, what would you categorise as being their main purposes, obviously, terrorism, but in terms of what areas of terrorism are they principally focusing on? Or does it vary depending on the group and its ideological motivation?
JD: I would say that it doesn’t necessarily vary depending on the group. But it does vary depending on the level of terrorism that we’re talking about. So, when I conduct terrorist financing analysis, I think about terrorism in three different ways. So, I think about it from the organisational level, so the group level, and then I also think about it operationally, so from the cell or the individual level, because these are the sort of three levels of actors that we see in the terrorism space. We could also probably extend that analysis to talk about extremist movements. And I’ve done that in some of my more recent work, but it is of a kind with, with the group or organisational level analysis.
So, when we break it down that way, there are some variations in terms of how terrorists use their money. So, at the group or movement level, we’re really talking about uses for things in terms of propaganda, creation, and dissemination. Recruitment activities, depending on where the group is and if they control territory or seek to control territory, they may be involved in using money for state building projects, things like paying salaries, bribery to public officials. And then there’s also their actual terrorist activity, so planning and executing attacks, either in the area where they’re operating or abroad. Again, depending very much on what kind of organisation or group that we’re talking about.
From the cell and individual level, they’re using money for much more tactical things. So, they’re doing things like procuring material for improvised explosive devices, they’re spending money on operational security, this can be things like burner cell phones, or even safe houses. Sometimes they’ll use some of their money for basic subsistence, because sometimes terrorist projects necessitate that their members remove themselves from other ways of making money, so they’ll have to sort of figure out how to pay their day to day living expenses, etc.
So, those are the main areas where we see terrorists using money. And it’s basically all of the things you can conceive of that they’re trying to do in terms of advancing their terrorist project.
SG: So again, you’ve provided very important insight and breakdown in terms of how these different purposes of terrorism funding can serve various groups. In some ways, I almost feel that we don’t talk about it nearly enough, but terrorists, of course, need to manage their funds to achieve their goals. You mentioned the cells and their specific purposes, but do terrorist groups, for example, do they have a financial manager or even a committee to manage funds and how well controlled is that.
JD: You’re very right, when you talk about this being an under studied or under examined area. In my research, every terrorist group and every terrorist plot that I’ve looked at has some sort of money management structure. Now, these vary significantly across groups and across the kind of activities that we’re talking about. Some groups will have entire committees established, this tends to be groups that have—the more elaborate committees tend to be from groups that aspire to a state or bigger project—state building or bigger projects. And they’ll often have really elaborate financial structures, sometimes far exceeding their actual financial activity. So, they’ll have three or four different managers for the same thing, when it’s really just a very small amount of money coming in. But it’s part of developing this organisational structure to seem like they’re bigger and more important than they actually are. Sometimes they actually need those kinds of structures.
So, when we talk about the Islamic State, they had a number of different and overlapping areas of money management and different people involved in that. And they needed it because they were generating revenues from a variety of different sources. And they were spending money in a wide variety of different ways. So, depending on the group structure and objectives, this shapes what kind of committee or financial management structures are in place.
When we talk about cells and individuals, so that more operational level actor, this is where I think it gets quite interesting, and probably one of the even more understudied areas of that overall financial management piece. Because every cell that I’ve looked at, and every operational attack and plot that I’ve looked at, has had somebody involved in figuring out how much the activities would cost and establishing a budget and financial controls around that. One of my favourite examples is the thwarted terrorist attack in Canada, the Toronto 18 plot, I did a really detailed analysis of that plot for a book that came out this year, analysing the plot. And it was such an interesting example because first of all, it was disrupted, so we have a fair bit of court information that sort of flushes out the financial management practises. And the level of detail that the individuals involved went into in terms of managing their funds and allocating their funds and how they stored it was really interesting.
So, a couple of interesting examples from that was they had a fairly detailed analysis about what their improvised explosive devices would cost, and they also allocated money to operational security measures. So, they established essentially a cover story for their purchase of fertilisers, calling themselves student farmers—they had T-shirts and business cards printed up—so all of this falls into that overall logistical and operational structure and the financial management for that plot. And this is consistent across a number of different plots and attacks that I’ve looked at.
