Terrorist Precursor Crimes: Issues and Options for Congress

Terrorist Precursor Crimes: Issues and Options for Congress

Order Code RL34014
Terrorist Precursor Crimes: Issues and Options
for Congress
May 24, 2007
Siobhan O’Neil
Analyst in Domestic Security and Intelligence
Domestic Social Policy Division

Terrorist Precursor Crimes: Issues and Options
for Congress
Summary
Terrorist groups, regardless of ideological ilk, geographical location, or
organizational structure, have certain basic needs in common: funding, security,
operatives/support, propaganda, and means and/or appearance of force. In order to
meet these needs, terrorists engage in a series of activities, some of which are legal,
many of which are not. Terrorist precursor crimes, offenses committed to facilitate
a particular attack or promote a terrorist campaign’s objectives, are thought to be
often carried out far away from the primary theater of conflict associated with a
terrorist group. Much of the precursor activity, especially with regard to crimes
conducted for the purpose of fundraising, takes place in wealthy Western countries,
including the United States. Precursor crimes, known and/or alleged, include various
fraud schemes, petty crime, identity and immigration crimes, the counterfeit of
goods, narcotics trade, and illegal weapons procurement, amongst others. The
implications of domestically occurring terrorist precursor crimes on the current threat
environment, and specifically the United State’s security posture, are not fully
understood.
It does appear, however, that the likely presence of terrorist groups or their
sympathizers conducting precursor crimes within the United States presents a series
of unique problems and challenges for U.S. law enforcement and intelligence
communities’ counterterrorism programs, many of which have important
implications for Congress. As Congress conducts oversight of the federal agencies
engaged in terrorist precursor crime investigations and intelligence efforts, this
phenomenon and U.S. efforts to identify, investigate, and counter it may be of
particular concern. One such issue is how these agencies coordinate with one another
on the issue of terrorist precursor crimes and whether there is an across-agency
strategy on how to deal with such activity. Beyond the federal government agencies,
there are numerous state, local, and tribal (SLT) agencies that are well positioned to
assist in the identification and investigation of terrorist precursor crimes, but it is
often unclear, and at the very least inconsistent, how these agencies are incorporated
into existing efforts. In addition to oversight, there are potential budgetary and
legislative issues related to terrorist precursor crimes that are of interest to Congress.
This report will not be updated.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Increase in Precursor Criminal Activity: Causes . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Decline in State Sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Amateurization of Terror . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Enhanced Counterterrorism Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Shift in Threat Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Examples of Terrorist Precursor Activity in the United States . . . . . . . . . . . . . . . 7
Front Businesses and Charities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Counterfeiting Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Counterfeit Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Narcotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Smuggling and Import/Export Violations . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Robbery/Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fraud (Credit Card, Benefits, Food Stamps, etc.) . . . . . . . . . . . . . . . . . . . . 12
Phone Scams and Cell Phone Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Bribery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Immigration and Identity Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Incitement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Division of Labor within Terrorist Organizations . . . . . . . . . . . . . . . . . . . . 19
Potential for Identification and Infiltration . . . . . . . . . . . . . . . . . . . . . . . . . 20
Precursor Crimes for Fundraising and Longevity of Terror Campaigns . . . 21
Precursor Crimes’ Effect on Threat Environment . . . . . . . . . . . . . . . . . . . . 23
Implications for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Federal Role in Intelligence/Investigation of Precursor Crimes . . . . . . . . . 24
SLT Role in Intelligence/Investigation of Precursor Crimes . . . . . . . . . . . . 25
Coordination of Federal and SLT Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Terrorist Precursor Crimes: Issues and
Options for Congress
Introduction
Irrespective of ideology or strategic goals, all terrorist groups have several basic
needs in common: funding, security, operatives/support, propaganda, and means
and/or appearance of force. In order to meet these needs, terrorists engage in a series
of activities, some of which are legal, many of which are not, including various fraud
schemes, petty crime, identity and immigration crimes, the counterfeit of goods,
narcotics trade, and illegal weapons procurement, amongst others.1 Terrorist
precursor crimes can be defined as unlawful acts undertaken to facilitate a terrorist
attack or to support a terrorist campaign. Many terrorist precursor crimes are carried
out far away from the primary theater of conflict associated with a particular terrorist
group. Much of the precursor activity, especially with regard to crimes conducted for
the purpose of fundraising, is thought to take place in wealthy Western countries,
including the United States.
