Terrorism is effective because it is unpredictable. The uncertainty and fear terror attacks generate is dependent on their being difficult, sometimes almost impossible, to anticipate and prevent.
Therein lies the challenge for compliance professionals: how does one help stop something that is by nature fugitive, operating in the shadows? The answer is to draw back, assess the bigger picture and strike at the heart of how terrorists raise funds for attacks.
Because while terrorism is hard to pin down, it is possible to discern, by studying patterns and trends, the ways in which funds are raised for terrorist activity. And by understanding the variety of ways in which terrorist attacks are supported, compliance professionals play a central role in making them that much more difficult to plan and execute.
The challenge
The challenge is a formidable one. Those who seek to finance terror are cunning and mobile, always exploring new ways of evading detection. In addition, the targets, causes and means of committing terrorism are never fixed. The first step in confronting this reality is to identify and trace the ways in which terrorism is carried out.
Research by the Institute for Economics & Peace [1] found that deaths from terrorist attacks in 2023 reached their highest level since 2017. What it called the geographical ‘epicentre’ of terrorism had also shifted, from the Middle East to Sub-Saharan Africa, despite the fact that the terror attack with the highest single death toll in 2023 took place in Israel on 7 October, with more than 1,200 victims.
In the West, terror attacks have fallen to their lowest level for 15 years. But there are concerns that regional conflicts elsewhere in the globe, most notably that involving Israel, Hamas and Hezbollah, will have repercussions in the West. In 2023, more than three-quarters of terror attacks that did occur in the West did so on US soil.
Change, good and ill
Not all of the news is negative. Take Iraq, a country that since the start of this century has perhaps suffered more than any other the horrors of politically and religiously motivated terror. Attacks in Iraq have dropped by 99% since 2007. That is an astonishing reversal for a country that for years was synonymous with suicide bombings, improvised explosive devices and bloody attacks by militants. Afghanistan and Nigeria have also witnessed a significant reduction in terrorist attacks.
This does not mean that the threat has gone away. Terrorism remains with us, even if, as research suggests, its character is changing. Terror groups are increasingly aligned with organised crime, either by associating or co-opting criminal groups’ operations or by participating in organised crime themselves. Such an evolution is another example of how the once-clear distinction between different forms of crime is increasingly irrelevant.
Funding is another important area of change. Traditional funding techniques remain prevalent, but there is growing use of the digital space to raise funds. Social media, digital currencies and crowdfunding are three key growth areas. Each offers unique challenges for compliance professionals and governments to detect and prevent.
Recognising risk
Digital means of raising funds for terrorist activity is naturally high on the list of compliance professionals’ concerns. But there exists an abundance of knowledge and tools on which they can draw and employ to fight back.
These include traditional techniques aimed at preventing illicit activity – transaction monitoring, adopting a risk-based approach and having a solid understanding of common red flags. But it also entails understanding newer approaches to raising funds for terrorist activity, for instance the use of the digital economy, virtual currencies and the exploitation of online crowdfunding, and the ways in which these can be thwarted.
Knowledge of these areas must be bolstered by a broader recognition of how terrorists operate. This includes how individuals can be radicalised online, the ways in which extremists inspire lone operators to commit imitative attacks (with no direct contact with larger terrorist groups) and – crucially – the often nebulous and deceptive ways in which terrorists raise funds.
Compliance
One must also acknowledge the ideological seedbed of different types of terrorism, from Islamist extremism and far right-wing ideologies to politically motived violence. Failure to understand the roots on which terrorists draw their inspiration makes it much harder to anticipate how and where risk will manifest.
Terrorism may be based on unpredictability. But terrorist financing is not quite so evasive: it relies on a series of processes that, while never static, are capable of identification. For this to occur, compliance professionals must be cognisant of how to recognise these processes.
As terrorists adapt, so must governments, law enforcement and compliance professionals, by arming themselves with the latest knowledge, information and skills.
Develop your knowledge of emerging terrorist financing threats with the ICA Specialist Certificate in Countering the Financing of Terrorism