Gruesome Anniversary Approaches

Evolution of both the financial system and terrorist supporters

Courtesy of the US Defense Department

NPR today reported that a general strike is planned in Israel for tomorrow on the heels of news that the designated foreign terrorist organization (FTO) HAMAS has murdered six more Israeli hostages, whose bodies were found in Gaza this weekend. The strike would be the first since HAMAS (yes, it’s an acronym for Harakat al-Muqawama al-Islamiya (Islamic Resistance Movement) ruthlessly attacked Israel nearly 11 months ago, murdered more than 1200 people and raped and tortured hundreds more.

Scores more protest all over the United States and Europe, including thousands of protesters at the Democratic National Convention, US college and university campuses, and European schools.

Many of the protesters savagely cheer mass rape, torture, and murder of innocent Israelis. Some are too young to remember the September 11th attacks on the United States in 2001 and do not associate the terrorist acts committed that day with the HAMAS attacks of October 7, 2023.

To be fair, HAMAS and al-Qa‘ida are different organizations. The National Counterterrorism Center’s guide to counterterrorism (CT) explains that HAMAS, formed in late 1987, is concentrated in the Gaza Strip and areas of Israel’s West Bank. HAMAS is focused on the eradication of the Jewish state.

Its roots are in the Palestinian branch of the Muslim Brotherhood, and it is supported by a robust sociopolitical structure inside the Palestinian territories. The group’s charter calls for establishing an Islamic Palestinian state in place of Israel and rejects all agreements made between the PLO and Israel.

Usama Bin Ladin (UBL) formed al-Qa‘ida in 1988, according to NCTC, and declared the group’s goal as the establishment of a pan-Islamic caliphate throughout the Muslim world.

Toward this end, al-Qa‘ida seeks to unite Muslims to fight the West, especially the United States, as a means of overthrowing Muslim regimes al-Qa‘ida deems “apostate,” expelling Western influence from Muslim countries, and defeating Israel. Al-Qa‘ida issued a statement in February 1998 under the banner of “the World Islamic Front for Jihad Against the Jews and Crusaders” saying it was the duty of all Muslims to kill US citizens—civilian and military—and their allies everywhere. The group merged with the Egyptian Islamic Jihad (al-Jihad) in June 2001.

The groups differ in tactics and support as well. HAMAS uses a variety of military equipment in attacks against Israeli military forces and civilians, as well as against ISIS and other Salafist armed group members based in Gaza. The group also uses cyber espionage and computer network exploitation operations.

Al-Qa‘ida has affiliates scattered all over the Middle East and Africa and exploits undergoverned areas, regional conflicts, and local grievances to recruit new members and derive resources. Al-Qa‘ida affiliates remain committed to attacking the United States and US interests abroad and use a variety of tactics, including conventional assaults, improvised explosive devices, suicide operations, and kidnappings. Al-Qa‘ida also encourages its adherents worldwide to conduct operations in their own countries using readily available weapons.

But these are terrorist groups, as are Iran-supported Huthis, Hizballah, the various terrorist groups in Africa, and those in Indonesia, Philippines, and other areas of the world.

To come back to the protesters on college campuses and streets today, I doubt that most of them comprehend the differences between the terrorists groups. They couldn’t tell you why HAMAS is different from ISIS, how the Huthis differ from al-Qa‘ida, and how the world CT environment has changed since the 9/11 attacks. They don’t understand why HAMAS and Hizballah have been designated as FTOs by the United States but not by many other countries. They couldn’t care less who provides financial support to the various FTOs, how that money moves, and how the world’s financial system has changed in response to the 9/11 attacks. But they sure get upset when bank checks intended to prevent terrorism financing and other illicit transactions force them to provide identity documents and other documentation aimed at protecting the bank and the financial system.

To be fair, it’s not just the people who are too young to remember 9/11 who raise a stink about know-your-customer (KYC) practices. Older customers who fail to understand the global nature of banks and the importance of stopping terrorists and other illicit actors from accessing the financial system also get bent out of shape. They haven’t forgotten 9/11, but they’re also not aware of the changes that have taken place in the financial system and illicit actors’ ability to move funds after the attacks.

The younger crowds who grew up with the current anti-money laundering/counterfinancing of terrorism (AML/CFT) requirements for financial institutions probably don’t remember anything different. But they don’t like to be inconvenienced either. This generation is used to instant gratification. They’re used to immediate results courtesy of technological advances, and providing extra documentation for KYC requirements and the possible delays are not making them happy.

The al-Qa‘ida terrorists in 2001 were not experts in the use of the US financial system. They simply avoided scrutiny by engaging in a series of relatively unremarkable transactions, according to the 9/11 Commission report published in 2004. Some of them used fake Social Security numbers to open accounts, and the banks never checked them. Most of them used accounts in their own names, however, and stringent KYC requirements just weren’t a thing.

The checks instituted to stop money laundering in the financial system did not fail. They were at the time mostly geared toward stopping drug trafficking organizations from laundering money through US banks. The financing of terrorism didn’t become a major issue until after the 9/11 attacks, but now CFT efforts and customer identification are critical to protecting the US and global financial systems.

So the biggest things that changed since the 9/11 attacks are that KYC checks by financial institutions are fundamentally viewed as a core part of national security. Banks are expected to know their customers and even their customers’ customers, they’re expected to know who is using their financial institution, how they’re using it, and their possible questionable connections to terrorist organizations or state-sponsors of terrorism.

Do they appear on sanctions lists?

Are they located in a country that is either known to be high-risk for terrorism or is geographically close to one?

Are they linked to terrorist groups or state regimes that support terrorism?

All these questions and more are part of protecting the integrity of the global financial system aimed at preventing bad actors from accessing it in the first place, identifying terrorist-related capital earlier, and extracting or freezing it.

Terrorist methods of raising funds have evolved as well.

Yes, terrorist groups still use kidnapping-for-ransom operations, state funds and support, extortion, and counterfeiting, among other ways, to raise funds. But now there’s crowdfunding, social media platforms and messaging apps, private fundraising networks, and “super-chat” features during webcasts and other online events that help them raise money from sympathizers worldwide.

Even the supporters of terrorism themselves have changed!

Many groups—including socialist organizations and BLM affiliates—openly applaud the HAMAS attacks of October 7, praise Hitler and the Nazis, and advocate for the destruction of Israel.

Assuming that many of these groups will try to use the US financial system to move money to support groups such as HAMAS and Palestinian Islamic Jihad (PIJ) is probably a sound strategy. Many of these protesters are college students, who are familiar with today’s financial technologies, such as crowdfunding platforms, private messaging, and social media, as well as the use of peer-to-peer (P2P) platforms to move cryptocurrencies and other digital assets.

We already know that HAMAS has used complicit virtual asset services providers (VASPs) and other money transmitters to move funds. In the aftermath of the October 7 HAMAS attacks, OFAC designated a Gaza-based VASP, Buy Cash Money and Money Transfer Company for providing financial services to HAMAS. The same entity is also involved with funds transfers on behalf of other terrorist groups. 

Treasury late last year reached a record settlement with virtual currency exchange Binance for violations that included failure to implement programs to prevent and report suspicious transactions with terrorists—including HAMAS, PIJ, al-Qa‘ida, and ISIS.

So as the gruesome anniversary of 9/11 approaches, we would be smart to remember why we fight, how terrorist groups have evolved, and how the efforts to fight them have progressed and changed as well.