Abstract: Countering the financing of terrorism has become a national policy of deep concern in every country, rightly so. With the influence of the G7’s Financial Action Task Force (FATF), every member country commits to implementing the FATF recommendations on terrorist financing, irrespective of the types of terrorist organizations that are restricted. Although the member countries have broadly complied with the recommendations of the FATF on terrorist financing, as with Sri Lanka, for example, the FATF’s recommendations still have not provided a satisfactory solution to effectively curb terrorist financing. In the FATF recommendations, priority has been given to identifying the flow of money rather than finding the identities of terrorist organizations. This paper examines how to identify terrorist organizations, small cells, and lone actors and their sources of funds. In addition, it recommends revisions to the policies that counter-terrorism financing rather than depending on a one-size-fits-for-all policy. In this article, Sri Lankan experience with terrorist financing has been discussed as it will not be limited to amending national laws of the country. The Sri Lankan experience will provide insight into the developments in terrorist financing, which are globally applicable. Countries can therefore learn from one another or share their experiences to develop strategies and policies to counter the financing of terrorism. This paper also highlights the need to amend the global standards on terror financing by exploring the developments in terror finance.
Problem statement: How to understand the importance of a terrorist group’s characteristics to counter its financing?
Bottom-line-up-front: While exploring developments in terror finance, this paper recognizes the need to amend the global standards on terror financing.
So what?: Despite being a Sri Lankan case study, the recommended amendments to national laws are not only intended for the country alone. The Sri Lankan experience provides insights into developments in terrorist financing with global applications. Countries can ultimately learn from each other or share their experiences to develop strategies and policies for countering the financing of terrorism.
Source: shutterstock.com/Zwiebackesser
Follow the Money
When it comes to terrorism and counterterrorism, what is often in discussion within the global discourse is a toolkit of preventive measures, policies, military strategies, and proposals of stakeholders designed either to understand the nature and gravity of terrorist attacks or to investigate the methods of terrorist financing, or the interaction of both. However, this does not necessarily indicate a depth of understanding of the identity of individual terrorists or terrorist groups, nor does it necessarily provide the means to demonstrate conclusively how terrorist financing is related to the identity of the respective terrorist group. With the nature and gravity of terrorist attacks, it urges policymakers to find new methods to group terrorists/terrorist organizations and identify the possible funding methods to implement appropriate countermeasures.
There is a cost of implementing countermeasures. If policymakers can make appropriate countermeasures by grouping terrorists based on the identity of the terrorist group and their capacity, it would be easier to take precautionary measures to prevent terrorist activities. When analyzing terrorist activities such as the 9/11 multiple terrorist attacks in the USA, the 11/3 train bombing in Madrid, Spain, the 2015 suicide bombing in Paris, and the 2015 Christchurch Mosque shooting in New Zealand revealed that the terrorist/terrorist organizations had different methods/sources of terrorist financing. Not only did those examples draw world attention, but they also provided evidence that although the attacks involved mass killings of civilians, each of the terror attacks had its methods of establishing its identity nurtured through (un)common methods of terror financing. Terrorist financing is directed to fulfil a specific target or for a specific purpose. However, it is unclear whether the financing component restricts terrorist activity or whether the nature of terrorist activity determines the amount of money needed. Understanding the relationship between the terrorist groups and how they financed their activities will allow investigators to adopt tailor-made countermeasures to prevent such terrorist activities cost-effectively rather than adopting countermeasures in general.
When analyzing terrorist activities such as the 9/11 multiple terrorist attacks in the USA, the 11/3 train bombing in Madrid, Spain, the 2015 suicide bombing in Paris, and the 2015 Christchurch Mosque shooting in New Zealand revealed that the terrorist/terrorist organizations had different methods/sources of terrorist financing.
The Financial Action Task Force (FATF), the global policy-setter on anti-money laundering and countering the financing of terrorism, has recommended identifying the flow of money as a key measure to be taken (referred to as the ‘follow the money’ method of investigating money laundering and terrorist financing offences). The scope of the FATF is to identify the financing component of terrorism in addition to money laundering. Therefore, the focus of the FATF is to trace the flow of money, assuming that the flow of money will ultimately lead to identifying the respective terrorist organization. Contrary to the FATF approach, investigating terrorist financing would be effective if the FATF paid greater attention to identifying the terrorist/terrorist group rather than the flow of money.
