A terror organization is fundamentally a business, similar to a financial organization. On a day-to-day level, every terror group expends the bulk of its efforts to raise, invest, allocate, and transfer money.
The common notion that bombs are cheap to build, and that therefore fundraising is not of primary importance to terrorists, reflects a profound misunderstanding of how terrorism works.
In fact, most of the world’s major terror organizations follow the same “business plan.” From Hezbollah in Lebanon, to Hamas in the Gaza Strip, to FARC in Colombia, Lashkar e-Taibe in Pakistan (which carried out the 2006 Mumbai attack), ETA in Spain, PKK in Turkey, to the Taliban in Afghanistan and Al-Itihaad al-Islamiya in Somalia, the story is similar: each organization sets up its rule over a local population, maintaining their loyalty by providing human services, from schools and support for the poor to health care and elderly assistance—services that outstrip those offered by corrupt national governments. Religious leaders are bought out, encouraged to spread the message of violence against the United States or its allies. Major financial incentives are offered to individuals willing to make the ultimate sacrifice for their cause. In exchange for these services and the infusion of cash, local leaders accept the creation of training bases in their territories, and the recruitment of locals into the organizational infrastructure.
According to The Israeli Security Services (Shin Bet), the standard profile of a suicide bomber, for instance, is not someone suffering from mental illness. Rather, he’s gone through a long process of conditioning, with terror funding playing a decisive role at every turn: From his foreign-funded elementary school, where he was taught to idolize the shaheed, the martyr who kills as many civilians as possible on his road to Heaven; to youth programs, sports camps, and health clinics—all of which bought his loyalty to the cause and convinced him that the terrorists treat their people far better than official government institutions—to massive internal PR efforts, like posters and trading cards promoting past suicide bombers. Finally, after he’s been filled with visions of martyrdom from his childhood, he is offered the chance of a lifetime: he can both become a shaheed and solve his family’s financial woes for the rest of their lives by blowing himself up. Therefore, while an explosive vest or car bomb might not cost all that much, the creation of a suicide bomber is a long and expensive process.
During the Israeli “Defensive Shield” operation in 2002, the IDF confiscated tens of thousands of documents, which provided a rare look at the inner working of Palestinian terrorism. The majority of correspondence between terrorists and the Palestinian government concerned the transfer of funds throughout the network—loans, letters of credit, payouts to terrorists, and more. The letters discuss money raised from sources around the world, money transferred between departments and factions, money given to terrorists’ families, or to terror-encouraging youth groups, or to mid-level lackeys greasing the system. The confiscated documents clearly demonstrate how much money terrorism requires—up to hundreds of millions of dollars per year—which typically comes from sympathetic governments, private donors and charitable organizations.
But there are other sources of funding, too: FARC, for example, gets much of its budget from ransom kidnappings, taxation on the Colombian drug trade, and protection money from Western corporations operating in the territory it controls; Hezbollah has developed a sprawling network of businesses, from banking to consumer electronics and shopping centers in Latin America to contraband cigarettes in the U.S.—all to boost and launder its funding.
Money makes terrorism go round—and dealing with money takes up the largest part the terror leaders’ time and energy. Yet, since this is their most important pre-occupation, it’s also their greatest vulnerability. The vast majority of terror funds are held, transferred, and switched into usable currencies (dollars and euros) either through established money changers or international banks—both of which have long been under the watchful eyes of law enforcement agencies around the world in their efforts to fight drug trafficking and organized crime. If these were to be brought under heel, a large part of the machinery of terrorism would grind to a halt.
In short: if you stop the money, you can stop the flow of the terrorism.
It was not so long ago that the idea of fighting terrorists through lawsuits was considered ridiculous, a mere drop in the bucket. Global terror is enormous, very organized, and able to hide behind the obscurities of international law, the protective veil of rogue states, and has garnered the support of many who see their acts were seen as righteous and godly. The terrorists, it often seemed, were too obscure, too cut off from the world of Western courts and judgments, and their attacks too low-budget to be truly hindered by lawsuits.
But things have changed. Over the last decade, courts have handed down judgments against state sponsors of terrorism like Iran and North Korea; big banks like Lloyds and Barclays have shut down suspicious charities accounts because of exposure to criminal and civil liability for aiding and abetting a terrorist organization. Terror sponsors like Iran have pulled billions of dollars out of the US and Europe, and are having a much harder time finding Western banks willing to convert their money into dollars and euros—hard currencies the terrorists desperately need to build their bases and buy their weapons. Boxed out by the banks, terrorists have had to resort to ever more risky methods of transferring ever smaller amounts of cash, such as in suitcases or through underground tunnels. Yet even then, terrorists have often found their money corralled by Western courts. After decades of building their networks around the world, terror financing has today swung into heavy retreat, in large part due to a sweeping dragnet of creative international lawsuits filed by Shurat HaDin-Israel Law Center.