This report provides an overview of the types of terrorist precursor crimes
known, and/or alleged, to have been employed by individuals and/or groups in the
United States. The report highlights issues related to the breadth of this activity in
the United States, as well as the opportunities for intelligence collection and law
enforcement-related countermeasures.
The report presents an analysis of the implications of domestically occurring
terrorist precursor crimes for U.S. security. The presence of terrorist groups or
terrorist sympathizers within the United States possibly conducting precursor crimes
presents a series of unique problems and challenges. Unfortunately, there does not
appear to be a consensus with regard to some of the fundamental questions associated
with this issue: How does the presence of precursor activity affect the current threat
environment? What is the current approach for dealing with terrorist precursor
crimes? How effective are current efforts and what are areas for improvement?
The report’s scope is largely limited to terrorist precursor crime occurring
domestically, although some foreign examples are mentioned to demonstrate the
importance of this issue and the extent terrorist groups are engaged in criminal
1 It is important to note that not all the individuals and/or groups that engage in the illegal
activities listed in this report are terrorists or have a nexus to terrorism. Indeed, it is more
likely that a very small percentage of individuals engaged in such activity are involved in
terrorism. The purpose of this report is to highlight some of those precursor crimes known
to be utilized and/or favored by terrorist elements in order to facilitate their attacks and/or
other strategic objectives.

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activity to forward their agendas. It is beyond the scope of this report, however, to
address each of the myriad national security policy implications associated with this
issue. Thus, one area, the role of federal, state, and local agencies in addressing
domestic, terrorist precursor crimes, is examined in greater detail.
Increase in Precursor Criminal Activity: Causes
According to numerous terrorism scholars and analysts, there are indications
that terrorists are increasingly relying on non-terroristic, precursor crimes to facilitate
their terrorist attacks and/or further their terrorist campaign.2 Additionally, it appears
that terrorist groups are diversifying and expanding the variety of crimes they
commit.3 The cause for the increase in pre-attack criminal activity may be due to the
following four factors:
! the decline in state sponsorship;
! the amateurization and decentralization of terror;
! enhanced counterterrorism measures,
! and changing terrorist demographics (i.e. shifts in ideology, strategy,
and capabilities).
It is important to note that not all groups and not all members and/or supporters
of such groups engage in such activity. There are some groups that appear adverse
to conducting criminal acts in order to facilitate their objectives out of ideological
concerns. Some may avoid criminal activity out of logistical concerns, for example
criminal activity may be viewed as a liability, enhancing the potential for detection
and apprehension of operatives. In other instances, criminal activity may be isolated
within a particular strata or division of a group, in order to protect key operatives,
spokesmen, and charismatic leaders from potential detection. There are instances
where a group’s involvement in precursor crimes remains the subject of debate.4
2 The Canadian Security Intelligence Service’s (CSIS) Integrated Threat Assessment Centre
(ITAC) “Actual and Potential Links Between Terrorism and Criminality,” Trends in
Terrorism Series, Volume 2006-5, available at [http://www.csis-scrs.gc.ca/en/itac/itacdocs/
2006-5.asp], accessed on May 4, 2007.
