Funding Terror

60 Pages Posted: 11 Mar 2013 Last revised: 25 Mar 2014

See all articles by Shima Baradaran Baughman

Shima Baradaran Baughman

Brigham Young University - J. Reuben Clark Law School

Michael Findley

University of Texas at Austin

Daniel L. Nielson

Brigham Young University

J. C. Sharman

Griffith University

Date Written: February 2014


The events of September 11 forever changed the political and legal response to terrorism. After more than ten years, two wars, several targeted military strikes, and significantly increased surveillance, we still have not succeeded in stopping the growth of Al-Qaeda and other terrorist organizations. The war on terror has not just been a military one. To stop terrorism, it is imperative to cut off the flow of terrorism financing. To this end, a number of nations have created financial laws that prohibit the formation of anonymous companies and monitor suspicious bank transfers. These laws have been touted as evidence that we are winning the war on terrorism. This Article questions their efficacy. In particular, this Article proves how easy it is to form a terrorist finance network and exploits the impotence of both international and domestic financial regulations that have been passed in this area. The Article presents findings from the largest global randomized controlled trial to date. In our experiment, we acted as customers seeking to form anonymous shell companies in a variety of scenarios resulting in either greater risk or greater reward. On the whole, forming an anonymous shell company is as easy as ever, despite increased regulations following 9/11. The results are disconcerting and demonstrate that we are much too far from a world that is safe from terror.

Keywords: terrorism, war on terror, terrorism financing, shell company, anonymous, randomized controlled trial, money laundering, corruption, charity, FATF, UNOTC

JEL Classification: K33, C93, F23, G15

Suggested Citation

Baughman, Shima Baradaran and Findley, Michael and Nielson, Daniel L. and Sharman, J.C., Funding Terror (February 2014). University of Pennsylvania Law Review, Forthcoming, Available at SSRN:

Shima Baradaran Baughman (Contact Author)

Brigham Young University - J. Reuben Clark Law School ( email )

430 JRCB
Brigham Young University
Provo, UT 84602
United States

Michael Findley

University of Texas at Austin ( email )

2317 Speedway
Austin, TX Texas 78712
United States

Daniel L. Nielson

Brigham Young University ( email )

Provo, UT 84602
United States

J.C. Sharman

Griffith University

170 Kessels Road
Nathan, Queensland QLD 4111

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