1. An Afghan security official is surrounded by the shadows of colleagues as he keeps watch at the scene of an attack
on a Red Cross office in Jalalabad on May 29, 2013. (Noorullah Shirzada/AFP/Getty Images)
With New Ways to Fund Attacks, Al-Qaeda Now a Bigger Threat
June 18, 2013
| Security
Summary
The overreliance by the United States on sanctions and surveillance in the war on terror
has allowed al-Qaeda to adapt its methods of financing to avoid detection, and resulted
in a decentralized al-Qaeda structure -- and a much greater threat.
Al-Qaeda has transitioned from a hierarchical cell structure to a franchise organization
that is now responsible for four times as many terrorist attacks a year as it was before

2. 9/11. Al-Qaeda training camps are now being established on the Arabian Peninsula, in
Africa, countries of the former Soviet Union, and Southeast Asia.
Background
The current counterterrorism strategy is to rely on economic sanctions and financial
surveillance to identify and then stop terrorist financing. Examples of this are the U.S.
PATRIOT Act, UN Resolution 1617, and the EU’s Third Money Laundering Directive.
The success of counterterrorism efforts in freezing the assets of terrorists has
diminished over time. The UN found that while $112 million was seized in the three
months after 9/11, only $24 million was seized in the two years that followed.
The continued targeting of al-Qaeda’s financial assets has had the unintended
consequence of transforming al-Qaeda into a loose coalition of localized, autonomous,
and self-sufficient terrorist “franchise” cells. These cells, held together by a world view
rather than by a hierarchical structure, have been enormously effective. The number of
terrorist attacks quadrupled in five years from 208 in 2003 to 864 in 2008.
In terms of financing, al-Qaeda’s shuria or high command council, no longer plays a
central role in allocating expenditures or soliciting funds. Instead, terrorist financing
has moved further into the ‘grey’ economy. Cells raise funds from a combination of
charities, independent criminal ventures, and licit businesses. In fact, crime is now
regarded as the main source of funds for al-Qaeda. Criminal ventures generally include
extortion, hijacking, theft, blackmail, the drug trade, and kidnapping for ransom (KFR).
LIGNET has previously covered al-Qaeda’s use of KFR on the Arabian Peninsula.
Even the transferring of funds between franchise cells has evolved to get around U.S.
counterterrorism strategy. Originally, al-Qaeda moved funds through the financial
sector, using banks such as France’s Credit Lyonnais, Germany’s Commerzbank, and the
Standard Bank of South Africa. However, counterterrorism measures have driven al-
Qaeda’s transferring of funds under ground, forcing it to rely on hawaladars and
couriers. These provide untraceable methods of securely moving funds. Al-Qaeda
recently used Pakistani-based hawaladars to move $1 million from the UAE into
Pakistan, at which point the money was couriered to Afghanistan. Al-Qaeda’s pushing of
its finances into illicit activities and localized funds have made it difficult for
counterterrorism strategies that rely on economic sanctions to be effective. The results
can be seen in Table 1, which shows the trend of cheaper – yet more frequent – terrorist
attacks.

3. Experts previously believed that the financial war had been a success. This presumption
was based, in large part, on the success the United States had in closing down al-Qaeda’s
traditional source of funding. But al-Qaeda has evolved and adapted. New al-Qaeda
cells, recruiting centers and finance operations have appeared in remote areas of the
world, with key affiliates on the Arabian Peninsula and in North Africa.
Analysis
The measures that have been taken in the war on terror since 9/11 to
intercept al-Qaeda’s funding have seen diminishing returns. And while
financial sanctions certainly weakened al-Qaeda’s ability to launch attacks,
at least for a few years, they undercut the ability of intelligence agencies to
“follow the money.” The importance of money trails is highlighted by the
fact that al-Qaeda spends around 10 percent of its income on operational
costs: The other 90 percent goes toward maintaining an international
network of cells.
A “follow the money” counterterrorism strategy can use several types of
financial transactions to spot emerging al-Qaeda franchise cells.
Transactions can connect a known part of the terrorist network with an
unknown part. Financial movements are frequently a component of attack
preparations, and changes in the predominant patterns of transactions
within a terrorist network may indicate a new set of targets. The al-Qaeda
Strasbourg plot in France is a classic example of this.
A recent analysis of the European al-Qaeda network shows that the Ben
Khemais cell in Milan stole credit cards for use by the Meliani terrorist cell
in Frankfurt. Generally, when a small matrix of cells results in a one-way
flow of money, it is an indication of which cell is planning an operation.
This turned out to be true, as the Meliani terrorist cell was planning an
attack on the Strasbourg market and cathedral. Furthermore, the Meliani
terrorist cell requested additional funding from the al-Qaeda operative Abu
Doha in Britain. By German and British surveillance tracing the various
movements of funds rather than freezing them, al-Qaeda cells in Europe
were uncovered and the attack was prevented.

4. An approach that combines asset freezing with following the money would
allow the U.S government to build up a broader picture of al-Qaeda’s
networks, permit observations, and prevent franchise cells from obtaining
the funds for particular projects beyond trivial amounts.
Conclusion
Counterterrorism efforts that target the financing of terrorism are a work
in process. The measures employed by the United States and others in the
last 12 years have reshaped rather than resolved the terrorist threat. It
remains to be seen if the United States will be able to in turn adapt to al-
Qaeda’s new and alarming franchise cell structure and finance methods.
Read more: http://www.lignet.com/ArticleAnalysis/With-New-Ways-to-Fund-Attacks-Al-Qaeda-Now-a-Bigge#ixzz2YnTy00iV
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