Background of Criminalizing Financing of Terrorism
Political parties typically focus on popular propaganda for elections. Political dialogues, media interests, and public attention are centered on popular topics prevailing for the time being, which can lead to victory in the election. When a government is formed, it has the mandate to control crime, deviance, and terror due to its negative impact on its constituents.[1] However, this mandate is exercised according to the political will of the governing party, offering an entry point for politics into the crime policy of a country. As an example of this political interference, many researchers highlight US President Ronald Reagan’s “war on drugs” campaign as a milestone in the history of anti-money laundering. The seminal work of Albanese[2] analyzes the US government’s responses to prevalent crimes at that time. Oliver claims that more than just pursuing a series of symbolic political speeches, the Reagan administration took concrete action by appointing a presidential commission on organized crime addressing prevalent crimes in the country. By appointing a commission, the US government impressed the general public that the government was committed to tackling crime and restoring law and order.
Political parties typically focus on popular propaganda for elections. Political dialogues, media interests, and public attention are centered on popular topics prevailing for the time being, which can lead to victory in the election.
The commission’s mandate was to investigate the depth of organized crimes, including the respective criminals’ source of income, and make recommendations for crime prevention.[3] The commission’s findings revealed offences of drugs, money laundering, labour racketeering, and gambling as predominant crimes, and drug trafficking was ranked as the most widespread and profitable organized criminal activity. Drug trafficking amounted to approximately 40 percent of the organized criminal activity in the USA.[4] According to the findings of the President’s Commission Report,[5] proceeds of drugs were mainly received in the form of cash, amounting to billions of dollars of illicit funds. When a large volume of illicit money flows as an income, there is strong pressure to find means of money laundering to make that money appear legitimate.
Alternatively, when the person in question earns illegal money, it creates a direct link between the perpetrator and the illegal money. To avoid government’s detection and tax evasion, the perpetrator needs to find methods to obliterate crime proceeds or break the link with the crime. Penetrating the banking institutions has become one such method to launder money. Due to secrecy laws, banks were precluded from questioning the source of funds in bulk cash deposits. Against this backdrop, the Presidential Commission on Organized Crime[6] has probed into investigating the cash flow in drug trafficking and contributed to revising the US drug policy.
Based on the findings of the Presidential Commission Report,[7] the US drug policy was framed as if drug traffickers and other criminals could not be convicted, at least the criminals should be deprived of enjoying the monetary benefits earned through criminal activities.[8] Following this concept, the USA criminalized money laundering as an offence in 1986,[9] and the UK also followed a similar approach and criminalized money laundering in the same year.[10] In the late 1980s, western governments, especially Germany and Italy, also intensified laws on proceeds of crime as a response to “drug trade, organized crime, and domestic terrorism”.[11] The criminalization of money laundering in the USA and the UK drew the attention of G7 countries to adopt similar legislation to combat money laundering.[12] As a result, the G7 summit in Toronto criminalized money laundering.[13] Although money laundering is criminalized in a particular jurisdiction, it is not sufficient to prevent illegal money from flowing across borders. Based on this premise, money laundering was considered a transnational crime and required international cooperation to strengthen anti-money laundering policies.
In the late 1980s, western governments, especially Germany and Italy, also intensified laws on proceeds of crime as a response to “drug trade, organized crime, and domestic terrorism”.
Laws were framed to deprive criminals of using proceeds of crime, mainly received in the form of cash. This objective cannot be achieved without international cooperation. In 1988 the United Nations Convention against Transnational Organized Crime[14] introduced the first international initiative to prevent the proceeds of crime. It focuses on the proceeds of crime, mainly drugs. With the understanding of the drug network and its organizational structure, the United Nations Office on Drugs and Crime realized that limiting money laundering only to the proceeds of drugs will not serve the objectives of the anti-money laundering policies. Indeed, the offence of money laundering should be able to capture other serious violations as well. The United Nations Convention against Transnational Organized Crime[15] was introduced in 2000 to widen the definition of money laundering to include proceeds of organized crimes. These treaties initiated a global prohibition of money laundering.
The G7 countries founded the FATF in 1989 with a mandate to examine money laundering techniques and trends and to understand the national or international frameworks in place to combat money laundering.[16] Non-compliance with the FATF standards will result in classifying a country as a high-risk jurisdiction for money laundering, followed by economic sanctions. Therefore, countries are compelled to comply with the FATF standards even though these standards were promulgated as soft laws.