The only exception to this that I would say is for your very small-scale lone actor attacks, the financial management piece tends to be, obviously, super simple; it reflects the scope and scale of the activity that we’re talking about. So, if we’re talking about a very improvised, for instance, stabbing attack, then the financial activities involved in that, and financial management is going to be really minimal. I would say, though, that there are plenty of examples where it’s not non-existent. You know, there’s purchases of specific knives and even settling of affairs beforehand that are all important aspects of the financial management of these plots.
SG: Has the pandemic hindered or ironically, aided terrorist groups’ ability to fund their activities, because you just explained all the different processes and the myriad of terrorism funding and the goals and the objectives? The pandemic, as we know, has affected everybody in every form of work, and life, and process. In terms of terrorist groups, does that also then impact on their ability to procure funding for their own nefarious purposes?
JD: This is such an interesting question and I think one that we don’t have great data on yet. So, what I’ll do instead of giving you a firm answer is I’ll walk you through some of the factors that I think are involved in figuring out what’s happening on the terrorist financing front during the pandemic. First of all, I think the pandemic has had the effect of, obviously reducing people’s ability to travel and join terrorist groups, but also to a certain extent perpetrating attacks, there are very few—there have been fewer events where there’s a potential for mass casualties, with lockdowns and things like that. So, terrorist targets have been reduced during the pandemic.
Terrorists have also exploited the pandemic for fundraising activities. There’s a couple of interesting examples of terrorist groups selling fake personal protective equipment (PPE) online as an effort to raise money, basically a low-level fraud. And I also think that there’s probably a number of people out there who, were not for the pandemic, might have tried to engage in terrorist activity. But given pandemic restrictions, and all of the complexities that are now involved in international travel and, organising and all that kind of thing, instead, they might be giving money to terrorist organisations or even cells. So, there’s different ways that the pandemic can affect the terrorist financing piece.
I would also say, though, that I think preliminary data suggests that terrorism levels during the pandemic have actually decreased. There are a number of really good reasons for this. I’ve mentioned a couple of them: the lockdowns, the complexities involved in organising really anything in the pandemic. And this may have also reduced terrorist groups’ ability to raise funds from their supporters. So, there are a number of different factors. I’m not entirely convinced which way this is going. I think that some of the factors might be—the scope of the factors is very difficult to estimate at this point. But it’ll be a very interesting thing to watch over the next couple of years.
SG: Absolutely. One thing that is potentially pandemic proof and has existed across numerous pandemics in many centuries has been the Hawala system, which is the informal banking system that is used in various parts of the world. Does that remain a popular method for moving funds for both operational and organisational terrorist activity?
JD: Absolutely, Hawala remains one of the ways that terrorists move money for their activities. The thing that I found in my research was that when we look at concrete evidence of organisational and operational funding for terrorist groups, and cells, and individuals, that a lot of that fundraising and fund movement activity was actually happening through the formal banking system. So, I think that there’s been a lot of concern about those more informal channels that you talked about, so Hawala Hundi, and that concern was particularly notable after 9/11, when there was a very little understanding about what the system’s entailed, and probably limited ability to really understand how to gain access to those systems. But realistically, when we’re talking about terrorist groups, and individuals trying to conduct attacks, a lot of that activity is happening through the formal financial sector because that’s what’s being used in the countries where they’re conducting a lot of their attacks. So, a lot of fund movement mechanisms can be determined by where terrorists are operating and where they want to conduct their activity.
So, if they want to conduct terrorist attacks in the United States, they’re going to use the kind of banking system that’s prevalent there. If they’re doing it in the Congo, they’re going to use whatever sort of financial system is present there. So, it’s really about that geographic and financial landscape that helps us figure out what are the methods of fund movement that terrorists are going to use.
SG: So, geography is key. Increasingly, we hear that cryptocurrency is being used to fund terrorism. Now this is something that is relatively new, but for what specific purposes are they used for terrorism? And is this something that perhaps is a warning of what will be the main primary use for terrorism funding? Or is that too early to speculate?
JD: I have really mixed views on the issue of cryptocurrency and terrorism. I’ve been asked this question for a number of years now, and I think that my answer remains fairly consistent. I think that there’s a lot of hype around terrorist use of cryptocurrency, because it is absolutely something that criminals find very attractive. But for terrorists, there’s more barriers to entry and in a lot of cases, it’s more hassle than it’s worth, when it’s just as easy to move cash or move money through a money service business, like Western Union. Those are probably the easiest ways to move money for most terrorists, including through banks.