3 Ibid.
4 Al Qaeda’s purported tie to Afghan opium provides an interesting example. There have
been numerous assertions in the press that the group was heavily involved in its production
and trade. However, David Kaplan of US News and World Report cites counterterrorism
officials who call those assertions “flat wrong,” claiming, “long ago, al Qaeda strategists
reasoned that drug trafficking would expose them to possible detection...[and since] they
don’t trust many of the big drug barons...[they] encouraged their members not to get
involved with them” - David E. Kaplan, “Paying for Terror: How Jihadist Groups are Using
Organized-Crime Tactics — and Profits — to Finance Attacks on Targets Around the
Globe,” US News and World Report, December 5, 2005. If this account is accurate, al
Qaeda’s choice may have been borne of logistical security concerns and a lack of acute need
for funds. Yet, there are reports suggesting that while al Qaeda has not actively joined in on
the opium trade, it has increasingly utilized the smuggling routes used to move opium from
(continued...)

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Decline in State Sponsorship
State sponsorship of terrorism has dramatically decreased since the 1970s and
1980’s when Dan Byman estimates that “almost every important terrorist group had
some ties to at least one supportive government.”5 The manner and extent of state
sponsorship have changed significantly over the last several decades. By Byman’s
assessment, of the 36 terrorist groups the U.S. State Department had labeled with
Foreign Terrorist Organization (FTO) status by 2002, “twenty had enjoyed significant
state support at one point in history” and of that 20, only nine still maintained a state
sponsor.6 Coinciding with the end of the Cold War there was a shift in the manner
and volume of state sponsorship which forced many groups to identify other sources
of revenue.7
Some terrorist groups turned to legitimate investments and business
opportunities. Much attention has been paid to al Qaeda’s business dealings in Sudan
in the early 1990s. According to Jean-Charles Brisard who testified before the Senate
Banking Committee in 2003, Osama bin Laden invested in and/or operated a bank,
several import-export firms, several agricultural companies and a construction
company with connections to his family’s bin Laden construction conglomerate,
while living in Sudan between 1991 and 1996.8 As with many groups, al Qaeda used
an amalgam of means, both legal and illegal, to raise funds and facilitate its activity.
Reportedly, numerous groups rely heavily on a wide range of crimes to facilitate their
goals, including Hezbollah, the Irish Republican Army (IRA), Abu Sayyaf, the
4 (...continued)
Afghanistan to neighboring countries and beyond. In 2004, media reports suggested “recent
U.S. Navy seizures in the Persian Gulf of several small boats carrying heroin and hashish
along with alleged Al Qaeda operatives offered the first firm indication of a link between
the terrorist network and drug trafficking”- Liz Sly, “Opium Cash Fuels Terror, Experts Say;
Taliban, Al Qaeda Profit from Trade in Afghanistan,” Chicago Tribune, February 9, 2004.
Again, logistical concerns regarding the safe movement of operatives may have driven al
Qaeda into this marriage of convenience, if they are indeed involved in the opium trade
and/or utilizing related smuggling routes.
5 Dan Byman, Deadly Connections: States that Sponsor Terrorism, (Cambridge, UK:
Cambridge University Press, 2005), 1, henceforth referred to as Byman, Deadly
Connections.
6 Ibid., 3.
7 However, Byman says that some groups continue to receive significant financial support
from state sponsors (i.e. Hezbollah from Iran). Many groups receive other kinds of support
today other than money: operational/training, arms/logistics, diplomatic backing, help with
organization, ideological direction, and sanctuary. Byman, Deadly Connections, Chapter 3.
8 Jean-Charles Brisard, “Prepared Testimony of Jean-Charles Brisard International Expert
on Terrorism Financing, Lead Investigator, 911 Lawsuit CEO, JCB Consulting International,
Testimony before the Senate Committee on Banking, Housing and Urban Affairs, October
22, 2003, Federal News Service.

