Financing Terrorism

This chapter reviews the fundamentals of terrorism financing and identifies what has been learned from the successes and failures of state responses to this phenomenon. The globalization of the world economy during the late twentieth century created new opportunities for terrorist organizations to move resources acquired from wealthy individuals, popular support, state sponsors, or participation in illicit economies across international borders and use these funds to support terrorist attacks. State responses following the September 11, 2001 terrorist attacks in New York and Washington, DC, created a new international counterterrorism financing regime that led to the relative “hardening” of the developed world against terrorist financing. This altered terrorist incentives and contributed to shifting large-scale financial operations towards lower risk jurisdictions in the rest of the world. The chapter concludes by identifying key theoretical and policy issues that remain to be addressed by future research into terrorism financing.