The attacks of September 11 and the global campaign against terrorism have put the spotlight on rogue capital, a growing problem for law enforcement and the financial sector. Using traditional and sophisticated techniques, terrorist and criminal groups have extended their reach beyond states to build multinational empires with pervasive, well-funded subsidiaries. Weak states, lax banking regulations, persistent corruption, and shadow financial systems compound the problem. Terrorists and criminals generate, manipulate, and launder funds in different ways and for different ends, but the links between them are growing stronger. As direct state sponsorship declines, terrorists have shifted increasingly toward illicit moneymaking. The question is how best to expose this money lifeline, render it vulnerable, and ultimately sever it. America has led the global effort to cut off the sources of money to these groups. It has worked through the Group of 8 and bilateral partners to strengthen initiatives against money laundering and manipulation. Yet compliance with such measures alone will not guarantee success. Economic assistance is needed to ease the domestic impact associated with the loss of illicit sources of foreign exchange in weak states. Helping such states to fight this problem is essential. It will entail strengthening justice systems and making bureaucracies more transparent to offset the increasing resort to corruption by those determined to circumvent stricter regulations.
Strategic Forum no. 191 (May 2002)