Terrorists need to move money across international borders to fund their work. One of the main fronts in the war on terror is the Treasury's fight to close off the funding mechanisms.
Glenn Simpson and Benoit Faucon report in today's Wall Street Journal about a development in terrorist efforts to fund their operations: Trade Becomes Route for Money Tied to Terrorism (July 2)
After a long and intense crackdown on cross-border money laundering, authorities say terrorist supporters, narcotics syndicates and sanctions busters have adopted a new method of sneaking funds past the watchful eye of the law: the global commodity trade.
The practice, known as "trade-based money laundering," was pioneered by Latin American drug smugglers in the 1990s. Now, it is spreading to Europe and the Middle East.
Here's how the practice works: Instead of wiring money directly from one country to another, a would-be money launderer buys foodstuffs like sugar or vegetable oil or other goods. Those goods are far easier to deliver to restricted destinations like Iran and the Palestinian territories because they often look like legitimate aid. When they arrive, local merchants transfer the goods on, or simply sell them for cash. A portion of the proceeds end up with local terrorist groups or criminals....
The illicit trades are often blended in with legitimate ones, which makes them difficult to single out and the source of their funding hard to trace. Authorities say the scope and prevalence of the practice is tough to determine with any precision, but it is clearly on the rise.
This sounds like an expensive way to move money.