OB Kenobi
06-17-2004, 09:18 AM
Combating the use of commodities in terror financing
By Douglas Farah
JID
There is a growing recognition in some quarters of the US intelligence community that terrorists use commodities, particularly gemstones, to store their assets and launder money.
The FBI, the Department of Defense and the Treasury Department now acknowledge that commodities, including diamonds and tanzanite, are important to the terrorist financial infrastructure. Only the CIA continues to publicly deny that such links exist.
This shift within the US intelligence community is significant because it is the first step in countering one of the primary financial tools used by Al-Qaeda, Hizbullah and other organisations. The lack of understanding of this facet of terror financing in the aftermath of the attacks on 11 September 2001, which has helped allow Al-Qaeda and other terrorist groups retain access to millions of dollars in assets, translated into a dangerous lack of action.
Several steps can be taken to combat the use of commodities by terrorist financiers. The weapon most often brandished, but one that would be the least effective, is to institute new, sweeping regulations on commodity traders. However, this will simply drive even legitimate businessmen underground or out of business. New regulatory burdens to halt the fraction of illegal activities that benefit terrorists in the diamond industry, the gold trade or hawala transactions would hurt millions of people who make their living in these trades or whose families benefit from them. This is especially true of the hawala system, which primarily benefits millions of families in India and Pakistan who live off the remittances sent through this system by family members working in Saudi Arabia and the Persian Gulf states.
Not all regulatory steps are harmful. The Kimberley Process, a public-private initiative, would make the transfer of ‘blood diamonds’ to market more difficult. But even its most ardent supporters acknowledge that it will not ultimately cut off the flow of illicit diamonds. What the Kimberley Process does is add layers of difficulty for those wishing to abuse the system and install some accountability mechanisms to punish those who do not play by the rules. While such rules are useful pieces of a much larger puzzle, they are not a silver bullet solution. What is really needed are the most difficult and time consuming measures to carry out: building up intelligence-gathering capabilities on the ground in the ‘grey areas’ or ‘stateless areas’ of the world, where the illicit commodity trades flourish and where terrorists have made significant inroads.
These areas include parts of West Africa, much of the Democratic Republic of the Congo, parts of East Africa and swathes of Southeast Asia. Only specific information gathered at the points of origin in the commodities trade can really help to monitor and decipher how the businesses operate. For example, in Sierra Leone, Liberia, and the DRC, a network of traders, related by family and political ties, have traditionally moved the bulk of the ‘blood diamonds’ for Hizbullah and, more recently, Al-Qaeda.
By Douglas Farah
JID
There is a growing recognition in some quarters of the US intelligence community that terrorists use commodities, particularly gemstones, to store their assets and launder money.
The FBI, the Department of Defense and the Treasury Department now acknowledge that commodities, including diamonds and tanzanite, are important to the terrorist financial infrastructure. Only the CIA continues to publicly deny that such links exist.
This shift within the US intelligence community is significant because it is the first step in countering one of the primary financial tools used by Al-Qaeda, Hizbullah and other organisations. The lack of understanding of this facet of terror financing in the aftermath of the attacks on 11 September 2001, which has helped allow Al-Qaeda and other terrorist groups retain access to millions of dollars in assets, translated into a dangerous lack of action.
Several steps can be taken to combat the use of commodities by terrorist financiers. The weapon most often brandished, but one that would be the least effective, is to institute new, sweeping regulations on commodity traders. However, this will simply drive even legitimate businessmen underground or out of business. New regulatory burdens to halt the fraction of illegal activities that benefit terrorists in the diamond industry, the gold trade or hawala transactions would hurt millions of people who make their living in these trades or whose families benefit from them. This is especially true of the hawala system, which primarily benefits millions of families in India and Pakistan who live off the remittances sent through this system by family members working in Saudi Arabia and the Persian Gulf states.
Not all regulatory steps are harmful. The Kimberley Process, a public-private initiative, would make the transfer of ‘blood diamonds’ to market more difficult. But even its most ardent supporters acknowledge that it will not ultimately cut off the flow of illicit diamonds. What the Kimberley Process does is add layers of difficulty for those wishing to abuse the system and install some accountability mechanisms to punish those who do not play by the rules. While such rules are useful pieces of a much larger puzzle, they are not a silver bullet solution. What is really needed are the most difficult and time consuming measures to carry out: building up intelligence-gathering capabilities on the ground in the ‘grey areas’ or ‘stateless areas’ of the world, where the illicit commodity trades flourish and where terrorists have made significant inroads.
These areas include parts of West Africa, much of the Democratic Republic of the Congo, parts of East Africa and swathes of Southeast Asia. Only specific information gathered at the points of origin in the commodities trade can really help to monitor and decipher how the businesses operate. For example, in Sierra Leone, Liberia, and the DRC, a network of traders, related by family and political ties, have traditionally moved the bulk of the ‘blood diamonds’ for Hizbullah and, more recently, Al-Qaeda.