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The Security Index Occasional Paper Series came out with the report "The Price Tag: Foreign Financing of North Caucasian Terrorism" by Alexey Polyakov

25.09.2020

MOSCOW. SEPTEMBER 25, 2020. PIR PRESS. The Security Index Occasional Paper Series came out with the report "The Price Tag: Foreign Financing of North Caucasian Terrorism" by Alexey Polyakov.

This paper is devoted to analyzing external sources of financial support of terrorism in the North Caucasus – a region of the Russian Federation notorious for the military crackdown on the Chechen insurgency in the 1990s and the continuous terrorist activity which has led to hundreds of attacks against civilian and military targets throughout Russia. The author brings together scant pieces of information on the topic to present a study that could contribute to designing better law-enforcement and security practices intended to disrupt the financing of terrorism in Russia from abroad. This research is based on open sources and may serve as a framework for further investigation with the use of classified data by specialized agencies.

Key findings:

  • The issue of external financing of contemporary terrorist groups operating in the North Caucasus does not receive much attention by the expert community.
  • In the mid-1990s, the Chechen insurgency relied primarily on foreign financial assistance, but nowadays terrorist groups in the North Caucasus are mainly sustained by a number of domestic sources. The current prevalence of the terrorists’ domestic financial sources poses a danger of mistakenly diverting attention and efforts of law enforcement and security agencies to cutting off these sources within Russia. Relatively insignificant external financial sources may gain prominence if left unattended.
  • Apart from money, foreign terrorist fighters bring workable, cost-effective tactics to the terrorists in the North Caucasus.
  • The diversity of routes of financial assistance to North Caucasian terrorists complicates the task of tracking the money flows to them.
  • While the financial support coming from Arab sympathizers might seem obvious and is frequently mentioned in the literature, donations originating in Europe should also raise a particular concern. Such funds are usually raised in Muslim neighborhoods of European cities in the form of zakat and then transferred to the North Caucasus either through cash couriers or charities. 
  • The following means used to move money to the North Caucasus to support regional terrorism: wire transfers, couriers, hawala, and non-profitable organizations.
  • Given that cryptocurrencies and cyber space in general have not been properly regulated in Russia so far, this legislative gap allows for ample opportunities for financing North Caucasian terrorists from abroad without risks of being detected. New legislation is needed to regulate informal-value transfer systems and cyberspace, due to both having a tremendous potential for money transfer.

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