Terrorism Financing is undoubtedly a serious and punishable crime. It is a complex procedure that involves 4 different stages of terrorism financing explained as follows:
1. Fundraising
The first stage of terrorism financing is raising the pool of cash and other monetary resources through illegal or legal means. Mainly, it includes charitable donations from sympathizers, drug trafficking, extortion, and money laundering. It can also be backed by sanctioned governments or agencies that work under a hidden agenda.
2. Transfer
The second stage is simply known as transfer and as the name refers, the funds are transferred to the terrorist organization’s cell or personal custody. It is mostly done through hawala, electronic transfers, and smuggling.
3. Layering
Just like in the 3 stages of money laundering, layering works in the same way in terrorism funding. Shell companies, fake charitable donations, small business expenses, households, and other such activities are used to conceal the source and ultimate ownership of funds. Thus, it makes it difficult to trace the money trail.
4. Integration
Integration is the final stage where funds are merged into legitimate economic channels and used to finance terrorist operations. These funds are used to purchase weapons and pay for training, travel, and attacks.
Overall, terrorism financing is done to keep terrorist operations running and create economic and social unrest among nations. Since it is seriously punishable, the following are some of the details of what can be done against a defaulter in this case in the US.
- For providing material support to terrorists, up to 20 years of imprisonment in case the crime resulted in death.
- Terrorism financers may also face hefty fines, asset seizure and confiscation, and other penalties.
- Punishment for the crime of terrorism funding depends upon the circumstances and degree of the crime.
General Ways of Terrorism Financing
In the recent past, terrorism financing has taken different shapes. Mainly, the following 5 ways are the most common ways to finance terrorism.
1. Trade-Based Money Laundering:
Terrorists mostly use cross-border trade and general trade as the cover to their actual operations they do it through money laundering and running legal businesses as a cover. Legitimate trades like exporting goods, vehicles, and other forms of trade and included.
2. Cash Smuggling:
Terrorist organizations use cash smuggling as one of the most common sources of funding their attacks. Money Mules, intermediaries and other channels are used to physically transport large amounts of cash.
3. Cryptocurrencies:
One of the most trending, fast and convenient way of terrorism financing is cryptocurrencies. Terrorists anonymously move funds through crypto assets. It is now increasingly being used and reported for terrorist funding. Since, cryptocurrencies allow peer-to-peer transactions where no centralized authority can monitor the transactions, so it is more difficult for regulators and authorities to track the funds.
4. Charities:
Terrorist organizations use charitable donations as a cover to their operations. Not only they can disguise charitable contributions to source their attacks but also physically place charitable donation camps for as their monitoring cell.
5. Kidnapping and Ransom:
Terrorist Organizations use kidnapping, extortion, and ransom as their handy weapon of choice. They kidnap inidividuals and demand a ransom in exchange for their release. This ransom money is one of the main source to their financing.
Conclusion
Conclusively, terrorism funding is a complex, highly-risky and illegal activity. It is a punishable crime which can lead to heavy fines and imprisonment for decades. Moreover, general public and the regulatory authorities need to work together to mitigate this threat and make financial system safe and secure.
