ABSTRACT
Terrorism has presented political leaders, military strategists, law enforcement agencies and analysts with a formidable challenge. The same has been the case with the battle against terrorist financing. Terrorists have been exploiting an increasing number of “fault zones” around the world not only for logistical, training and operational purposes but also for fund raising.1 Increasing transborder mobility, improvement of communications technologies and opportunities created by the global financial and communications market has enabled terrorists to create international matrices of operational, logistical and financial networks.2 Such networking has been quite significant among militant Islamist groups like al-Qaeda, Hamas, Hezbollah and Jemaah Islamiyah. This has been most pronounced in the realm of terrorist financing, with financial exchanges both within and among various groups. The major task, therefore, is how best to expose this “lifeline” or “lifeblood” of the terrorist groups, render it vulnerable and ultimately sever it. The real challenge, however, is to retain the flexibility and efficiency of global financial institutions and yet ensure that terrorists do not abuse the system.3 This is not an easy task by any means. The threats posed by contemporary terrorist groups and their operations are global in nature. Hence these threats can only be countered through a global response and strategy. Cooperation among nations is also strongly indicated given the impact of terrorism and terrorist financing in both domestic and international context. Terrorist attacks have grown in sophistication and lethality. Terrorists, moreover, are proving more adroit than the states at adapting to the imposition of controls, especially in global financial systems. As Loretta Napoleoni notes, in response to counter-measures, terrorists have skilfully restructured the financial systems supporting their activities to the extent that counter-measures are often obsolete even before they are implemented.4
