The anatomy of terrorist financing


Third of four parts
Terrorist activities can be classified into both operational and support activities.

Operational activities encompass surveillance and reconnaissance, rehearsal, final preparations and the actual attack.

Support activities entail propaganda, recruitment, fund-raising, procurement, transportation and travel, safe havens, multiple identities, communications and training.

All these activities require money; thus terrorist groups have turned to various sources of funding.

The financing of terrorism involves several activities, including storing of finances, masking funding sources and developing infrastructure that are institutional in nature to manage and transfer funds to terrorist organizations.

The Financial Action Task Force, an intergovernment body that set standards to promote the effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system, has highlighted a number of existing threats.

CITY CENTER Photo shows the Mapandi District, the business center of Marawi City. PHOTO BY DREI TOLEDO AND MIMI FABE

These include the use of multiple funding resources and banking availability, which make financing terrorist acts possible.

Terrorist financing can be broken down into two distinct types of activity. Type 1 terrorist financing refers to the early stage of gathering large proportions of funds, while Type 2 terrorist financing refers to the approach that uses the acquired funds to financially support a terrorist.

The Marawi siege falls under the Type 2 terrorist financing, with the Islamic State of Iraq and Syria (ISIS) channelling huge amounts of funding to support local fighters.

Oil wells, fields
ISIS revenue comes primarily from the sale of illicit oil, from the deep pockets of a small number of major donors, and from a wide array of criminal enterprises.

In September 2014, US government placed ISIS’ daily income at about $3 million, and assets at between $1.3 and $2 billion.

ISIS helped supply and maintain equipment, provide salaries for fighters, manage civilian infrastructure and administration, and expand its propaganda campaign.

It owned 350 oil wells in Iraq and 60 percent of Syria’s oil field. ISIS was believed to sell some 30,000 barrels a day in Iraq and 50,000 in Syria, at roughly $40 per barrel on the black market.

Kidnapping and other crimes
Terrorists engage in crimes such as kidnapping, robbery and extortion because these require force, but limited skills. Terrorists are continuing to diversify into illicit activity as a means to increase the dependability of financial flows.

For example, the Abu Sayyaf Group pocketed at least P353 million ($7.3 million) from ransom kidnappings in mid-2016, and have turned to abductions of foreign tugboat crewmen as military offensives restricted the militants’ mobility.

Of the estimated P353 million in ransom received by the Abu Sayyaf from January to June 2016, the bulk was paid in exchange for the releases of 14 Indonesian and 4 Malaysian crewmen who had been held at Abu Sayyaf jungle bases in Sulu province.

The militants got P20 million ($413,000) in ransom for freeing Marites Flor, a Filipino woman who was kidnapped in 2016 with two Canadians and a Norwegian from Samal Island.

About P10 million worth of shabu was recovered in the house of former Marawi mayor Omar Solitario Ali, affirming the link between the crisis in the city and illegal drugs.

Security forces seized two kilos of shabu worth P10 million from a house of Ali while conducting clearing operations in battle-ravaged Marawi City on June 24, 2017. Authorities were convinced that the house was used by the Maute terrorists as a safe house.

Ali was one of the persons in the arrest order issued by the Defense department after President Rodrigo Duterte declared martial law in Mindanao last May 23. He was also one of the politicians accused by Duterte of having ties with the illegal drugs trade.

Ali’s brother, Fajad Salic, also a former mayor of Marawi, was charged with rebellion for allegedly supporting the Maute terrorists that occupied Marawi City. President Duterte has repeatedly claimed that money from illegal drugs funded the terrorist activity in Mindanao.

Also according to President Duterte, Lanao del Sur narco-politicians operated the illegal drug trade in the entire Mindanao.

Anonymous mobile payments
Almost half of the world’s population use smartphones. Smartphones have internet connectivity, making half the world at risk of cybercrime. Almost three-fourths of the transaction money to and from bank accounts of smartphone users are processed through smartphones and related banking apps.

According to the International Data Corp., the Philippines is the fastest-growing market for smartphones in Southeast Asia.

Almost 30 percent of the growing Philippine population are using smartphones, and about 3.5 million smartphone units were sold in 2016. This segment is expected to double in 2018.

Given the lack of an existing financial services infrastructure in the Philippines, the acceptance rates for mobile payment and mobile banking solutions have been high. The use of mobile payments is also significantly affected by the security of the mobile payment process.

Payment processes where the user is anonymous rely less heavily on security and authentication than on the user’s account being tied to mobile payment counterparts. This anonymity makes the system vulnerable to exploitation by terrorist financing.

Local telecommunication companies should thus provide information on the location and potentially even the identity of a person using mobile payments to fund individuals linked to terrorism or terrorist groups.

Experts say the threat of mobile payment systems being used by terrorist groups within the Philippines is rooted in the absence of a national ID system. Currently, all telecom companies accept any one valid ID for registration purposes.

Regulatory structures set up by the National Telecommunications Commission and the Bangko Sentral ng Pilipinas are also considered generally weak.

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