Initially, the FATF was confined to promulgate standards on anti-money laundering. With the shock waves created by September 11, 2001, the global response to countering the financing of terrorism accelerated. The FATF’s mandate was changed due to the September 11, 2001, attacks. This included adopting nine special recommendations on countering the financing of terrorism. In the intervening decades, the FATF’s mandate was broadened by the member states to capture transnational crimes, terrorism financing, and proliferation of weapons of mass destruction.[17] Several international organizations are affiliated with the FATF to strengthen recommendations on anti-money laundering and counter the financing of terrorism as well as fulfilling the objectives of the individual organization.
With the shock waves created by September 11, 2001, the global response to countering the financing of terrorism accelerated. The FATF’s mandate was changed due to the September 11, 2001, attacks.
Let us now consider why the system of anti-money laundering and countering the financing of terrorism changed after the 9/11 attacks. As mentioned in the 9/11 Commission Report,[18] on September 11, 2001, Al-Qaeda created an unprecedented shock for the USA, which caused a traumatic impact on society. The report revealed funds were transferred to the perpetrators through their banking system along with directions from the network. This implied that Al-Qaeda did not rely on close-knit groups or alternative money remittance systems to transfer money, rather, it funded its activities using the formal financial system. After the 9/11 attacks, policymakers identified the necessity to maintain the formal financial system under surveillance to curtail avenues that transfer money for terrorism. The FATF revised anti-money laundering policies and adopted a new configuration to face the challenges posed by terrorist groups. Initially, the FATF revision was focused mainly on countering the transference of money through the formal financial system, but later it was extended to the informal money transfer system. Following the FATF recommendations, the offences of money laundering and terrorism have been addressed extensively worldwide.
The FATF recommendations have addressed the financing of terrorism through the formal and informal sectors but failed to consider that terrorists can self-finance their activities. The reason may be that the FATF recommendations focused on the 9/11 attacks, a classic example of an affiliated small cell operation. The financing pattern of affiliated and unaffiliated small cells might be different. The Islamic State of Iraq and the Levant (ISIL) coalition is different from the 9/11 attacks by Al-Qaeda. First, ISIL inspired people worldwide to join them, bearing their own expenses to travel to the conflict zone in Iraq and Syria. Second, ISIL inspired potential terrorists to work spontaneously.[19] Without affiliating itself to a terrorist organization and depending on external funding and commands, ISIL inspired terrorists to conduct attacks at home, for example, the 2019 attacks in Sri Lanka. With such methods, ISIL has reduced the financial burden on its organization and found methods to overcome financial restrictions that surround executing terrorist attacks beyond its territory. The ISIL methods of funding mark a deviation from Al-Qaeda’s. It highlights that the policymakers need to find a new approach to counter the financing of terrorism rather than depending on the formal recommendations of FATF, which were based on the fundamentals of the flow of money.
Without affiliating itself to a terrorist organization and depending on external funding and commands, ISIL inspired terrorists to conduct attacks at home, for example, the 2019 attacks in Sri Lanka.
Definitions
The FATF defines terrorist financing as “… not only the financing of terrorist acts but also the financing of terrorist organizations and individual terrorists even in the absence of a link to a specific act or acts…”.[20] What is important with the FATF definition of terror financing is that its recommendation is accepted by all the member countries, at present in more than 200 jurisdictions and territories.[21] Terrorist financing is a transnational crime, and providing one such definition can reduce the disparities in interpreting the offence of terror finance and enhance cooperation among countries through mutual legal assistance and extradition. What is important with the FATF definition is that it covers financing terrorist acts, irrespective of whether there is a link between a terrorist organization and an individual terrorist.
The definition of terror financing would be more effective if the FATF recommendations were expanded to capture three elements to identify the patterns of funding terrorist activities. (I) identify the terror organization. The identity of the terrorist organization morefully depends on the ideology of the terrorist organization, among other factors. (II) Understand the level or the degree of threat posed by such an organization and (III) What the possible methods of funding, depending on the nature of the threat posed by the terrorist organization, would be. On this premise, the FATF definition does not adequately cover the broader spectrum or macro-level of terror financing. Instead, it is dedicated more to the micro-level by following the flow of money without analyzing whether this money is sufficient or not to establish the identity of the organization. Since the funding needs of a terrorist organization vary, identifying the flow of money does not capture the capacity or capabilities of the terrorist organization.
