How terrorists use their money
For weapons, components, to sponsor other groups, and more.
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How terrorist groups, cells, and individuals use funds
How terrorist groups, cells, and individuals use funds is often given short shrift in the literature on terrorist financing, in part because it is relatively obvious: they use money to conduct terrorist attacks. However, more nuance around the specifics of how terrorists use funds can help illuminate the full scope of their procurement of goods and materials for their activities as well as the relatively more quotidian needs of a terrorist group, all of which are important for understanding the true cost and techniques of terrorism. This accounting can help balance the conversation around the wealth of terrorist organizations by illustrating that although many terrorists (particularly organizations) generate significant revenue, they also have substantial costs, and even low-cost terrorist attacks might require more financial resources than is evident at first glance.
Terrorist organizations, cells, and individuals all have a discernible need for money. They need food and shelter; money to pay for travel (either locally or internationally), communications, and internet access; and a host of other basic human necessities. Where they differ from the norm, however, is in their desire for weapons, operational security measures, and funds to engage in a host of terrorist activities. Identifying these uses of terrorist funds can help shed light on differences between organizational and operational financial needs; although there are many aspects that overlap, differences can help identify various types of terrorist activity as well as opportunities for detection and disruption.
Organizational use of funds
Terrorists’ organizational use of funds can be broken down into a handful of categories that encompass a variety of activities:
terrorist attacks, including weapons, components, and training
terrorist group patronage
propaganda and recruitment
social services, sustenance, salaries, and support
intelligence gathering and operational security
corruption and political lobbying
Terrorists’ operational activity also falls into many of these categories and of course differs in scope and scale from their organizational use of funds.
Operational use of funds
Terrorist attacks are often said to be low cost, but this assessment does not take into consideration the variety of costs actually incurred through the planning and preparation for those attacks. Even for terrorist groups conducting attacks within their area of operation (rather than farther afield),
costs can be substantial. For instance, for al-Qaeda in Iraq, individual attacks were relatively expensive but not because of the material the group used to conduct them. The group had to pay salaries to fighters as well as to the families of imprisoned and deceased members. The organization also had to secure and maintain safehouses and transportation for its operatives. The attacks themselves are estimated to have cost around $2,700, but this underestimates the overall cost that the group incurred for each attack.1 Taken as a whole, terrorist attacks (and terrorist organizational support) cost far more than is often assumed, meaning that the amount of money terrorists have to dedicate to these activities is far more than the numbers suggest.
Examples of the types of expenses incurred for a terrorist attack abound. For instance, in the Madrid attack of 2003, the terrorist group used the money raised to pay for safehouses, phones, logistical support, and the weapons used in the attack.89 The cars used before and after the attack were likely stolen.2 The Manchester bomber also incurred operational security expenses. In the weeks before the attack, he rented a second flat several miles from his home, paying about $1,000.3
Policy implications
For counter-terrorism options, it’s important to rectify the neglect in our analysis of this type of financing: by understanding how terrorists use their funds, a better appreciation of their capabilities and likely costs can be developed. This categorization also sheds further light on the actual financial health of terrorist organizations by expanding our understanding beyond their revenue-generating activities, accounting for expenditures as well.
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Benjamin W Bahney et al., “Insurgent Compensation: Evidence from Iraq,” American Economic Review 103, no. 3 (May 1, 2013): 518–22, https://doi.org/10.1257/aer.103.3.518.
Fernando Reinares, Al-Qaeda’s Revenge: The 2004 Madrid Train Bombings (Woodrow Wilson Center Press / Columbia University, 2017), 72.
Robert Mendick, Martin Evans, and Victoria Ward, “Exclusive: Manchester Suicide Bomber Used Student Loan and Benefits to Fund Terror Plot,” The Telegraph, May 26, 2017, https://www.telegraph.co.uk/news/2017/05/26/exclusive-manchester-suicide-bomber-used-student-loan-benefits/.