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
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