By David Nordell
International counter-terrorism expert Brian Jenkins published an article a few days ago under the title “How do we know if security measures work against terrorists?” in the online publication Inside Science Minds. In it, he explains in broad terms the financial cost of counter-terrorism measures – the US Department of Homeland Security alone spends $200 billion a year – and correctly points out that the level of international terrorism against US targets has dropped very significantly, from 50-60 attacks a year during the 1970s, through the few but very bloody attacks of September 11, to only four attacks in 2013, for a loss of only 18 lives.
Jenkins, with whom I had the privilege of working in an international workshop on economic terrorism a few years ago, makes a convincing case with these numbers that the USA, at least, is safer against terrorism now than in the past; and there are similar numbers to show good results for other Western countries that have been the targets of Islamic and other transnational terrorism.
However, he also correctly points out that although we know that all the security measures to which we have become accustomed do work, we don’t really know which ones matter most. As he puts it, in making the comparison between ordinary crime and terrorism, “Terrorist attacks differ from ordinary crimes in important ways. Despite an increase in the volume of terrorism worldwide, terrorist attacks remain statistically rare events. Unlike bank robbers, who go where the money is, terrorists can attack anything, anywhere, any time. Statisticians treat terrorist attacks as random events.”
“Terrorists can avoid security by attacking soft targets, such as public places that are difficult to protect. That terrorists have moved toward softer targets can be interpreted as an indirect indicator that security works. However, it also may reflect the terrorists’ growing determination to kill in quantity, which can be done most easily in crowded public places. Not all terrorist perpetrators worry about being caught in the act, or even about escaping. Even the terrorists’ operational failures cause fear, which is the objective of terrorism.”
Jenkins’ bottom line, which is that we don’t yet have reliable analytical methods to work out which security measures are most effective, let alone cost-effective (also in light of the psychological damage that the threat of terrorism causes to society in general), applies even more when it comes to terror finance.
Why is this? First of all, unlike actual terror attacks, where we have fairly reliable information on how many there are, their cost in human life and suffering, and also how many are foiled by intelligence, law enforcement and technical means, we really don’t know how much money is spent annually on terror finance. Actually, for most countries outside North America, Europe and Israel, we don’t even know how many lives are taken by terrorist action, because of a shortage of reliable information.
Some of our fogginess over the scale of terror finance is a problem of definition: does terror finance include the global cost of dawa, Muslim religious propaganda? Foreign aid given by governments to Palestinian government security and law enforcement bodies, some of whose personnel take part at least part-time in terror attacks against Israel? Government subsidies and tax breaks given in countries such as the UK to Islamic charities and institutions that preach hatred for the West and its values, thus contributing to the desire and motivation to carry out terror attacks? Foreign aid and charitable contributions given to African countries, Pakistan and other states where very considerable sums get diverted either to internal terrorism or to terrorism against the donor states themselves? The cost of running training camps, safe houses and other infrastructure for active terror cells? The cost of guns and explosives? Some terror attacks cost next to nothing: the example of Drummer Lee Rigby, murdered in London on 22nd May 2013, illustrates the absurdity of attempting an accurate analysis, since the knives and hatchet used to kill him cost only a few pounds.
The next methodological problem is that unlike in anti-money laundering, where we can make estimates, or guesses, about the scope of financial crime, and then assert with some confidence that all or most of the proceeds of financial and property crime are then laundered in some form to some beneficiary (including the criminal), we don’t know how much of this ends up financing terror groups. And on top of that, a lot of terror finance comes from honestly earned money that is either donated in good faith to charities that pass it on to terrorist groups, or is extorted from its owners. The new international plague of cyber crime creates a whole new question: we have no idea how much of the proceeds of different cyber crimes, from ‘Nigerian 419’ frauds to large-scale market abuse, is being recycled into the infrastructure of terrorism; and how much of this is controlled by organized crime groups or by nation states and their proxies.
The third problem is the total inconsistency of how terror groups are defined as such. Hizbollah, for example, is a legitimate political party in Lebanon; but it is also a terrorist organization that has attacked civilians in Israel, which is a clear war crime, and is currently engaged in killing civilians in the Syrian civil war. So when is sending Hizbollah money considered terror finance, and when not?
We can not even be reasonably confident about the cost of counter-terror finance measures, whether in the global financial industry or in law enforcement, intelligence and associated legal costs, because these measures are nearly always conflated, both operationally and in totting up the costs, with anti-money laundering, sanctions, anti-corruption and now also FATCA compliance. So when we read that HSBC, or Standard Chartered, or whichever other bank, has been fined some huge amount for non-compliance, or that JP Morgan Chase is taking on thousands of new compliance staff, how much of this should we ascribe to fighting terror finance?
Nor can we be too confident about the effectiveness of these measures. The plot in 2006 to blow up several airliners due to fly from London to the USA was indeed foiled, just in the nick of time, thanks to good luck and good CTF intelligence applied by Britain’s National Terror Finance Investigation Unit in Operation Overt: in that case, we can say clearly that the CTF system actually proved itself as the safeguard that prevented a major terror outrage. There have certainly been other cases where attempts to finance terrorist activity have been interdicted successfully. But much of the time we don’t really know. According to recent reports, Taliban is running out of money. But is this because its narcotics-smuggling activities have been stifled successfully, or because external donors have reached the conclusion that they don’t want to throw good money after bad? In more general terms: how effective is cutting off the money supply at stopping the terrorists, especially now that it has become a fairly low-cost and sometimes self-funding activity? The reality is that more than 100,000 civilians have died in Syria, in what is called a civil war but is in reality mainly a war of terrorism; yet CTF doesn’t appear to have saved many lives.
I don’t claim to know the answers to these questions, although I do think I know what many of the questions are. But it’s actually important for international policy-makers, from the UN’s Counter-Terrorism Executive Directorate and FATF down, and for national authorities, to not only ask them but also try to find some answers, in order to re-examine whether we are doing the right things. If the regulations and their application are not fit for purpose, maybe it doesn’t make sense to impose large fines and massive increases in regulatory compliance expenses on banks for not doing effectively something that doesn’t work well. This is especially true at a time when the world is trying to recover from a global economic crisis and so needs a banking system that is both more liquid and can manage financial risks better. I’m by no means suggesting that banks should be let off the hook for ignoring AML and CTF regulations, as they too often do. But a great deal of unnecessary inconvenience and cost is borne by customers, and a large part of the developing world is being left unbanked, with negative economic consequences, because of a system that needs change.