Moving Money for Al-Shabaab
Group Profile
While many terrorist organizations prefer cash due to its anonymity and ease of movement, the use of cryptocurrency has also been on the rise in recent years. Al-Shabaab, however, stands out for its significant reliance on mobile money to conduct transactions. In addition to mobile money, the group also still uses cash, formal financial institutions, Hawala, and money service businesses to support its operations.1
In fact, Al Shabaab is one of the only terrorist groups around the world that has not used cryptocurrency to move money. This is likely due to a lack of counterterrorist financing pressure that has not forced the group to adapt to cryptocurrency and the existence of other financial technologies that can facilitate payments for the group.
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Mobile Money
Mobile money transfers using US dollars have become a standard for conducting everyday transactions in Somalia. In 2023, the Africa Center for Strategic Studies highlighted that there were an estimated 155 million mobile money transactions in the country in a month, worth approximately $2.7 billion.
Al-Shabaab has capitalized on the adoption of the technology. One of the group’s financiers, Jim'ale Ali Ahmed Nur, allegedly established a mobile money transfer business, ZAAD. He specifically made a deal with Al-Shabaab to remove identification requirements for transactions. This lack of oversight made the transfers significantly more anonymous and harder to trace.
Companies that refuse to cooperate with Al-Shabaab have been coerced to do so. The group has banned certain mobile banking services and threatened national telecommunications companies operating in areas under its control. These actions are designed to help the group avoid detection, preserve the flow of funds, and maintain an economy that enables Al-Shabaab to continue extorting individuals and businesses.
Cash
While mobile money is Al-Shabaab’s preferred method for many transactions, Zakat is primarily collected in cash. The group relies heavily on US dollars and Somali shillings to store and transfer funds.2 The Global Initiative Against Transnational Organized Crime surveyed drivers in regions under Al-Shabaab’s control and found that they all reported paying Al-Shabaab-imposed taxes exclusively in cash, typically in US dollars. Upon payment, drivers received a receipt that acts as a pass, allowing them to transit through subsequent checkpoints without incurring additional fees.
Al-Shabaab further uses cash couriers to move small amounts of money. Though individual sums appear insignificant, when aggregated across numerous account holders or couriers, they amount to substantial totals.3 For larger transactions, smuggling methods are commonly used to avoid detection.4 Al-Shabaab often employs women as couriers, taking advantage of the fact that they are less likely to be thoroughly searched at checkpoints or subject to financial monitoring. To further disguise the transfer of significant sums, women are often instructed to buy goods in one location and sell them in another, allowing the group to move money across regions under the pretence of trade.
Financial Institutions
Somalia has thirteen licensed banks operating across the country, with major institutions including the International Bank of Somalia, Premier Bank, Salaam Somali Bank, Dahabshiil International Bank, and Amal Bank. Somalia also has 14 money transfer businesses and four mobile money service providers. However, the Somali Central Bank has not issued official currency since the collapse of the state in 1991, leaving nearly all Somali shillings in circulation technically counterfeit. As a result, while larger-scale operations—such as those involving Al-Shabaab—function in US dollars, over 80% of everyday transactions in Somalia are low-value, under one dollar, and conducted in Somali shillings.
Despite the fragmented nature of Somalia’s financial system, Al-Shabaab continues to exploit formal institutions. In 2024, the criminal trial of Hassan Osman Adam—a land broker turned financial facilitator—revealed the group’s involvement in Mogadishu’s financial institutions. Court evidence showed that Adam opened 12 bank accounts using his and his family members’ credentials, through which over $12.6 million was funneled in just seven months. His minimal compensation—only $25 per account—suggests Al-Shabaab depends on a network of coerced or low-level intermediaries to obscure its activities while minimizing operational costs.
Al-Shabaab not only leverages these accounts but has also institutionalized internal controls to minimize corruption within its ranks. In some cases, taxes extorted from civilians are deposited directly into Al-Shabaab-controlled bank accounts. In others, cash is collected at checkpoints and managed through an extensive accounting process. According to data from the Hiraal Institute, funds are logged by receipt serial numbers and collected by rotating accountants every ten days. These funds are verified by auditors, deposited into banks with proper documentation, and then delivered—often via local money transfer agencies or direct deposits—to the group’s operational hub in Jilib.
Money Service Businesses
Funds from Somali diaspora remittances were estimated at $2 billion annually in 2024. Due to concerns over terrorist financing, institutions like Merchants Bank of California and Barclays Bank have shut down Somali transfer accounts. Companies like Western Union only operate in Somaliland, leaving rural areas of Somalia reliant on hawala or smaller businesses. All financial companies facilitating movement of funds into or out of Al-Shabaab controlled territory are likely to be taxed.
Hawala
Al-Shabaab support networks often use Hawala to send remittances for income support and donations.5 Further, al-Shabaab taxes transactions within Hawala networks by monitoring brokers, senders, and recipients.6 While Hawala remains a significant method for remitting funds (55.4%), mobile money is growing in popularity (41.5%) due to its convenience. Mobile platforms are more accessible and allow users to avoid the high fees - up to 5% for hawala transfers, leading to a decline in its use for remittances and tax collection, though it still plays a role in Al-Shabaab’s financial activities.
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A Permissive Regulatory Environment
While some Somali banks comply with regulations requiring identification for account holders and reporting suspicious transactions, many deposits and transfers are made without proper documentation. Money service businesses often refrain from reporting transfers over $10,000 due to fears of retaliation by Al-Shabaab. In 2019, only 9 suspicious transactions and 113 large transactions were reported by private financial institutions in Somalia. The regulatory environment for mobile money and know-your-customer requirements is weak, allowing greater anonymity for account holders. As a result, Somalia’s financial sector remains fragmented, poorly regulated, and vulnerable to exploitation—conditions Al-Shabaab exploits.
Al-Shabaab has institutionalized its financial operations, even appointing a Humanitarian Coordination Officer to monitor and assess aid agencies in areas under its control.7 This complex, bureaucratic structure enhances the group's ability to manage and exploit financial resources effectively. We’ll dive deeper into Al-Shabaab’s financial management in future posts.
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Fathima Azmiya Badurdeen, “Al-Shabaab Financing: Sources, Methods, and Countering Terrorist Financing,” in Countering Terrorist and Criminal Financing (CRC Press, 2023).
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
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