Terrorist Organizations and Funding Essay

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Introduction

After the 9/11 attacks inside U.S territory, the world has awoken to the realization that a new kind of international terrorism is now threatening global security. Unlike previous forms of terrorism that heavily relied upon traditional and state reserves for financial and other support, this new form of world terrorism operates under highly organized and well financed terrorist groups. After major efforts were made to decentralize Al Qaeda following 9/11, there has been increased diversification of the methods used by terrorists to raise funds for their operations, the major financier being sympathizers of the jihadist Wahhabist Islam.

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Wahhabism is an Islamic religious movement that has been widely used by Al Qaeda to conceal its activities towards severing U.S. relations with Saudi Arabia, Egypt and other secular Arab states. Major terrorist organizations have also established themselves under the cover of militant and other extremist groups in lawless states and societies as well as in those countries where organized crime is rampant (Aubrey 2004, pp. 2, 7-8; Brown, Lynn-Jonnes & Miller pp. 10-11, 246).

Terrorist funding, transfer and use of funds

Although experts argue that terrorist attacks are relatively cheap to organize with the 9/11 attacks approximated to cost an estimated $ 350,000 – $500,000 raised over several months, militant organizations have a variety of other activities that require funding and which necessitate a continuous and reliable sourcing of finances. Many militant and insurgent organizations maintain extensive recruitment, training and arming of recruits; education and social work; welfare and intelligence among other functions. Al Qaeda operated in this design when it was based in both Sudan and Afghanistan.

Among the various methods of fund raising used by terrorist organizations charitable organizations such as the Muslim World League and International Islamic Relief Organization. Terrorist groups also exploit financial markets especially commodity markets that operate in unregulated environments. Credit card fraud using skimming devices and bank robberies have also been used by these groups.

The Al Qaeda instigated Pakistan bank robbery which took place in 2006 netted about USD 12 million. Criminal activities such as smuggling, kidnapping, drug trafficking and individual funding have also been a major source of finances for terror groups. International criminal gangs which are affiliated with major terrorist organizations also raise funds through extortion and protection funds (Costigan & Gold 2007, pp.18-20, 28-32; Parkman & Peeling 2007, pp.73-78, 92-99).

It is difficult to identify or single out a method that different terrorist organizations have not been able to use in transferring of funds or making payments. Terrorists have for a long time been able to take advantage and exploit poorly regulated wire transfer and formal banking systems; use well-regulated financial systems as well as the informal value transfer systems (IVTS). The IVTS such as hawala and others are largely unregulated and transfer of funds can be carried out outside the regular formal financial systems or without leaving any traceable identification.

Globalization has led to increased international trade that enables terrorists to move tremendous wealth across international boarders without raising suspicions or leaving traces. Under-invoicing and over-invoicing, tax evasion and capital flight which amount to billions of dollars annually can evidently provide enough cover for terrorist financing (Giraldo & Trinkunas 2007, pp.7-11, 29-30; Brown, Lynn-Jonnes & Miller 2004, pp456, 463-466).

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Funds are used for various activities within terrorist organizations such as carrying out major terrorist attacks internationally, maintaining terrorist families, housing and food for those on duty, and maintenance of members who are in waiting for new commands to launch attacks. Terrorists also use their finances to purchase equipment such as explosives as well as conventional and unconventional weapons; for communication equipment and expenses; intelligence gathering, bribery and recruitment of new staff (Costigan & Gold 2007, pp.20-28).

Conclusion

Terrorist groups like any other organization cannot be able to run without financial support. As a result, they have taken advantage of the availability of opportunities such as sympathizers; highly inefficient financial systems; better communication; and greater opportunities and options of moving personnel to conduct their financial affairs and mount operations.

After the 9/11 attacks in the U.S, formal banking sectors have received a special kind of attention from law and regulatory enforcement agencies as a result of which militants have resulted to informal methods of value transfer. It is also presumed that trusted individuals are increasingly being used to transfer funds by hand delivery. These informal methods are preferred by terrorist organizations for their assumed lower detectability and their reliability (Giraldo & Trinkunas 2007, pp.7-11, 30).

References

Aubrey, S.M. (2004). The new dimension of international terrorism. Zurich, Switzerland: vdf Hochschulverlag.

Brown, M., Cote.O, Lynn-Jonnes.S, and Miller.S. (2004). New global dangers: Changing dimensions of international security. Cambridge, MA: MIT Press.

Costigan, S. and Gold.D. (2007). Terrornomics. Aldershot, UK: Ashgate Publishing Ltd.

Giraldo, J.K and Trinkunas H.A. (2007). Terrorism financing and state response: A comparative perspective. Palo Alto, CA: Stanford University Press.

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Parkman, T. and Peeling.G. (2007). Countering terrorist finance: A training handbook for financial services. Aldershot, U.K: Gower Publishing Ltd.

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IvyPanda. 2021. "Terrorist Organizations and Funding." November 1, 2021. https://ivypanda.com/essays/terrorist-organizations-and-funding/.

1. IvyPanda. "Terrorist Organizations and Funding." November 1, 2021. https://ivypanda.com/essays/terrorist-organizations-and-funding/.


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