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Liberation Tigers of Tamil Eelam (LTTE) and the Revolutionary Armed Forces of
Colombia (FARC), among many others.9
Amateurization of Terror
As terrorism has become more decentralized over the last decade, with groups
adopting less hierarchical, cell networks and the proliferation of technology,
information, and inspiration to support autonomous terror, there has been a
proliferation of smaller, autonomous (or semi-autonomous) cells.10 Such groups
often have fewer concrete links to larger, more organized terrorist groups and thus
limited access to organized, large-scale fundraising mechanisms. In addition, many
of these smaller cells mount more limited and less sophisticated attacks, which
require less infrastructure, expertise, and expensive weaponry. Thus, amateur
terrorists are likely to require significantly fewer funds. For example, while the
September 11th attacks are estimated to have cost approximately $400,000 -
$500,000,11 the July 7, 2005 London bombings are estimated to have cost between
several hundred and £ 8,000 (approximately $15,600).12 This is not a phenomenon
limited to Britain. It appears that small, semi-autonomous terrorist cells in many
countries have discovered that they are capable of conducting violently disruptive
9 See for example Oded Lowenheim, “Transnational Criminal Organizations and Security:
The Case Against Inflating the Threat,” in International Journal, Vol. 57 No.4/Autumn
2002, available from [http://www.lexis.com], accessed on April 23, 2007.
10 Exactly how autonomous these newer, smaller terrorist cells are remains debated. Some,
like Bruce Hoffman, have argued that “ongoing investigations increasingly suggest that
recent terrorist threats and attacks — the foiled 2004 plan to stage simultaneous suicide
attacks in the United States, the 2005 suicide bus and subway bombings in London and the
August 2006 plot to blow up 10 planes over the Atlantic — were all coordinated in some
way by Al Qaeda and not by homegrown terror groups.” Bruce Hoffman, “Remember Al
Qaeda? They’re baaack: Defeating Osama bin Laden’s resurgent terrorist network requires
far more than military might,” Los Angeles Times, February 20, 2007. While these new
cells, like the one that perpetrated the 2005 London transit bombings, may have connections
to, and in some cases may have been in part trained, funded, or directed, by ‘corporate’ al
Qaeda, there is clearly a distinction between this type of cell and those that were handpicked
and directly managed by al Qaeda’s upper-level leadership. The former are clearly part of
a more decentralized, inspired cell network of like-minded believers who see themselves as
part of the global jihad, even if they don’t have the same level of involvement with the
professional terrorist cadre.
11 The National Commission on Terrorist Attacks on the United States, The Final Report of
the National Commission on Terrorist Attacks on the United States, Official Government
Edition, available from [http://www.9-11commission.gov/], accessed on October 30, 2006,
169.
12 Quoting British police officials, BBC, London Bombs Cost Just Hundreds, January 3,
2006 available from [http://news.bbc.co.uk/], accessed on October 30, 2006, and quoting
Home Secretary John Reid, BBC, Resourcing Blamed Over July Bombs, May 11, 2006
available from [http://news.bbc.co.uk/] accessed on October 30, 2006.

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activities without extensive outside financial and/or logistical support, and, as such,
numerous cells appear to have turned to precursor criminal activities to do just that.13
Enhanced Counterterrorism Measures
Enhanced counterterrorism measures, especially with regard to freezing certain
charity and front business holdings, additional regulations within the banking sector,
and monitoring money remittances may have caused terrorist elements to utilize
different techniques for fundraising and money laundering. One notable example of
a possible causal relationship is the result of the U.S. law enforcement crackdown on
the Irish Republican Army’s (IRA) American-based fundraising activities, which
some experts have cited as the driving cause of the IRA’s turn to criminal activity to
fill that void and continue to fund its initiatives.14 In the last three decades, the IRA
is reported to have been involved in everything from protection/extortion rackets,
bank robbery, tax evasion, construction fraud, weapons and explosives running, to
cigarette/narcotics smuggling.
Shift in Threat Environment
The terrorist threat environment has changed significantly since the dawn of
modern international terrorism in 1968. For example, the number of terrorist groups
with primarily religious objectives has risen dramatically, the lethality of terrorism
has increased, and the number of groups that are no longer satisfied with limited,
symbolic violence — but rather seek to cause large-scale carnage — has increased.
This altered terrorist demographic may help to explain why terrorist groups today are
increasingly reliant on precursor crimes.
