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Terrorist Financing and Money Laundering

26 Pages Posted: 8 Jun 2011  

Tim Krieger

University of Freiburg - Department of Economics

Daniel Meierrieks

University of Freiburg

Date Written: June 8, 2011

Abstract

Terrorism causes enormous costs to society. Since the 9/11 attacks, the “war on terror” has therefore been an important challenge to all civilized countries. In the present contribution we analyze the root causes and costs of terrorist activity, thereby setting the stage for discussing the need for measures against terrorist financing. We argue that running a terrorist organization requires substantial financial resources which are transferred to the groups through clandestine and often illegal channels. Anti-money laundering policies may appear useful measures to stop transfers to terrorist groups; however, they are not sufficient means to deal with all facets of terrorist financing. Compared to similar activities of organized crime, terrorist financing involves “reverse” money laundering. This is a consequence of some fundamental differences between terrorism and organized crime, which also lead to different implications in terms of choosing appropriate counter-measures.

Keywords: terrorist financing, causes and costs of terrorism, money laundering, organized crime vs. terrorism, anti-terrorist financing policies

JEL Classification: K42, H56, D74

Suggested Citation

Krieger, Tim and Meierrieks, Daniel, Terrorist Financing and Money Laundering (June 8, 2011). Available at SSRN: https://ssrn.com/abstract=1860069 or http://dx.doi.org/10.2139/ssrn.1860069

Tim Krieger (Contact Author)

University of Freiburg - Department of Economics ( email )

University of Freiburg
Wilhelmstr. 1b
Freiburg, D-79085
Germany

HOME PAGE: http://www.wguth.uni-freiburg.de

Daniel Meierrieks

University of Freiburg ( email )

Fahnenbergplatz
Freiburg, D-79085
Germany

HOME PAGE: http://www.wguth.uni-freiburg.de/mitarbeiter-en/dr-daniel-meierrieks

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