Cryptocurrency, though, can be useful. But again, I think a lot of it is really determined by the area where they’re operating. So, as societies adopt cryptocurrency, more and more, I think 2021 saw the real mainstreaming of cryptocurrency, we will see more adoption by terrorists. There are some benefits to it: it’s a little bit more anonymous than—well, I guess that’s even difficult to say, I wouldn’t say that it’s even more anonymous than most things because sending a transaction through banks is quite anonymous, unless you’re triggering suspicious transaction reporting.
So, there are a number of uses there. There’s also the issue of extremism financing, which I consider to be a bit separate from terrorism, extremism being more of the foundational precursor or background conditions from which terrorism develops. And when we talk about extremist financing, particularly today, I think about it more in the sense of, particularly, U.S. extremism, or white nationalist, neo-Nazi extremism, perhaps extremist propagandists, or extremist ideologues who haven’t transitioned to terrorism, they haven’t actually crossed that sort of legal threshold towards committing attacks or inciting attacks, but they’re absolutely spreading extremist propaganda and encouraging people to adopt extremist mindsets. This is where we see a lot of cryptocurrency adoption. And there are a couple of reasons for that.
The first one is that there’s a natural tendency for a lot of extremist groups today to shy away from the formal financial system—it’s sort of an integral part of their ideology to move away from the state and to adopt things that might hasten the downfall of the formal financial system or the established financial system. So, cryptocurrencies fit that bill, depending on your worldview, to a certain extent. And then I also think that there are some people, some of these extremists, who have personally profited from increases in prices in things like Bitcoin. So, there are sort of these Bitcoin promoters or cryptocurrency promoters, who are operating almost like a multi-level marketing scheme, in terms of hyping the use of cryptocurrencies, because they personally profit from it. They also tend to accept donations in cryptocurrencies. But it’s really quite a complicated space, where I’m not entirely convinced that the adoption of cryptocurrency in the extremist landscape is just about security or privacy.
SG: It’s, I guess, a tool or a method that is still developing and unravelling. And will, over time, perhaps provide more insight on this. We’re hearing in Afghanistan, for example, that people are increasingly using cryptocurrency as a means to survive, as Afghanistan’s economy tethers on the brink of collapse. Can you see a situation where, for example, the Taliban will avail of cryptocurrency in Afghanistan, if they haven’t done so already?
JD: Crypto and Afghanistan is a really interesting space. I think that 2021 with that mainstreaming of cryptocurrency has probably for the first time, the preconditions for the adoption of crypto in a country that’s now ruled by what many people consider to be a terrorist organisation, could be a way to avoid sanctions, it could be a way to circumvent the formal financial system in Afghanistan, which the Taliban now controls. So, I think that there’s a lot of promise there. But I also think that there’s an awful lot of hype, because it’s not clear to me how effectively the average Afghan can use cryptocurrency to buy their basic daily necessities. It might be a useful thing for people as it becomes more—if it becomes more adopted—on a wide scale. This might be a viable sort of parallel economy that can develop, which I think there’s pros and cons to that in terms of avoiding the Taliban economy, it makes it a little bit more difficult for them to tax and extort people.
But on the flip side, and this is sort of something that’s intrinsic in the question that you asked, this could be something that the Taliban themselves decide to make use of, they could, for instance, largely abandon their national currency and instead, move towards cryptocurrency. We’ve seen other countries trying to do that. I think that’s still an experimental project at this stage. But these are all things that we need to sort of be thinking about and considering in terms of Afghanistan and sanctions, and all of those, and really economic collapse at this point.
SG: Absolutely. And sticking with Afghanistan for a moment, we know that Taliban factions have made much of their money through narcotics and drug trafficking, traditionally, from heroin, but also increasingly from methamphetamines. How do you believe, based on the situation in Afghanistan, that we could start seeing a proliferation of narcotics for the funding of the Taliban? You mentioned that some see it as a terrorist group, we know that they’ve been involved in criminal enterprise, and we know that terrorism and criminal enterprise sometimes collaborate as bedfellows. But you see that drug trafficking could potentially be a major growth earner for the Taliban during these times in Afghanistan?