If terrorists are deprived of access to their source of funds, same as taking the profit out of the financial crime, it is presumed that the terrorists may be discouraged from committing a crime due to insufficient funds. This could be considered an old school of thinking as terrorists can find alternative ways, such as self-financing, to fund their activities without depending on external parties. After considering the terrorist activities that occurred worldwide, the importance of understanding to what extent money is needed for a terrorist organization to commit a crime grew.
Raising Funds
The FATF concept of ‘follow the money’ is framed to understand the flow of money and its causality. This concept is mainly built on understanding the flow of funds, which includes more broadly raising funds generated through legal and illegal sources and moving and using funds. Similarly, Santoso and Laksmi encapsulate terrorist financing as the “raising of funds, movements of funds, and the use of funds.”[22] In perusing the FATF recommendations, raising funds was prohibited by introducing restrictions on money laundering and terrorist financing offences. The movement of funds was captured through several recommendations, including money or value transfer services, wire transfers, and non-profit organizations. The use of funds is also controlled through confiscation and provisional measures: freezing and seizure. In addition, the people who use the financial sector and other designated non-financial sectors are scrutinized by customer due diligence, transparency, and beneficial ownership of legal persons and legal arrangements. Following the steps of raising, moving, and using funds helps understand the originality of the source of funds and the links to the ultimate user. This method is more favourable to understanding the flow of money from the external sector and its transfer through intermediaries to third parties.
In perusing the FATF recommendations, raising funds was prohibited by introducing restrictions on money laundering and terrorist financing offences. The movement of funds was captured through several recommendations, including money or value transfer services, wire transfers, and non-profit organizations.
There is no guarantee that terrorist organizations and small cells/lone actors use similar methods to fund their activities. If they did, investigators could adopt one method that fits for all to counter the financing of terrorism. Several sources on terrorist financing revealed that the patterns of terrorist financing depend on the organizational structure of the terrorist group, which includes territory-controlling groups, organized crime-type groups, lone actors, and small cells may or may not be inspired by foreign terrorist groups.[23] These findings challenge the fundamentals of FATF recommendations on terrorist financing that are purported to identify the flow of money. On this basis, adopting a singular method to counter the financing of terrorism seems impractical. In turn, it urges a review of the present recommendations on countering the financing of terrorism.
To review the countering of terrorism finance policies, one needs to understand terrorist organizations as a whole. This means an organizational structure, ideology, patterns of terror financing, and the modes of committing terror rather than solely focusing on money flow. It is often the case that the same pattern of financing did not fund all terrorist attacks. For example, in the case of small cell or lone actors, the perpetrators use their own money, which they may earn through legal and illegal methods. In such a scenario, the person who financed the terrorist activity and the end-user is the same. Contrary, territory-controlling terrorist groups need a significant amount of money to control their territory, much like a local municipality. Therefore, these terrorist organizations may explore various methods to maintain the flow of money, which may provide an opportunity for the investigators to trace the flow of money. As such, it is not prudent for criminal investigators to have a pre-determined mindset to identify the flow of money in every terrorist activity. It raises the question of whether the FATF recommendations are sufficient to disrupt the flow of money of small cells or lone actors via traditional methods. All this to say: the differences in the financial flow of terrorism should be observed to understand the applicability of the FATF recommendations in place to counter the financing of terrorism.
To review the countering of terrorism finance policies, one needs to understand terrorist organizations as a whole. This means an organizational structure, ideology, patterns of terror financing, and the modes of committing terror rather than solely focusing on money flow.
Differences in the Financial Flow
The applicability of the FATF method of tracing terrorist financing is limited to unaffiliated small cells and lone actors. The methods of FATF are based on understanding the flow of money and do not pay attention to self-financed terrorism. In that regard, there should be a new approach to detecting unaffiliated small cells and lone actors financing. When identifying the methods of terrorist financing of small cells or lone actors, the first thing to be excluded is whether small cells or lone actors receive money or any support from an external party. When there is no external funding, the FATF recommendations should not go as far as analyzing the flow of money or the sources of self-funding.
To understand how small cells or lone actors generate money, criminal investigators need to understand how they earn money for a living. In this scenario, criminal investigators need to understand their educational or vocational qualifications and training. The FATF[24] findings are currently limited to identifying a few legal sources: social benefit schemes such as unemployment allowances, consumer loans, bank drafts, or donations from family members and friends to fund terrorist activities. The FATF approach to identifying self-financing cannot be taken as a comprehensive method because it limits listing a few sources that the perpetrators can manipulate.