At that time - the height of the Cold War - the terrorist threat environment was
thought to be dominated by “left-wing, revolutionary Marxist-Leninist ideological
organizations.”15 In 1968, according to data from the RAND/St. Andrew’s Terrorism
Chronology,16 eight of the 11 identifiable terrorist organizations could be classified
as such and the other three were Palestinian ethno-nationalist groups. Due to their
13 There are examples of terrorist cells that funded their activities through their own wages
and savings and/or a combination thereof with petty crime.
14 For example, Mark Hamm, Crimes Committed by Terrorist Groups: Theory, Research,
and Prevention, September 2005, available from [http://www.ncjrs.gov/pdffiles1/nij/grants/
211203.pdf], accessed on November 14, 2006, 5.
15 Bruce Hoffman, Inside Terrorism, (London: Indigo, 1999), 90, henceforth referred to as
Hoffman, Inside Terrorism.
16 According to a 1998-1999 RAND publication, “The RAND-St. Andrews Chronology of
International Terrorism is a computerized database of international terrorist incidents that
have occurred worldwide from 1968 to the present. The chronology has been continuously
maintained since 1972, first by RAND and since 1994 by the Centre for the Study of
Terrorism and Political Violence at the University of St. Andrews, Scotland.” Bruce
Hoffman, “Old Madness, New Methods: Revival of Religious Terrorism Begs for Broader
U.S. Policy Review,” Rand Review, Winter1998-1999, Vol. 22, No. 2, available from
[http://www.rand.org/publications/randreview/issues/rrwinter98.9.pdf], accessed on April
23, 2007.

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state sponsorship and concern that such activity would tarnish the statesman-like
image they created for themselves, many of these groups did not engage in significant
criminal activity. Today, groups with predominately religious or religio-nationalist
ideologies dominate the current threat environment. For example, in 1968, none of
the identifiable 11 terrorist groups was predominately religious in nature, but by
1995, 26 of the 56 (46%) known, active international terrorist groups in the
RAND/St. Andrews database could be classified as religious.17 As of October 2005,
the State Department had designated 42 groups as Foreign Terrorist Organizations
(FTOs), of which at least 21 (50%) could be classified as religious terrorist groups.18
Somewhat counterintuitively, many of the terrorist groups that are religious in
nature are involved in precursor criminal activity, even when said activity is
expressly prohibited in religious scripture.19 Potential rationalizations for this activity
could include First, any action that is undertaken in pursuit of the group’s ultimate
cause is deemed permissible. For example, numerous Islamist terrorist groups
promote the use of suicide bombing as a legitimate tactic in jihad despite the explicit
condemnation of suicide in the Quran.
Second, sometimes criminal activity allows groups to achieve two goals
simultaneously - generate funds and harm their enemies. This is iterated by the
purported comments of Abu Bakar Bashir, spiritual leader of the al Qaeda-linked
Jemaah Islamiyah (JI), an Islamist group in Indonesia. When questioned about JI’s
involvement in a series of jewelry store robberies believed to have financed the 2002
Bali Bombings, Bashir purportedly commented, “You can take their blood; then why
not take their property?”20 This sentiment is echoed by Baz Mohammad, the Taliban-
linked narcotics kingpin who was extradited to the United States in 2005. According
to the indictment issued by the U.S. Attorney’s Office, “in or about 1990, Baz
Mohammad met with members of the Baz Mohammad Organization in his Karachi,
Pakistan, residence and told them that selling heroin in the United States was a
‘jihad’ because they were taking the Americans’ money at the same time the heroin
they were paying for was killing them.”21
17 Hoffman, Inside Terrorism, 91.
18 “... having aims and motivations reflecting a predominate religious character or
influence.” - Ibid. 90. & U.S. State Department, “Fact Sheet: Foreign Terrorist
Organizations (FTOs),” October 11, 2005, U.S. State Department Website available from
[http://www.state.gov], accessed on June 14, 2006.
19 For example, the IRA, a political terrorist organization with religious overtones,
conducted numerous violent acts and other crimes over several decades, even though these
ran contrary to Catholic dogma. Another example is the numerous jihadi groups that
promote a Salafist school of Islam and a literal reading of the Quran, and yet utilize suicide
bombings, even though suicide is explicitly prohibited in the Quran.