JD: Yeah, that’s something that I’m quite confident that we are seeing and will see more of as the next couple of years unfold. The reality is that groups like the Taliban, and even other groups that operate within Afghanistan’s borders, are all looking for ways to raise money off the Afghan economy. That economy includes narcotics production, drug trafficking, etc. So, these are all natural ways that terrorist groups will be exploiting the Afghan economy. The nuance and the details of how and what that looks like, I think, are what’s kind of interesting to me. Depending on what kind of region in Afghanistan we’re talking about, the Taliban is either directly involved in the production of some of these drugs, or they’re just taxing the shipment routes. So, the scope and scale of that involvement really depends regionally. And the same is true for things like ISIL-Khorasan Province. They’re more likely to be involved in the taxation of that activity, since they’re not really holding all that much territory at the moment. But again, that can shift pretty quickly. So, this is definitely a place where we’re going to see more financing, for both the Taliban and ISIL-KP and also other groups that operate regionally.
SG: You mentioned ISKP, the ISIS affiliate in Afghanistan. It’s interesting to talk about ISIS itself. Back in December 2021, Ahmed Abdullahi—a Canadian National—he pled guilty in a federal court in the US, admitting that he had conspired with others to provide material support to terrorists engaged in violent activities connected to ISIS in Syria. Is funding for ISIS in the West still going on in a substantive way? What should we be concerned about if that is taking place? And has the situation in Syria, to do with ISIS in particular, has that been overlooked in the last two years because of the pandemic? Are things happening with ISIS and funding that perhaps are not getting the attention they need to?
JD: Yeah, it’s quite an interesting one…that’s an interesting question, because it really forces us to think about what we see certainly in reporting and media reporting and court cases, but then also to consider what’s possible and what’s probable. So, in the case that you mentioned, the Abdullahi case, the material support that he was providing was really primarily about travelling to join the Islamic State, and to individuals travelling during the Islamic State. Now, a lot of these cases that we’re seeing these days are historical in nature. It’s a little bit of the closing of the loop on the ISIS foreign fighter chapter in the West. Hopefully, it stays closed, I hope that that’s something that we’re done with at this point. But the group still operates, it still has a certain draw for individuals. So, I wouldn’t be surprised to continue to see some individuals arrested for this type of support. In fact, we’ve actually seen some of it, even from Canada in fairly recent years, which doesn’t make a tonne of sense to me since the caliphate has been destroyed. But there you have it.
In terms of funding for ISIS from the West, this has always been something that’s quite interesting, because the majority of sort of more serious high-level financing activity for ISIS proper, and not just for foreign fighters, has really been done at individuals’ own initiatives. So, the group was never really keen to try to get large-scale financing operations going in Western countries. We can contrast this with things like al-Shabaab, who had a fairly robust financing network in North America and probably in other parts of the world as well. ISIS really relied on the local economy for most of their financing and some other activities as well. So that Western support was never really
driven by the group itself.
Has that changed? I don’t think that it’s really changed much in the short-term. There’s still a huge question about where ISIS’ financial reserves are and whether or not they’re able to access them. You know, even recently, we’ve seen reports of the group having stored or stashed hundreds of millions of dollars. I haven’t seen a lot of reliable reporting that indicates where that may be and whether the group has access to it. And I think that there are some contradictory indicators that suggest that the group doesn’t have much access to that given they’re sort of low-level financing activities that they’re doing in Syria at the moment, you know, taxing livestock, some kidnapping for ransom activities. These are sort of rent-seeking activities that a group with 400 million dollars that they could readily access might not choose to do, because they also erode any potential support from local populations.
So that’s sort of where we’re at. The only caveat that I’ll add to that is the issue of ISIS detainees. There is some fairly good evidence that family members of some of those detainees are sending money to the women and largely children that are being detained in Kurdish custody. But this is fairly low-level funding, and I think that most of it is just going for subsistence. There may be small amounts that could be syphoned off to the group for particular activities, but again, this remains a little bit of a black hole in terms of intelligence right now.
SG: Is there a difference in terms of how ISIS was funding itself to, say, al-Qaeda? Because we know that ISIS, in terms of the way operated, tried to be this kind of proto-state, very much physically present, visually, whereas al-Qaeda was just more clandestine, dependent on allies to provide sanctuary and support like the Taliban and some Pakistani terrorist groups. So, were their processes of funding different?
JD: Yeah, there was a lot of variation there between those two groups. I think between all terrorist organisations, you can draw some similarities, but this is an interesting compare and contrast exercise. So, I would say that the majority of ISIS’ funding was very much that rent-seeking activity, taxation, extortion, some kidnapping for ransom, obviously oil sales, antiquities—all of the kind of economic activity that was already happening in the area where they were able to control.
