Terrorists are moving away from traditional sources of funding and relying more on money-making opportunities from cybercrime.
A recent article summarized remarks of David Cohen, U.S. assistant secretary for terrorist financing, explaining how terrorist groups such as Al Qaeda have been forced into relying on the proceeds of crime as governmental and private-sector restraints have blocked other financial flows.
"Due in part to the success we have had in disrupting their traditional funding sources, terrorist organizations' reliance on crime to finance their operations appears to be expanding," Cohen said.
Fraud, and Internet fraud in particular, is increasingly used as a source of funding for terrorists, as traditional supply routes from donors are squeezed by tighter regulations, according to a white paper by Dennis M. Lormal, managing director of IPSA International, an anti-money-laundering consultancy.
As terrorists adapt to find new ways of raising capital, it is important that investigators stay ahead of the new technologies that provide the means for illicit gains, which in turn are used to fund more criminal activities.
Worryingly, even experts like Simon Dilloway, former U.K. Metropolitan Police investigator, admit that it is not known how much of a problem money laundering is in activities such as online gambling. However, Dilloway says that terrorists will use any possible means, including online gambling, to move or clean their money.
Terrorists also will seek out ways to raise money by using weaknesses in systems that can be exploited, and the Internet apparently provides plenty of loopholes and opportunities to make or hide money. Virtual e-money and e-metal purchased anonymously using mobile phones, unregistered laptops, or email accounts
is one example of how the Internet can be used for criminal gain, if the incentive is there.
Money can be transferred through Western Union and Moneygram, to name just a couple of examples, and WebMoney and Liberty Reserve have been clearly implicated in cybercrime money laundering. In small-value transactions, laundering can be difficult, if not impossible, to trace.
In one chilling example, Dilloway told how a relatively small amount of money was used to fund the London bombings of July 7, 2005, which killed 56 people, including the bombers, and injured 700. One of the bombers raised $23,000 (£14,000) to self-fund the group’s activities by taking out online loans and using credit cards, knowing that he would not have to make any repayments. Clearly, a relatively small sum in the wrong hands has the capability to cause immense harm.
Hawala, an honor-based transaction system based on a large network of money brokers primarily located in the Middle East, North Africa, and Southeast Asia, bypasses foreign rates and enables transactions to take place without an audit trail. This method was suspected in the 9/11 attack and more recently was used by terrorists in Kashmir; there are now increasingly available methods to use this system online.
Cell phones play a central role in these transactions, which is an area of increasing concern. Prepaid cards or store value cards also are easy to purchase and can be a useful aid for raising small-scale funds; but larger amounts are still too easily filtered through online payment methods, such as PayPal, with, for example, non-existent purchases.
During these recessionary times, companies and suppliers may be tempted to cut corners, taking the risk of avoiding proper regulatory checks on online transactions. This makes it easy for the terrorist to use them to move money electronically via money service bureaus and online stores.
— Jart Armin, Editor of RBNexploit.com, a watch blog on the infamous RBN (Russian Business Network), and HostExploit.com
How much surveillance do we need in our personal lives today?
Isnt that supposed to be an individual choice as opposed to something that is handed down in a top-down manner by the state?I know so many people who donate anonymously to charities-because they dont want to be associated with them publicly-Not because of nefarious reasons but rather because of more altruistic reasons.Such anonymous donations form a significant part of the US Charity system.Would that be completely eliminated or dried up under the pressure of this surveillance especially at a time when its needed the most as we now have Record numbers of Americans who are dependent on Food Stamps or charity???
Its not the best way to deal with it.In my humble opinion.
Leave Charity and Micro-finance organizations alone and outside this insidious loop.Give us back our freedom or the People will take it by Force.
Actually most of these so-called "Terrorist" Organizations are quite open about Fundraising.Whether it was the Hedge fund guru Rajratanam who funded the LTTE or it was the Saudi Princes who funded the Al Qaeda;most of this happened quite openly.I am pretty sure that even today,if you go and spend time in Organizations which have Territorial or Religious or Social leanings they can still find ways to coax you to raise funds for them.
Jart, I am wondering is there an open raising by terrorists? I mean do they raise money indicating the reason " for bombing", "destroying the enemies" or something like that?I think a lot of people would give the money for that reasons, wouldn't they? Do special services monitor that kind of raising?
Yes, a really difficult issue, and in one sense this whole topic area lends a hand to those who advocate the current or developing intel approach of extensive SIGINT domestic & foreign data mining.
NSA's Pinwale & Stella Wind meta-data mining programs arguable could be readily widened for the monitoring of micro-financing. This to enable what is called "real-ID" pattern recognition, i.e. the system throws up warning bells for fake IDs and patterns of anonymous transactions, etc.
In such a scenario it is then realistic to:
(a) lean on / investigate micro operators and money transfer agents where such patterns are more than a reasonable & statistical norm
(b) this could cross correlate against highlighted individuals, or say a specific geographical area (say a zip code) to alert local law enforcement
Ironically, I think from a propaganda perspective if NSA & the contractors made the above a public issue, they would probably gain increased public support?
The down side? All very doable, obviously this then brings us back to the argument (see earlier blog) of how much surveillance do we as a society desire.
There are many kinds of money sources that terrorists are relying on.
In addition to online fraud, one of the biggest sources of cash flow for terrorist activities is drug trafficking. Drug users, including here in America, are among the best sources of funding for Al Qaeda.
Another increasingly lucrative source of few words but massive transactions is piracy on the high seas. It would come as no surprise when direct links are found between Somali pirates and Al Qaeda.
