Terrorists increasingly are diversifying their funding sources to support their violent and nefarious activities. That includes various criminal activities.
A new Union des Fabricants (UNIFAB) report, commissioned by the French government, highlights the important relationship between terrorism and counterfeiting in particular. The criminal-terrorism nexus manifests itself in several forms, but the main elements include: cooperation between terrorist groups and organized criminal elements, and crimes by terrorists which are conducted to finance their own operations.
Since 2001, profits from cigarette smuggling and counterfeiting account for over 20 percent of illicit financing for terrorist groups, the report says.
Terrorists' reliance on counterfeiting has attracted further attention with the rise of Islamic State terrorist networks. Without a formal state sponsor, and facing considerable setbacks in Syria and Iraq, ISIS may start to rely more on crime to fund operations. The terrorist organization also extensively recruits European operatives with criminal backgrounds.
Individual terrorists and cells depended on profits from selling counterfeit goods on numerous prominent occasions. For example, the Islamist terrorists responsible for the January 2015 attack in Paris earned money from drug trafficking and counterfeit sales, including Nike shoes. The Belgium city of Molenbeek, home to a disproportionate number of radical Islamist terrorists and sympathizers, is strongly associated with counterfeit activities. In 2012, for example, authorities there seized about three tons of counterfeit clothes, perfumes, and other accessories. The UNIFAB report suggests that law enforcement agencies in France and abroad need to stop treating counterfeiting as simply "petty crime" and understand it frequently bankrolls terrorist activity.
The report outlines counterfeiting activities by prominent terrorist organizations. Hizballah for example, has exploited counterfeiting methods on several occasions, including in 2003 when Lebanese authorities found containers full of counterfeit automobile parts worth over $1 million dollars intended for Hizballah supporters. In 2006, U.S. authorities arrested 19 people who were part of a counterfeit drug network spanning five countries and involved significant profits for the Iranian-sponsored terrorist organization.
Though Hamas' criminal financing operations are well documented, the report also describes Fatah and the Palestinian Authority members' suspected involvement in illicit financial activities and cooperation with criminal networks. Interpol believes that al-Qaida and affiliated organizations earned between $300 and $500 million in the last decade from illicit activities and smuggling counterfeit goods worldwide.
While the internet and the rise of virtual currency, such as BitCoin, allow for illicit transactions to remain anonymous, terrorists still rely on traditional and clandestine networks such as the Hawala (trust in Arabic) system to transfer money undetected. Counterfeiting is very profitable, carries relatively lax legal consequences and involves less risk compared to other financing activities. Beyond raising critical awareness, the report outlines key recommendations for law enforcement and counterterrorism agencies.
Click here to read the full report.