Identifying the sources of terrorist financing in small cells or lone actors must stem from finding the person and tracing their ability to generate money either legally or illegally. In the context of legal money, the capacity of the perpetrator to generate money is important. For example, suppose that the perpetrator does not have a proper source of income. In that case, criminal investigators may assume that the perpetrator might be using government benefits or consumer loans to finance their terror activities, which is different from an employed person. Sometimes the money seems to be legal but tainted by criminality, i.e., obtaining government loans or other benefits by producing forged documents.
Identifying the sources of terrorist financing in small cells or lone actors must stem from finding the person and tracing their ability to generate money either legally or illegally.
On the other hand, the money may derive from illegal sources like proceeds from drug trafficking or petty crimes.[25] In summary, to trace the financial flow of small cells or lone actors, criminal investigators need to start by identifying the members of the small cell or the lone actors. This is in contrast to a terrorist organization wherein the investigators must map the external sources which flow money into the organization, including legal and illegal methods and money received through the diaspora. Therefore, the methods of identifying the flow of money should be varied according to the identity of the terrorist organization, the small cells, or lone actors.
The Sri Lankan Context
Citizens of Sri Lanka are sensitive toward the country’s security, and ultimately, the topic of national security plays a vital role in demarcating the landscape of national politics. Sri Lanka had three decades of military confrontation with the Liberation Tigers of Tamil Eelam (LTTE). With the military defeat of the LTTE, President Mr. Mahinda Rajapakse was re-elected for a second term with a majority vote of 62 percent.[26] The President and the parliament were ruled out in the aftermath of the Easter Sunday bomb attacks in April 2019. Subsequently, former President Gotabaya Rajapakse was elected with 52 percent of the majority votes, and under his patronage, the parliament won a two-thirds majority.[27] These are landmark victories in the Sri Lankan election history and show the pulse of citizens towards national security and negative response to terrorist activities.
The national economy and security go hand in hand. Even though Gotabaya Rajapakshe established a high level of confidence among Sri Lankan citizens about his commitment and capabilities to secure national security, he was compelled to vacate his office after ruling for two years. At the time, he had three more years to hold office as the President of Sri Lanka. With the recent developments in Sri Lankan society, the relationship between the national economy and national security is significant. When national security deteriorates, it adversely affects the national economy. For example, in 2019, the Easter Sunday attacks harmed the tourism sector, and the impact spilled over onto Sri Lanka’s economy.[28]
On the other hand, there is insufficient evidence to establish that the present economic crisis in Sri Lanka harms its national security. A person can reasonably assume that when the economy is contracting, the national budgetary allocations may also be comparatively decreased. However, this does not necessarily mean that the amount of budgetary allocation positively correlates with deploying successful countermeasures to terrorism in a country. To counter terrorism, it is to understand “who they are and what they want”. For this purpose, every country should have a threat assessment protocol, including threats posed by foreign terrorist organizations and homegrown or affiliated local terrorist organizations.
A person can reasonably assume that when the economy is contracting, the national budgetary allocations may also be comparatively decreased. However, this does not necessarily mean that the amount of budgetary allocation positively correlates with deploying successful countermeasures to terrorism in a country.
To understand the terrorist organizations which posed a threat to Sri Lanka, this paper analyses terrorist organizations under three limbs following these steps: (I) Identify the terrorist organization, (II) Understand the degree of threat posed by such an organization, and (III) what are the possible methods of funding depending on the nature of the threat posed by the terrorist organization. Two organizations mainly threatened the national security of Sri Lanka: the LTTE and ISIL-affiliated small cell.
LTTE
The LTTE is a homegrown terrorist organization that Velupillai Prabakaran led until the organization was militarily defeated on the 18th of May, 2009. From its inception, the LTTE demanded an independent state for Sri Lankan Tamil. The LTTE, therefore, had characteristics of a territory-controlling terrorist group. When identifying the threat posed by the LTTE, we need to first consider the level of threat caused to the country or region. Although the LTTE was militarily active in Sri Lanka, the LTTE’s foreign terrorist activity was limited to the assassination of Rajiv Gandhi, former Indian Prime Minister[29]. This is the only available statistic of the LTTE’s international outreach. On this basis, the LTTE financial needs were limited to controlling the claimed territory in Sri Lanka.