20 David E. Kaplan, “Paying for Terror: How Jihadist Groups are Using Organized-Crime
Tactics — and Profits — to Finance Attacks on Targets Around the Globe,” US News and
World Report, December 5, 2005, henceforth referred to as Kaplan, “Paying for Terror.”
21 United States Attorney Southern District of New York, “United States Announces Historic
Extradition of Taliban-linked Afghan Narco-terrorism to New York,” Press Release,
October 24, 2005, available from [http://www.usdoj.gov/usao/nys/pressreleases/] accessed
(continued...)

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Examples of Terrorist Precursor Activity in the
United States
Although they often engage in many of the same activities, and despite the fact
that terrorist attacks are ultimately criminal acts, most terrorists fundamentally differ
from other criminals. It can be argued the latter are primarily driven by need, greed,
and opportunity, while most terrorists are predominately driven by ideology.
Terrorists may commit crimes because of that ideology or in support of more
immediate logistical needs to support the group’s long-term strategic ideological
goal(s). Terrorists commit crimes in order to raise funds, hide their activities, and
facilitate recruitment, propaganda efforts, and pre-operational planning. The
following is an overview of known terrorist precursor crimes that occurred within the
United States.22
Front Businesses and Charities
Terrorist groups often set up front organizations to raise and launder money,
recruit new members, and/or provide ideological and rhetorical support for the
organization’s cause. These front entities have taken the form of businesses,
charities, and other non-governmental organizations. For example, in December
2001, then U.S. Treasury Secretary Paul O’Neill announced that the U.S. government
had shut down three HAMAS-controlled organizations and frozen their assets in the
United States.23 In the Treasury Department press release, two of the organizations,
the al Aqsa bank and the Beit al Mal bank, were described as not “just banks that
unknowingly administer accounts for terrorists. They are direct arms of HAMAS,
established and used to do HAMAS business.”24
A third entity that had its assets frozen, the Holy Land Foundation for Relief and
Development (HLF), described itself as a charity dedicated to “prevent or alleviate
human suffering arising out of conflict or natural disaster, with the core of our efforts
21 (...continued)
on November 8, 2006.
22 Many of the successfully prosecuted cases and/or allegations of terrorist precursor
criminal activity could fall under the category of white collar crime. As this report
demonstrates, terrorists have engaged in a wide variety of criminal activities, ranging from
low-level ‘street’ crime to sophisticated white-collar crimes. However, there is not enough
publicly available data from which to draw definitive quantitative conclusions regarding the
breakdown of types of domestic precursor crimes. In general, it appears that larger,
‘professional’ groups are more likely to be able to engage in sophisticated, white collar
crimes, while smaller terrorist cells that lack extensive links to such groups and whose
members have little ‘formal terrorist training’ are more likely to engage in less sophisticated,
smaller-scale criminal enterprises.
23 U.S. Treasury Department, “Statement of Secretary Paul O’Neill on the Blocking of
Hamas Financiers’ Assets,” Press Release, PO-837, December 4, 2001, available from
[http://www.treas.gov], accessed on November 20, 2006.
