The House Committee on Financial Services’ Subcommittee on Terrorism and Illicit Finance heard testimony from five expert witnesses in a hearing entitled Survey of Terrorist Groups and Their Means of Financing on September 7 2018. Ms. Katherine Bauer of the Washington Institute for Near East Policy noted that “critics are right to highlight the high costs of anti-money laundering and CFT regulation…and the need to better balance some of the competing but equally important priorities, such as the efficient delivery of timely humanitarian aid.”
The hearing was to provide up-to-date information about which terrorist groups represent the highest threat, and the new ways that they finance new operations and infrastructure. The subcommittee heard how the threat of terrorism continues to evolve, that efforts to combat terrorist financing are a “central pillar” to combatting all forms of terrorist activity, and that regular adaptation by law enforcement, financial institutions, and regulators is needed in order to remain “vigilant.”
In her written testimony, Ms. Bauer noted, “As conflicts continue with no end in sight across the Middle East and North Africa—from Syria to Yemen to Libya—charities are crucial for alleviating the accompanying humanitarian crises.” None of the witnesses mentioned any terrorist financing threat posed by civil society. Instead, Mr. Oren Segal of the Anti-Defamation League testified that foreign terrorism should not be the only counterterrorism concern for the U.S. He said, “over the past ten years, Domestic extremists of all kinds have killed at least 387 people in the US… approximately 71% were at the hands of right-wing extremists, such as white supremacists and anti-government extremists.” Mr. Segal explained that these organisations were largely self-funded.
Mr. Yaya J. Fanusie of the Foundation for Defense of Democracies rejected concerns that cryptocurrency has been adopted as a major source of terrorist financing. He explained that managing large amounts of cryptocurrency requires extensive cybersecurity knowledge, leading most groups to prefer cash transactions. Dr. Colin P. Clarke of RAND Corporation corroborated this testimony, noting that “many terrorist groups attempt to avoid the formal financial system.” Dr. Clarke explained that a key source of income for terrorist groups like ISIS comes directly from the territory they controlled, which provides lucrative resources, such as oil, and a taxable population. Ms. Bauer also highlighted the oil economy as under threat from terrorist financing, using the example of Yemen in 2015 where Al-Qaeda in the Arabian Peninsula (AQAP) forcibly occupied the port of al-Mukalla, raising as much as $2 million per day in taxes on goods and fuel, while also seizing nearly $100 million from a Central Bank branch and extorting funds from the national oil company.