To control territory, the LTTE, like any other territory-controlling terrorist group, needs stable and continuous financial flow for several reasons: establishing a territory, maintaining its infrastructure, procuring weapons, and advancing troops. As Ariyasinha, Chalk, and Weenink[30] proposed, the LTTE earned money through multi-faceted approaches such as donations from the diaspora or fund-raising programs and illegal sources like human and drug trafficking. This money flow is similar to other territory-controlling terrorist groups such as the Taliban, Boko Haram, Al-Shabaab, and IRA.[31] Although there are many similarities in the flow of money between the LTTE and other territory-controlling terrorist groups, the LTTE differs from them, considering it had no access to the natural resources of Sri Lanka, including gem, graphite, and minerals. Natural resources are one such method of generating money for terror finance. For example, Al-Shabaab uses charcoal in Somalia.[32] Still, the use of national resources will depend on two factors: (I) The terrorist organization must have physical access to the natural resource, or (II) it should be in a position to control its demand and/or supply chain. The LTTE neither had access to natural resources as they were located out of its ruling area nor was it in a position to control the demand and supply chain.
The flow of money to a terrorist organization varies even among similar organizations. Therefore, it does not provide a clear indication of the identity and threat level of a particular terrorist organization. Alternatively, by tracing the characteristics and the threat level of a terrorist organization, investigators can understand its financial needs. Arguably, if the Sri Lankan investigators focus beyond the traditional concept of following the money and pay attention to assessing the characteristics of terrorist organizations, the investigators might be able to trace potential terrorist organizations, which can commit crimes beyond their territory.
ISIL Small Cell Attacks
After the suicide attacks in 2019, known to the public as the ‘Easter Sunday bomb attacks’, the parliament of Sri Lanka formed a parliamentary Select Committee to probe the root causes of the incident. The proceedings of the Select Committee were done transparently, in a manner open to the media. Press releases were published to allow the public to give evidence of the facts known to them. During the inquiry at the Parliamentary Select Committee,[33] it transpired that criminal investigators lack understanding of global terrorism. Although it was revealed that people had joined the IS as foreign terrorist fighters, the law enforcement authorities did not pay much attention to them. This may be due to a lack of understanding of the policymakers and criminal investigators about the Sri Lankan citizen’s participation with a foreign terrorist organization and its consequences. Sri Lankan investigators mainly relied on the recommendation to follow the money, which requires that one grasps the inward and outward flow of money to the territory-controlling terrorist groups. On the other hand, if Sri Lankan authorities based their criminal investigations on the FATF recommendations to trace the flow of the money, then this method would not be able to capture the money generated by the perpetrators through their educational and vocational skills or training as in small cells and lone actors.
The FATF recommendation on terror finance has to be revised to understand whether the said recommendation has the same effectiveness in identifying the financial flow of organized to disorganized terrorist organizations. In the first place, criminal investigators need to understand the identity of the terrorist organization as it will provide background knowledge on the structural and operational capacity of the group. This structural and operational capacity of terrorist organizations varies from time to time and from country to country. In the global landscape of terrorism and based on the assessment of Europol, Reimer, and Redhead[34] state that the new threat of terrorism emanates from small cells and lone actors. However, the operational structure of the small cell has varied from the 9/11 terrorist attacks. The 9/11 Commission Report[35] revealed that Al-Qaeda transferred funds to the perpetrators through the banking system along with directions from the network. This implies that the affiliated terrorist groups funded the small cells. However, the assessment by Reimer and Redhead[36] revealed that the terrorism threat is shifted from funded to self-funded small cells.
The Sri Lankan incident of April 2019 provides an example of a transformation from funded to self-funded small cell terrorist attacks. On the 19th of April 2019, multiple terrorist attacks were conducted by a small group inspired by IS ideology. The suicide bombers tried to establish that they had ties with the IS. Nonetheless, Sri Lankan criminal investigators could not establish such a fact. Out of the eight hardcore suicide bombers in the incident, only one terrorist was reported to the criminal investigators as a foreign terrorist fighter. This evidence shows that the hardcore terrorists were radicalized at home, but others did not have past criminal records except the leader, Mohammed Zahran, also known as Zahran Hashmi.