Al-Qaeda is a bit different. So, they definitely had some of that initial seed money from bin Laden himself. There were some state sponsors, there were some individual wealthy donors that were involved in it, but because al-Qaeda never really controlled any of that territory, their budget was much more constrained. But at the same time, they were able to dedicate whatever sort of surplus revenues they had to those attacks, and they had a bit more of that outward looking desire to attack outside of their immediate area of operations.
So, I would say that they’re quite different in terms of their funding methods. When I think about ISIS, I think more about groups like al-Shabaab and Hezbollah in terms of territorial control and scope of finances. So, when we talk about ISIS, we’ve often heard the refrain that the group had unprecedented wealth. And I’m not convinced that that’s true. Hezbollah runs right up there with them in terms of the amount of money that they’ve had access to, and consistently over the course of their existence.
SG: We’ve had people on this NATO DEEP Dive programme talking about Hezbollah and just how well funded they are and how they operate in various parts of the world, including in Europe and also in Latin America. One thing I was curious to get your perspective on, something you mentioned earlier about the role of women and the work you’ve done on the role of women in terrorism, is that aspect when it comes to terrorism financing. What role do women play with terrorist funding? And in terms of, does it differ with a specific terrorist group based on its ideology? So, for example, are there women involved in terrorism funding for jihadist groups, for transnational entities, or would they be more prominent in, say, other ideological entities such as the neo-Nazis? Where do you see women fitting in when it comes to terrorism financing?
JD: This is one of those areas where we need to be a little bit…I’m going to be a little bit measured in my response because frankly I’m just not entirely convinced that we have enough data to make a really good assessment about this. When I was doing research for Illicit Money, I came across a number of examples of female financial facilitators—more than I found when I was doing research for my book, Women in Modern Terrorism. Now, I was asking different questions, for sure, and Women in Modern Terrorism really focused on terrorist attacks, particularly suicide bombing, because there’s really good data for that, so I could use it to create a baseline for estimating a whole number of different things.
When I was doing this research for Illicit Money, it really did seem to me like there was more and more women becoming involved in the financial component of terrorist activity, and more states being aware of it and taking action against it. So, there’s a little bit of a data problem there, in the sense that I’m not convinced that this is a new phenomenon, but I think that it might be something that is now newly public. So, it’s the kind of thing that, as states have turned their counterterrorism lens on the role of women in terrorist groups, we’re now seeing those arrests and those prosecutions of women involved in financial activity.
In terms of whether or not it varies between groups, I think, you know, the vast, vast majority of terrorist groups and ideologies really see women in that subordinate role—well they say they do, anyways. They talk about women being supporters and in the background. When push comes to shove, though, they’ll do what’s tactically expedient. So, they will encourage women to become suicide bombers, encourage women to conduct terrorist attacks, regardless of what their ideology actually says, because terrorists are, to a certain extent, practical, rational actors. In terms of the financing piece, though, this is probably one of those areas where women have played a bigger role than we think. Some good examples, of course, include Hezbollah and al-Shabaab. But I suspect that women are active in fundraising for a number of groups. And this is only the kind of thing that we’re starting to see good information on. So, I suspect that this is one of those areas of research that could really use a good, critical lens to sort of establish that baseline.
SG: In terms of all of this, we then have that other aspect in terms of perhaps trying to stop terrorism funding, and I know you’ve also dealt with that in great detail, and also this aspect about financial intelligence. Talk to me about this. What is that, and how successful have we been in terms of trying to stop terrorist groups from being able to fund their activities? Is this basically an uphill treadmill, that we find one avenue, close it down, and then the terrorists find an alternative route to utilise? Is this basically an endless cycle of trying to play catch up? Or have we been able to make major headway in stopping terrorism funding?
JD: This is probably my favourite current question: what have we done, what have we achieved in terms of terrorist financing, counter terrorist financing, specifically? So, I have both an academic and an anecdotal answer to this question. So, I would say academically and from a very rigorous research perspective, we have no idea whether counter terrorist financing is working. There have been no good studies evaluating global policies and practices on this front. And we really just have no data that suggests that these policies and practices have done anything in terms of reducing levels of terrorism. We also don’t know if they haven’t worked. So, it’s really just this black box of counter terrorist financing and its effects on terrorism. I am looking at this question right now for my dissertation, which I’m very excited about.
