“For money is the oxygen of terrorism. Without the means to raise and move money around the world, terrorists cannot function.” – Colin Powell
Al Qaeda thrived on plenty of oxygen. We imagine them as a rag-tag jihadi gang laundering money from any black market sympathetic to their Islamic state - charities, mosques, cartels, or rich relatives. If this image is in any way reality, then Al Qaeda’s more consistent ransoming, such as the kidnapping of a South African couple Yolande and husband Pierre Korkie, seems like just another sleazy scheme. But, the reality of the financial structure of Al Qaeda is too banal to imagine: it has been fueled through a diversified portfolio of investments, investors, money transferred through banks, and employment – of the legal kind.
In other words, Al Qaeda dollars have been funneling through the same monetary system David Cameron uses to buy his silk blue ties. In this regard, it has been analogized by Western media to a “multinational corporation.” In an interview from September 28, 2001, Osama bin Laden stated, “Al Qaeda is comprised of such modern educated youths who are aware of the cracks inside the Western financial system.” If they are so well aware of these cracks, then why is ransoming increasing? Al Qaeda’s increase in kidnapping shows they are desperately gasping for oxygen.
It was disturbing when English HSBC bankers found out terrorists were conducting transactions from their accounts. In 2012, HSBC was charged with links to Al Rajhi Bank, of which the owner has been confirmed to be an Al Qaeda benefactor. They were not charged for this “stunning failure of oversight” and reiterate they did not intend to fund terrorist activities nor are they sympathetic to terrorism. The premise of money laundering is by taking “dirty” money and making it “clean,” which is how we imagine - or would like to - how Al Qaeda money is transferred. It is now known that many terrorist organizations’ liquid cash comes from the “clean” money of the national banking system. Finding money in the banking system transacted by terrorists is often said to be like “finding a needle in a needle haystack.”
Just to clarify - there are banks who channel money from terrorist related activities unknowingly, ones sympathetic to terrorism, and ones owned by terrorist organizations through shares, such as Al Qaeda’s Al Taqwa, which recently allegedly cut ties with terrorism. Then, there is always something else. For example, Saudi Prince Alwaleed Bin Talal Alsaud, the richest man in Saudi Arabia, twenty-sixth in the world, owned $9.4 billion of Citigroup stock. He also owned a large stake in Samba, the second-largest bank in Saudi Arabia. Citigroup had been running Samba under a management contract for over twenty years. In 2000, the Saudi Arabian government ordered all banks in Saudi Arabia, including Samba, to create an account to channel funds to “martyrs” of the Palestinian intifada (i.e. the Palestinian Liberation Organization, against Israel). Citibank alerted the Treasury who eventually agreed to phase out the plan. These kinds of transactions are at the root of banking. HSBC began by channeling money between India and China during the opium trade. Funding terrorism was the beginning of many lucrative transactions for banks that continues.
Al Qaeda, like many gangs and cartels is run by individual cells who work for a more centralized system. The central authority uses the more steady income of front charity donations and zakat (tithes) from mosques. This money is raised for training, propaganda and operational expenses. Cells, however, raise funds for living and their operational expenses after an initial “seed” funding and became self-sufficient and fund their own operations. Cells garner this money through the usual ways that include credit card fraud, car fraud, and forgery. In North America, smuggling cigarettes and coupon scams are examples of lower-penalty, but highly profitable ways an individual can make enough for their own cheaper operations.
Many make money through legitimate employment, such as plumbing and agriculture. Cells have the advantage of their “average Joe” disguises and legitimacy of money which makes it particularly hard to track them. Al Qaeda increasingly connects to affiliates in Somalia, Yemen, and Nigeria - in other words, poorer countries with lower literacy rates. This is a shift from the once educated and wealthy demographic. Analysts Michael Jacobson and Steven Levitt suggest that Al Qaeda has been turning away from the original model. They are “more likely” to be sending those funds to the central leadership as they are in the defensive.