That is why it is important for us not just to try to choke off the money supply for terrorism but also to focus on the root causes and for those problems. Otherwise we will simply be chasing newer and more elusive ways of funds transfers while still remaining at risk of terrorism worldwide.
Yes, it seems there's a need for tight ID security for micro-payment and finance sites. That should be a good focus of development effort, since so much good work is being done via micro-financing.
How can one be sure that money transferred in small amounts isn't somehow related to laundering?
Mary, I don't think that we can ever be 100% sure. But money transfer companies should make sure that the person sending the money present valid Ids. That may not be the panacea; but at least it would help somehow.
I have been beating this particular drum for years and it finally seems to be making a difference. I suspect that you (albeit in a greater sense) feel the same way. That is why I try very hard to make sure that you know there are many of us who sincerely appreciate your work. Kudos my friend.
Quite frankly I think some of these techniques are preventable, but it will require some form of controls and better safeguards for online transactions.
Brian Krebs article is very timely and helps to demonstrate how simply a web user can become engaged in cybercrime by becoming a money mule.
Jart, As usual a chilling dose of reality. Money laundering, financial transfers and fraudulent transactions have now become nameless, faceless and of no country origin. I know there is a tremendous amount of unregulated money trading hands in the US stock market and Foreign Exchange market. The jurisdiction of ADR's(American Depository Reciepts) move money seamlessly from country to country disguising their origin. It appears impossible to enforce in a timely fashion. There seems to be so many ways for terrorists to move and access money. Elecronic fingerprint or not, it's smoke and mirrors.
The ThinkerNet does not reflect the views of TechWeb. The ThinkerNet is an informal means of communication to members and visitors of the Internet Evolution site. Individual authors are chosen by Internet Evolution to blog. Neither Internet Evolution nor TechWeb assume responsibility for comments, claims, or opinions made by authors and ThinkerNet bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
Fatal System Error, the book just released by West-coast-based journalist Joseph Menn, is really a public policy statement written as a thriller for a wider reading public. UPDATED 2:45 PM
If you were a criminal looking to hide money-laundering operations, anonymously rent swaths of Web infrastructure for Internet badness, or create a financial base to threaten national security, where would you look? Panama? Liechtenstein? Offshore islands?
Most users have become accustomed to providing social-networking Websites with extensive personal details, information about friends, pictures, and connections. But new hacks out in the wild -- and already in the hands of the bad guys -- demonstrate that any thought of privacy or anonymity is a myth. Sites like Facebook, Bebo, LinkedIn, and Orkut are leaking personal information like an open faucet.
The open-source whistleblower site, Wikileaks, which according to The National has “produced more scoops in its short life than the Washington Post has in the past 30 years,” has temporarily and voluntarily suspended its own service.
Smarter Collaboration: How to Thrive in a Challenging Business Environment Market conditions are changing faster than ever, and organizations need to improve their agility and adaptability in order to provide better service and improve processes. The ability to work with customers, business partners, and employees as effectively as possible - while at the same time holding down costs - is a key to success. READ THIS eBOOK
your weekly update of news, analysis, and
opinion from Internet Evolution - FREE! REGISTER HERE
Wanted! Site Moderators Internet Evolution is looking for a handful of readers to help moderate the message boards on our site – as well as engaging in high-IQ conversation with the industry mavens on our thinkerNet blogosphere. The job comes with various perks, bags of kudos, and GIANT bragging rights. Interested?
To save this item to your list of favorite Internet Evolution content so you can find it later in your Profile page, click the "Save It" button next to the item.
Saunders predicts the decline and fall of America’s Internet empire, and explains how the Internet of the future will be multi-lingual as well as multi-national.
Saunders explains how Internet users in North America are already vastly outnumbered by those in the rest of the world – a situation which is only set to accelerate.
Global communities are changing the nature of innovation on the Internet from a fiscal model based on greed, to an organic model based on greed, posits Saunders.
With the number of mobile broadband users more than doubling in 2009, and soon to exceed fixed broadband, the Internet saw a historic transition this year – and the long-term effects are incalculable.
Imagine being able to use your mobile phone to pay taxi and mass transit fare; use vending machines; make retail purchases; and check in at hotels. Every day, millions of citizens in Japan, S. Korea, and soon Singapore do so simply by waving their mobile phones in front of point-of-sale terminals using near-field communication or related technology. But, while the technology is readily available in the US, it will be some time before Americans can use their cellphones as mobile wallets.
The US loses about $20 billion a year on pirated software, movies, and music. But public policy can help stem the tide of digital theft. For example, France has recently passed a 'three strikes and you’re out' law, whereby if after two warning letters an individual continues to download pirated software then his Internet access will be cut off. US policy makers should consider adopting similar policies.
Earlier this year, Heartland Payment Systems was breached by Russian hackers who had also hit 300 other financial institutions. The scope of the Russian operation is mind-blowing and points to a new era in cyber attacks.
Cyber Warfare may be the next frontier for tactical hacking. It has already reared its head in Estonia, Russia, and Georgia, and some say it has been used by North Korea, China, and other world powers. The implications and the potential are both fascinating and scary.
Research shows that the youth of today like Facebook – but not blogging or Twitter. Does that mean Facebook has won, or just that it's not yet out of favor? Will all the services we see today fade into Ovaltine-or-Wheaties status in just a few years?
What kinds of companies are doing the most innovation in the data center? Turns out it's midtier enterprises that are taking the "Just Right" approach.
Ray Kurzweil's Blio and Apple's iPad tablet will make it easier than ever to have books "read" to us, says Dr. Kim, who believes that talking tablets will become interwoven into our consciousness as we "merge" with the increasingly elegant machines we hold in our hands.
Digg
Del.icio.us
Reddit
Email This
TWEET THIS