And, anecdotally, what I would say, based on my practical experience, is that it has worked. But it’s really difficult to figure out what parts of counter terrorist financing have worked. I think that we see how it works in terms of some countries experiencing more small-scale, lone actor-style attacks. That could be a terrorist evolutionary response to counter terrorist financing policies and practices—things like the exploitation of financial intelligence, the detailed analysis of terrorist financing, looking for indicators mobilisation—these things may have forced terrorists to adopt those lower complexity, lower scale attacks. This, of course, is not universal. There’s a huge amount of variation in terms of levels of terrorism globally, the complexity and scale of attacks globally. But I think that countries that have had better success in implementing counter terrorist financing policies and practices have seen this evolution.
Now what of these policies and practices work? This is really the question, because counter terrorist financing encompasses a range of different activities. There’s things like, obviously, the criminalization of terrorist financing, things like military or kinetic strikes against financiers, this is obviously a constrained activity, depending on whether or not there’s an armed conflict going on, financial intelligence exploitation I would consider to be part of counter terrorist financing policies and practices, and, of course, global regulations and national level regulations, sanctions, etc. So, the question for me is, what of these policies and practices work? How do they work in combination? And what’s sort of the magic combination that gets you to reduce levels of terrorism?
The last thing that I’ll say about this is, I don’t think that we’re really looking for a zero level, or I don’t think it’s realistic for us to look for a zero level of terrorism. I think that the conditions that lead to terrorist activity are present in every country around the world, there will always be a certain level of discontent and a certain number of people who will decide to take that discontent and engage in terrorist activity to support that. The question for me is how can current counter terrorist financing policies and practices best reduce their ability to conduct attacks, and particularly high-profile, high-lethality, or high-casualty attacks?
SG: Well, I appreciate also that it was a pretty difficult question that I was throwing at you. But again, you provided a lot of nuance and deep perspective on that. One final question I’d like to ask you about, to pivot in a slightly different direction but still in terms of that aspect of financing, is to get your take on the clandestine espionage that goes into funding. Does that operate entirely differently from terrorist groups? Or, for example, when state actors are plotting nefarious activities in other countries, do they use similar funding streams?
JD: This is an interesting one, and I think that it lives somewhere between money laundering and terrorist financing. You know, there’s been very little research done on espionage or foreign influence financing— I’ve done some of the only research on that that I’m aware of. And a lot of it looks a little bit more like money laundering than terrorist financing. So, the use of front companies, perhaps, the use of more elaborate money laundering activities. There’s a lot of cash, though, that still happens in the espionage space. But there are some similarities with terrorist financing as well, in terms of it often being a little bit more—sort of there being smaller amounts of money involved. So, when we talk about money laundering, a lot of money laundering schemes can run into the hundreds of millions of dollars.
On the terrorist financing and espionage side of things, we’re talking much smaller numbers. And I would say that probably espionage financing is even smaller than terrorist financing in terms of the amount of money that’s involved. So, it sort of lives in that weird space between the two of them. But it’s really got its own typologies and methodologies as well, because it’s really about trying to obscure state payments to, generally, one or a handful of individuals. And sometimes states aren’t even all that concerned about hiding those payments, particularly after they’ve received the information that they want. So, depending on how willing they are to leave a source out to dry, they may take very few efforts to obscure the source of those funds.
SG: Well, we’re probably going to have to get you back to talk in more detail about those different dynamics, especially when it comes to the differences between terrorism funding and also then money laundering and the role of state actors, because that’s certainly going to be something that will have more relevance in the future.
JD: Absolutely.
SG: But Jessica, thank you so much for joining us on NATO DEEP Dive, and we look forward to having you back again.
JD: Thanks so much. It was a great conversation.
SG: Thank you for listening to this episode of DEEP Dive. I’m your host, Dr. Sajjan Gohel. DEEP Dive is brought to you by NATO’s Defence Education Enhancement Programme. The production and research team are Marcus Andreopoulos and Victoria Jones. For additional content, including full transcripts of each episode, please visit: deepportal.hq.nato.int/deepdive.
Disclaimer: Please note that the views, information, or opinions expressed in the DEEP Dive series are solely those of the individuals involved and do not necessarily represent those of NATO or DEEP.