Australia/Israel & Jewish Affairs Council

Indonesia needs to "follow the money"

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Zachary Abuza


On September 11, the Indonesian Financial Transaction Reports and Analysis Centre announced that it had frozen the assets of three terrorist suspects on the United Nations Security Council (UNSC) 1267 list. Hambali, who masterminded the 2002 Bali bombings that killed 202 people, was a key conduit of al-Qaeda funds to its Southeast Asian affiliate Jemaah Islamiyah. He has been in US custody since August 2003. Umar Patek, also wanted in conjunction with the Bali bombing, was arrested in Abbotabad, Pakistan in January 2011 and extradited to Indonesia. The third individual, Zulkarnaen, is on the run. The three individuals, who are amongst 17 Indonesians on the UNSC 1267 list, held assets under US$100 each. The blogosphere and Twitter-universe were filled with guffaws.

With a mere US$300 seized from two already incarcerated individuals and one who has been in hiding since 2002, one could rightfully ask why even bother to expend limited government resources when other forms of counter-terrorism are seemingly more effective. Should those funds be used for developing counter-terrorism police forces, such as Indonesia's Densus-88, or spent on disengagement/de-radicalisation programs or prison reforms? It's a fair question. US$300 is less than one billable hour of a government attorney. But the financial instrument should remain part of our counter-terrorism toolbox for six key reasons.


First, if terrorism suspects believe that they are being tracked, or that the formal banking sector through the Belgium-based SWIFT networks are too vulnerable to government spying, it deters them from using traditional banking infrastructure and forces them to rely on less efficient means of moving money, such as cash couriers. Couriers are a vulnerable link that can be targeted. Governments have become much better at countering the movement of cash around the world and significant investments are being made in new technologies that can detect large amounts of cash. Even informal remittance companies, often referred to as hawaladars, are under more scrutiny; witness the Sept. 17 closure of an Australian remittance company suspected of sending money to ISIS via Turkey and Lebanon.

Second, the way UNSC 1267 and national legislation such as the US Treasury Department's Specially Designated Nationals (SDN) list or the Australian Transaction Report and Analysis Centre (AUSTRAC) operate mean that anyone who has financial dealings with designated individuals is subject to legal action Thus the mere act of donating funds to a charity controlled by someone on the 1267 list, for example, is illegal. This is a powerful deterrent that really targets the supply side.

Third, targeting terrorist financing does a poor job against individuals, but it is much more effective at targeting the social welfare structure of terrorist organisations. One is not born a terrorist; one becomes one through a process of recruitment and indoctrination. The primary means of recruitment are kinship, school/madrassa and mosque. So targeting the social services and welfare arms of terrorist organisations that are the primary conveyors for moving people from passive supporters to activists to militants can have a very important role in limiting recruitment over time. For every bomb-maker or AK-47-armed insurgent, there is a vast social network.Only by countering terrorist financing can governments begin to weaken terrorist holds over their communities.

The fourth reason is the Al Capone effect; it gives police and prosecutors another tool at their disposal to use against terrorist suspects. For example, the spiritual leader of Jemaah Islamiyah, Abu Bakar Bashir, is currently serving a 15-year sentence because his ostensibly overt and legal organisation, the Jamaah Ansharut Tauhid (JAT), was secretly funding a terrorist training camp in Aceh. Previous attempts to charge him for inciting terrorism had largely failed. Likewise, counter-terrorist financing legislation is giving the Indonesian and Malaysian governments some of their best legal tools to target supporters of ISIS in Iraq and Syria.

Fifth, making it harder for individuals to raise funds through seemingly legal channels, such as charitable contributions, forces terrorist groups to engage in crime, including robbery, kidnapping for ransom, extortion, narcotics, smuggling and trafficking. All of these erode terrorist organisations' legitimacy and moral and ideological standing amongst their constituents. Criminal activity dilutes their political focus and over time corrupts and degrades their organisation.

Finally, the act of tracking terrorist financing, tracing funds, donors, bank accounts, etc., is an intelligence bonanza. Yes, it requires resources, but relative to the price of military instruments, it is very cost effective. Moreover, the money and assets do not necessarily have to be frozen in order for security services to benefit.
Indonesia has been slow to get on board. In February 2013, the House of Representatives passed Law 9, "Bill on Prevention and Eradication of Crimes of Financing of Terrorism," yet it did not move against any of the 17 nationals and four charitable organisations on the UNSC 1267 sanctions list. The US$300 has been all that has been frozen, to date.

The public and politicians both like to see terrorists taken down, or are awed by drone strikes that target high value terrorists. Yet, decapitation strategies have only a limited effect; they can degrade but not destroy terrorist organisations. Targeting their social welfare infrastructure is less sexy, but it does a far better job in degrading the organisation over the long-run. Australia and the United States would be wise to encourage Indonesia to increase its monitoring and enforcement, but also to provide needed technical and financial assistance to their counterparts in Jakarta.

Dr. Zachary Abuza is a professor and analyst of Southeast Asian politics and security, and author of Militant Islam in Southeast Asia: Crucible of Terror (Lynne Rienner, 2003), amongst several other books.


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