The Political Conundrum!

U.S. and international efforts to combat terrorist financing are a little understood—and often unappreciated—aspect of the global counterterrorism campaign. With this in mind, soon after rejoining The Washington Institute after serving in the Treasury Department’s Office of Terrorism and Financial Intelligence, Mike Jacobson and I decided that it would be worthwhile to conduct a comprehensive study of this issue. The produce is our just released study, "The Money Trail: Finding, Following and Freezing Terrorist Finances."

We spent more than a year conducting the research and writing this Policy Focus. It is based on open source information, including media reports, reports by U.S. and foreign governments and international organizations, congressional testimony, and perhaps most important, our field research and interviews. During the course of our research, we interviewed some seventy-five people, ranging from U.S. and foreign government officials to officials in key international organizations such as the United Nations, International Monetary Fund, and the Financial Action Task Force, as well as academics and financial experts in the private sector. While many of the interviews took place in Washington, D.C., and in New York, we also spent considerable time abroad, including multiple trips to Europe and the Middle East. During one extended research trip to the Persian Gulf, we met with government officials, bankers, and industry and academic experts.

We have strived to produce a report that not only explains the threat of terrorist financing and the efforts of governments and international organizations to address it, but also assesses the effectiveness of these efforts. We offer, in addition, our thoughts as to what steps the United States could take to improve international efforts in this area. We hope that this study helps inform the public debate on this important topic, which has not always received the attention it deserves. Better understanding both the threat and our response is critical to determining what role combating terrorist financing should play in our overall counterterrorism efforts and what changes should be made to our current approach.

Chapter 1, the introduction to the monograph, provides a broad overview of the subjects we cover, as well as some of our basic findings. In chapter 2, we explain the importance of the little understood efforts to combat terrorist financing, and why they are and should be an important part of the global counterterrorism campaign. Chapter 3 lays out how terrorist financing—like the terrorist threat itself—is rapidly evolving, frequently in response to international efforts to combat it. As we discuss in this chapter, the terrorist groups’ adaptation in how they raise, store and, move funds can often frustrate governmental efforts to detect and stop them. In chapter 4, we assess U.S. and international efforts to combat terrorist financing since the September 11 attacks—first laying out the many areas where steps forward have been taken, then exploring some of the remaining challenges. In chapter 5, we gauge how effective U.S. and international efforts have been, pointing to specific signs of success in an area in which progress is often difficult to measure. In chapter 6, we offer numerous recommendations for U.S. policymakers to bolster the international regime in this critically important area. Chapter 7 includes three case studies, providing “status checks” on the terrorist financing-related activities of three key terrorist groups—al-Qaeda, Hamas, and Hizballah.

The full study is available here as a free PDF download.