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Authors

William Hett

Abstract

Informal money transfers present a significant challenge to combating the financing of terrorist organizations worldwide. Although the U.S. and other governments have implemented measures to restrict terrorist financing, these measures were designed to regulate formal financial institutions. Accordingly, those seeking to avoid detection have turned to other methods of transferring money, such as commodities trades, hawala, and digital currencies. Many terrorist operations do not require large sums of money, making the detection and prevention of even modest transfers important. For example, the September 11 Commission estimated the cost of carrying out the 1998 U.S. embassy bombings, which killed 224 people in East Africa, at only $10,000. Al Qaeda funded the October 18, 2002 bombing in Bali for around $20,000, killing 202, and the 2004 Madrid train bombings cost approximately $70,000, killing 191. The London bombings of July 7, 2005 were estimated to have cost several hundred to 8000 pounds sterling (up to $15,600) and killed 52. Even large-scale attacks with high levels of devastation are within reach of a well-financed terrorist group. The September 11, 2001 attacks in the United States were relatively inexpensive to carry out at an estimated $400,000 to $500,000, killing approximately 3,007 people. The low financial cost of carrying out these deadly attacks necessitates a focus on both traditional and non-traditional methods of transferring funds.

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