The financing of terrorism: Sources, operation methods, and countermeasures

Terrorism has global reach in its activities and in its sources of funding. There are a variety of sources operating through methods that may be legal or illegal and through ways that are often indirect. Indeed, so-called charitable organizations are often used as a front to mobilize funds or serve as a means for the money. It is clear that if acts of terrorism are to be eliminated, the flow of money on which they move about must be stemmed at the source. This is one area in which stringent financial procedures and controls could be helpful. Equally important is the control that central banks must exercise in the financial sector---and the banking system in particular---to ensure greater accountability and better record keeping. However, as long as there is someone who operates a hawala system, money will keep flowing. No less important is the cooperation between countries and the enforcement of international conventions.