The Al Qaeda financial network began during the Afghan-Soviet war. Bin Laden created Maktab al-Khidamat, the office of Afghan services, to help finance the war he helped fight which built Al Qaeda’s the financial infrastructure and international network. As his relatives became less supportive of their black sheep son, the donations from mosques and “front” charities became paramount for the emerging organization to sustain itself. Additionally, the support from the Taliban who took him as a refugee from Sudan in 1996 helped him reconnect to wealthy Saudi finances established from the Afghan war in the Gulf. From that point forward, the Gulf was and remains an Al Qaeda investment hub.
Not only are investors important, but Al Qaeda’s own portfolio. The Al Qaeda assumed-to-be-true training manual talks about the importance of these investments. Bin Laden invested in Taba Investments (currency trading firm), al Hijra Construction, genetics research lab, agriculture, and the list goes on. These investments are, as it is stated simply in the training manual, “for returns.” Al Qaeda even opened a mine in Tanzania.
Patterns in money laundering emerged and Section III of the Patriot Act cracked down, trying to detect and prevent money laundering to finance terrorism. Since then, the US Department of Justice froze terrorist related assets and Al Qaeda has been hitting a recession. The Bush administration called it “starving the terrorists of funding.” Countering terrorist transfers, such as those from the hawala banking systems an informal money transfer system popular in the Middle East. Even Saudi Arabia began watching out for Al Qaeda financing from a fatwa by Sheik Abdulaziz.
In 2009, Al Qaeda’s finances seemed to be running out. In a video published on a jihadi forum, Ayman al-Zawahiri asked supporters for financial assistant. This led secretary of US Treasury for Terrorism and Financial Intelligence, David Cohen to say, “Al Qaeda was in its weakest financial condition in several years.” The forum showed a telling dialogue about the donation process. It said that the donor should contact a faction (Iraq, Syria, ect.) representative who would give them a code word for identification purposes. Then, the donor would go to a bank and wire the money. According to the website, the banks do not question wire transfers of less than $700, but “the smaller the amount the better.”
One way to adapt to this was by having separate affiliated networks, such as Al Qaeda in the Islamic Maghreb (AQIM – who currently hold the Korkies as captives) and Al Qaeda in Iraq. Al Qaeda turns to its affiliate groups to help transfer money, such as the Shura Majilis and AQIM. West Point analysts in 2011 found that bin Laden was not satisfied with AQIM as they kidnapped and managed suicide bombings away from central leadership, modus operandi. In his documents, it was also found that he was frustrated by Yemeni affiliates wanting to overthrow the government. In the document, Bin Laden writes, “the capabilities of our brothers there are not yet such that they can enter this sort of struggle (overthrow of Yemen), neither in terms of their administration or their financial resources.”
This is low point for Al Qaeda since the training manual stresses the importance of savings: through investments with returns, savings, and simply hiding it from those who may steal money. In 2013, the Los Angeles Times wrote an article about how the affiliate group, Al Qaeda in the Arabian Peninsula (AQAP), has leveraged kidnap-for-ransom schemes into a $10 million annual enterprise. Before his death in 2011, documents reveal that Bin Laden was looking more into kidnapping as Al Qaeda was losing more money. Cells showed how much money could be made from ransom operations, which is said to have changed the “core attitude” of recognizing ransoming to gain funds rather than just sustaining itself on mostly donations. With an increase in the central authority turning to operational expenses, Al Qaeda is investing less and perhaps saving less.
The Korkies were captured by AQIM, who are hardly affiliated to Al Qaeda financially as their title deserves. The ransom money will most likely be used by cells to fund their own events, rather than for the “macro” needs of the organization to thrive as an enterprise. As the US is becoming increasingly aware of Al Qaeda’s presence in their banking system, young operatives are no longer thriving from what bin Laden calls being “aware of the cracks in the Western financial system.” It is no longer 2001 and the Western bank’s “cracks” are sealing up. However, the “Al Qaeda-corporation” analogy is over-assuming in that the importance of money is not as high for a multinational terrorist corporation as it is with Sabic or Monsanto. Operatives, devout to Al Qaeda as a vehicle for their ideal of an Islamic state, will create money modus operandi. It will take more than the freezing of assets to take down these zealous workers.