The scale of terrorism will depend on the ideology. The ideology of a caliphate is to be ruled by a caliph; therefore, we need to understand how the concept of the caliphate can influence countries. When observing the demography of Sri Lanka, the Sri Lankan Muslim (Moor) community represents 7.9 percent.[37] On this basis, an attempt to declare the Islamic State in Sri Lanka seems to be irrational thinking. Berrebi proposes that when terrorists select their targets, they consider feasibility, cost, and target attractiveness.[38] The IS-affiliated group in Sri Lanka set the date and places and explicitly revealed that they were not acting randomly. In the April 2019 bomb attacks, it is evident that the terrorists select targets with whom they can maximize publicity, accessibility to the target, and other factors while keeping the cost of committing the crime at a minimum. When the crime’s price is at a minimum, terrorists can earn this money without law enforcement authorities’ attention. This emphasizes that what is important to the law enforcement authorities is to understand the identity of the terrorist organization as it will eventually reveal the operational and structural capacity of the organization and its particular financing component. Merely complying with the FATF recommendations to track the financial flow is insufficient to detect terrorists in a broader spectrum.
Conclusion
A terrorist group’s identity will indicate its funding. This information supports law enforcement authorities in developing and implementing individual countermeasures rather than implementing one-size-fits-for-all policies. The ultimate objective of implementing appropriate countermeasures to terrorism is to prevent people from becoming victims of said acts. The recommendations by the FATF on terrorist financing are based on tracing the flow of money. However, these recommendations are limited to determining the flow of money of terrorist organizations rather than tracking down their identities.
The financial flow of unaffiliated small cells or lone actors may differ from organized terrorist organization. In the case of unaffiliated small cells or lone actors, it may not be possible to trace the source, movement, and use of funds in the cause of terror finance as the perpetrators directly use their money for terrorism. In such a scenario, terror finance for unaffiliated small cells and lone actors may be limited to raising funds and using funds. Criminal investigators, therefore, need to pay more attention to the livelihood of small cell members and lone actors to understand how they earn money for their living. It also reveals their methods of terror finance.
The financial flow of unaffiliated small cells or lone actors may differ from organized terrorist organization. In the case of unaffiliated small cells or lone actors, it may not be possible to trace the source, movement, and use of funds in the cause of terror finance as the perpetrators directly use their money for terrorism.
In general, it seems that the FATF recommendations on countering the financing of terrorism policies do not apply to all terror activities across the sphere. There should be a new approach to countering the financing of terrorism and identifying the terror groups as it would allow for designing more appropriate countering strategies to be included in the financing of terrorism policies. The challenge now is to redirect from depending on one method to identify terror finance (the flow of money) to identify the terrorist group and then implement the appropriate countermeasures to curb terrorist financing.
Noragal Dasni Lakmalee Hemchandra holds the following titles: Attorney-at-Law, LLB, Master’s in Economics and Public Policy (University of Queensland, Australia). Her research interests are in money laundering and terror finance. Earlier publications under her belt include an article on FATF standards that was published on the Central Bank of Sri Lanka’s (internal) website. The views contained in this article are the author’s alone and do not represent the views of the Central Bank of Sri Lanka.
[1] Terence Halliday, Michael Levi and Peter Reuter, “Anti-money laundering: an inquiry into a disciplinary transnational legal order,” Anti-Money Laundering: An Inquiry into a Disciplinary Transnational Legal Order 4 UC Irvine Journal of International, Transnational, and Comparative Law 2019 (heinonline.org).
[2] Jay Albanese, “Government perceptions of organized crime: The Presidential Commissions, 1967 and 1987,” 112938NCJRS.pdf (ojp.gov).
[3] Executive Order 12435- President’s Commission on Organized Crime, https://www.reaganlibrary.gov/archives/speech/executive-order-12435-presidents-commission-organized-crime.
[4] Albanese, “Government perceptions of organized crime: The Presidential Commissions, 1967 and 1987.”
[5] Idem.
[6] Idem.
[7] Idem.
[8] Michael Levi, “Money for crime and money from crime: Financing crime and laundering crime proceeds,” European Journal on Criminal Policy and Research (2015) 21: 275-297; Brigitte Unger and John den Hertog, “Water always finds its way: Identifying New Forms of Money Laundering,” Crime, Law, and Social Change 57: 287-304.
[9] Halliday, Levi and Reuter, “Anti-money laundering: an inquiry into a disciplinary transnational legal order.”
[10] Idem.
[11] Idem.
[12] Mark Nance, “The Regime that FATF Built: An Introduction to the Financial Action Task Force,” Crime, Law and Social Change 89: 109-129.