24 Ibid.

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spotlighting the Palestinian refugees in Jordan, Lebanon, and Palestine.”25 The
Treasury Department, however, disagreed, stating “The Holy Land Foundation
masquerades as a charity, while its primary purpose is to fund HAMAS.”26 To date,
several people have pled guilty to or been convicted of providing material support to
a terrorist organization for their work with HLF, including Mohamed Shorbagi,27
Bayan Elashi, Ghassan Elashi, Basman Elashi, and their company, Infocom.28 They
are currently serving sentences related to those convictions. Ghassan Elashi and
seven other co-defendants, are scheduled to go to trial again in July 16, 2007 in a case
styled U.S. v. Holy Land Foundation for Relief and Development, et al.29 The
allegations in this case include transferring millions of dollars to HAMAS, other
HAMAS front entities and individual Palestinian families “who had a relative
‘martyred’ or jailed as a result of terrorist activities.”30
Counterfeiting Money
Another method terrorists have used to generate funds is counterfeiting. In
2005, Gale Nettles was convicted for his role in a plot to bomb the Dirksen Federal
Building in Chicago.31 Although his plot seemingly started as a lone wolf enterprise
against the federal government, Nettles eventually conspired with an undercover FBI
agent he believed was working with al Qaeda. Nettles was found guilty however of
selling, exchanging, transferring and delivering false, forged, counterfeited and
altered U.S. Federal Reserve notes. Nettles attempted to use counterfeit monies and
the sale of counterfeit monies to procure the bomb-making materials for his attack.32
Nettles was acquitted of the charge of “fraudulently making, forging and
counterfeiting U.S. Federal Reserve notes with the intent that the same be passed as
25 Holy Land Foundation, “A Message from the President,” Holy Land Foundation Website
archived by the Library of Congress, available from [http://memory.loc.gov/911/index.html],
accessed on November 27, 2006.
26 U.S. Treasury Department, “Statement of Secretary Paul O’Neill on the Blocking of
HAMAS Financiers’ Assets.”
27 United States Attorney’s Office, “Rome, Georgia Resident Pleads Guilty to Material
Support of Foreign Terrorist Group: Local Businessman and Imam Provided Money to
HAMAS,” Press Release, October 13, 2006, available from [http://www.usdoj.gov/
usao/gan/press/2006/10-13-06.pdf] accessed on November 27, 2006.
28 United States Attorney’s Office, Northern District of Texas, “Infocom Corporation and
its Operators Sentenced in Federal Court: Elashi Brothers Convicted for Doing Business
with Terrorist,” Press Release, October 13, 2006, available from
[http://www.usdoj.gov/usao/txn] accessed on November 27, 2006.
29 United States v. Holy Land Foundation for Relief and Development et al., (N.D. Tex.
Updated May 2007) Criminal Docket for Case #: 3:04-cr-00240 All Defendants.
30 United States v. Holy Land Foundation for Relief and Development et al., (N.D. Tex.
November 2005) (No. 3:04-CR-240-G), Superseding Indictment.
31 United States v. Nettles, 400 F. Supp. 2d 1084, (N.D. Ill. November 2005).
32 Ibid.

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genuine,” despite presented evidence that the counterfeit bills he used were actually
created in his apartment and a prior history creating counterfeit monies.33
Counterfeit Goods
One of the crimes used with increasing frequency by a variety of terrorist
organizations is the sale of counterfeit goods. In March 2006, Imad Hammoud and
several of his associates were indicted for operating a multi-million dollar cigarette
trafficking ring to benefit the terrorist group Hezbollah.34 Between 1996 and 2002,
Hammoud and his associates allegedly purchased low- and non-taxed cigarettes in
North Carolina, Kentucky and on Indian reservations, outfitted them with counterfeit
tax stamps and resold them in the high cigarette tax states of New York and
Michigan. The operation allegedly was eventually expanded to other goods, to
include counterfeit Viagra pills and stolen goods such as infant formula and toilet
paper.35 It is charged that the operation directed sums towards Hezbollah and
charged customers a “Resistance Tax” above the black market price, which went to
Hezbollah.36 To date, Hammoud and 19 of his known associates have been indicted
on a combination of RICO, smuggling, counterfeit tax charges related to their roles
in the operation - several have been convicted or pled guilty, some are appealing their
convictions, and some are at other stages of the legal system.37
This is just one of numerous counterfeit cases with a purported nexus to
terrorism. Intelligence analysts have also warned that terrorist groups are making
profits off everything from counterfeit handbags to illegally reproduced video games.
