March 01, 2005
Rico Carisch is a frequent financial consultant and member of UN Panels of Experts, Journalist, and analyst specialized in compliance responses and security risks involving corporate networks, political power structures and rogue enterprises (criminal and terrorist)
Q: How can we tell a terrorist organization from a merely criminal one? Where are the boundaries, and how does the criminal activity of a terrorist band differ from the purely "businesslike" and non-political activities of a merely criminal entreprise?
A: The basic differences between criminal and terrorist organizations is that for criminals, illicit acts are the means to the goal – which is wealth. For terrorists, the illicit act is the goal – the exploding bomb which causes destruction. Criminals are satisfied with accumulating and maximizing material gains whereas for terrorists material interests are only enablers of their violent pursuits.
This very schematic and theoretical distinction falls quickly apart as a useful model for identifying criminal and terrorism patterns. In the real world, other issues come into play. There is also the additional challenge that well established, organized terrorism such as the armed groups associated with Hezbollah, Hamas, IRA, ETA, etc. are subject to constraints that small, ad-hoc groups of terrorists who operate with very little institutional support, do not have to consider.
Broadly speaking, and as a consequence of their organized activities both, criminals and terrorists have to pay heavy transactional costs in order to pursue their long-term objectives. For organized criminals to benefit over an extended period of time from their gains, well organized money laundering schemes are necessary. Terrorist organizations may face the same requirements. Their threats can only be menacing and ongoing, if their funding is institutionalized, and therefore, they, too may depend on well organized money laundering operations. Efficient long-term money laundering operations require solid structures and organizational support, manpower that has to be committed to defend these investments, and legal counsel and other services to build and maintain a screen of corporate entities.
For criminals these investments not only make sense, they are mandatory. After all, their goal is to achieve comfort, wealth, and eventually, they may even wish to become respected citizens. The smoother the conversion of illicit gains to licit wealth the closer criminals come to their ultimate goal. This is the cross section, where terrorism and crime go a separate path.
For terrorist organizations an opt-out or a change into legitimacy exists only as part of a political solution. They merely want to be a constant menace to the targeted society. For that purpose, they require infrastructure support and a ready supply of suicide bombers or fighters. The costs for these needs have to be met by whatever means available, be they legal or illegal. But there are significant motivations for terrorist organizations to procure funding and services as much as possible in a legal manner.
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Where criminality starts and stops depends much o the type of flow of money you are using as cash is far more difficult to trace than, say, capital flows through chequing accounts.
Posted by: Paul Jessup at March 11, 2005 12:00 PM
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