[13] Anja Jakobi, “Governing Illicit Finance in Transnational Security Spaces: The FATF and Anti-money Laundering,” Crime, Law and Social Change (2018) 69: 173-190.
[14] United Nations Office on Drugs and Crime, “United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.”
[15] United Nations Office on Drugs and Crime, “World Drug Report (2000).”
[16] The Financial Action Task Force Recommendations, “Financial Action Task Force,” 2012, FATF-GAFI.ORG – Financial Action Task Force (FATF).
[17] Jakobi, “Governing Illicit Finance in Transnational Security Spaces: The FATF and Anti-money Laundering;” Financial Action Task Force Recommendations, “Financial Action Task Force.”
[18] Featured Commission Publications, The 9/11 Commission Report: Final report of the National Commission on terrorist attacks upon the United States (9/11 Report), https://www.govinfo.gov/app/details/GPO-911REPORT.
[19] Tom Keatinge, Identifying Foreign Terrorist Fighters: The role of public-private partnership, information sharing and financial intelligence (2015), www.rusi.org.
[20] Financial Action Task Force Recommendations, “Financial Action Task Force.”
[21] Ibid.
[22] Agus Santoso and Sylvia Windya Laksmi, “Regional Terrorism Financing Risk Assessment Framework: Southeast Asia and Australia,” Counter Terrorist Trends and Analyses 8, no. 10 (2016): 20-24.
[23] Tom Keatinge and Florence Keen, “A Sharper Image: Advancing a Risk-based Response to Terrorist Financing,” 20202001_ctf_final_web_copy_2.pdf (rusi.org).
[24] Financial Action Task Force, “Emerging Terrorist Financing Risks,” 2015, http://www.fatf-gafi.org/publications/methodsandtrends/documents/emerging-terrorist-financing-risks.html.
[25] Levi, “Money for crime and money from crime: Financing crime and laundering crime proceeds.”
[26] Election Commission of Sri Lanka, “Presidential Election,” 2010, PresidentialElections2010.pdf.
[27] Election Commission of Sri Lanka, “Parliamentary Elections,” 2019-2020, https://elections.gov.lk.
[28] Central Bank of Sri Lanka, Annual Report 2019, Annual Report 2019 | Central Bank of Sri Lanka (cbsl.gov.lk).
[29] UK Proscribed Organizations Appeal Commission, 2020.
[30] Ravinatha Aryasinha, “Terrorism, the LTTE and the conflict in Sri Lanka,” Conflict, Security & Development 1, no.2 (2006): 25-50; Peter Chalk, “The Tigers Abroad: How the LTTE Diaspora Supports the Conflict in Sri Lanka,” Georgetown Journal of International Affairs 9, no.2 (2008): 97-104; Anton Weenink, “Situational Prevention of Terrorism. Remarks from the Field of Counterterrorism in the Netherlands on Newman and Clarke’s policing terrorism,” Trends in Organized Crime 15 (2012): 164-179.
[31] Niamh Hourigan, John Morrison, James Windle and Andrew Silke, “Crime in Ireland north and south: Feuding gangs and profiteering paramilitaries,” Trends in Organized Crime 21: 126-146; Keatinge and Keen, “A Sharper Image: Advancing a Risk-based Response to Terrorist Financing.”
[32] Global Terrorism Index 2020, GTI-2020-web-2.pdf (reliefweb.int).
[33] Parliamentary Select Committee 2019, sc-april-attacks-report-en.pdf (parliament.lk).
[34] Stephen Reimer and Matthew Redhead, “Financial intelligence in the age of lone actor terrorism,” 2020, CRAAFT_+RB3_Reimer+Redhead.pdf.
[35] The 9/11 Commission Report: Final report of the National Commission on terrorist attacks upon the United States (2004), https://www.govinfo.gov/app/details/GPO-911REPORT.
[36] Reimer and Redhead, “Financial intelligence in the age of lone actor terrorism.”
[37] Department of Census and Statistics, “Census of Population and Housing 2012,” http://www.statistics.gov.lk/PopHouSat/CPH2011/Pages/Activities/Reports/FinalReport/FinalReportE.pdf; Reimer and Redhead, “Financial intelligence in the age of lone actor terrorism.”
[38] Claude Berrebi, “The economic of Terroriism and counterterrorism: What matters and is rational choice theory helpful?,” in: P.K. Davis and K. Cragin. K eds., Social Science for Counterterrorism, https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=berrebi+2009+counterterrorism&oq=Berrebi+%282009%29.