In testimony before the House Committee on International Relations in 2003,
Interpol’s Secretary General stated that the link between organized crime and
counterfeit goods (also known as intellectual property crime) was long established,
but announced that the international law enforcement body was “sounding the alarm
that Intellectual Property Crime is becoming the preferred method of funding for a
number of terrorist groups.”38
33 Nettles was convicted of counterfeiting U.S. Federal Reserve notes in September 2002,
for which he served two years time at the Federal Correctional Institute in Yazoo City,
Mississippi. Ibid.
34 United States v. Imad Mohamad-Musbah Hammoud, et al., (E.D. Mich. March 2006),
Indictment.
35 Ibid.
36 Ibid.
37 United States v. Haydous, (E.D. Mich. Updated May 2007), Criminal Docket for
Case#:2:03-cr-80406-GER-RSW All Defendants
38 Ronald K. Noble, “The links between intellectual property crime and terrorist financing”
Testimony before the U.S. House Committee on International Relations, July 16th 2003,
available from [http://www.interpol.int/Public/ICPO/speeches/SG20030716.asp], accessed
on March 30, 2007.

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Narcotics
Narcotics reportedly are one of the most profitable terrorist fundraising
commodities. According to the United Nations (UN) Office on Drugs and Crime, in
2003, the “value of the global illicit drug market for the year 2003 was estimated at
U.S.$13 billion at the production level, at $94 billion at the wholesale level (taking
seizures into account), and at U.S. $322 billion based on retail prices and taking
seizures and other losses into account.”39 Significant portions of several illicit drug
markets, including the South American cocaine trade, the Afghan opium market, and
the Moroccan Hashish trade, are believed by some observers in the law enforcement
community to be closely intertwined with terrorist campaigns.
Terrorist groups across the ideological spectrum have become involved in the
narcotics trade at various stages. Some groups are involved in the initial stages,
growing coca or opium crops or taxing those farmers that grow them. Other groups
provide protected smuggling routes for hefty fees. Still other, usually smaller groups,
are active in the distribution stage, selling drugs on the street to generate funds.
In 2006, Elkin Alberto Arroyave-Ruiz, Edgar Fernando Blanco-Puerta, and Uwe
Jensen were convicted for their role in a $25 million dollar weapons-for-drugs deal
to provide material support for Autodefensas Unidos de Colombia (known by the
acronym AUC or in English as the United Self-Defense Forces of Colombia), a
paramilitary organization designated as a FTO by the U.S. State Department. The
group brokered a deal with an FBI confidential informant to trade four to five tons
of cocaine for prohibited weapons. The U.S. District Court in Houston found all
three guilty of conspiracy to possess cocaine with intent to distribute and material
support for a foreign terrorist organization. Ruiz received a life sentence for his role
in the drugs for weapons plot, Puerta and Jensen received 15 and 14 years
respectively.40
Smuggling and Import/Export Violations
In 2004, the Department of State (DOS) announced that in coordination with
the Secretary of Homeland Security and the Attorney General, the Human Smuggling
and Trafficking Center was being reestablished to combat threats emanating from
human smuggling, trafficking of persons and clandestine terrorist travel.41 The
United Nations estimates that “human smuggling has grown to a $10 billion per year
39 United Nations Office on Drugs and Crime, “2005 World Drug Report, Volume 1:
Analysis,” available from [http://www.unodc.org/pdf/WDR_2005/volume_1_chap2.pdf],
127.
40 United States v. Carlos Ali Romero Varela et al., (S.D. Tex. November 2002) (No. 4:02-
cr-0074). According to (United States v. Varela, (S.D. Texas updated April 2007) Criminal
Docket for Case #:4:02-cr-00714 All Defendants and Case#:4:02-cr00714-4), Puerta and
Ruiz have since entered appeals.
41 Department of State, “Human Smuggling and Trafficking Center (HSTC) Charter,” Press
Release, May 2004, available from [http://www.state.gov], accessed on December 2, 2006.

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global criminal industry.”42 According to DOS, there are “an estimated 800,000 to
900,000 individuals trafficked across international borders each year. The U.S.
Government estimates 18,000 to 20,000 victims are trafficked to the United States
annually.”43 Human smuggling is not currently considered one of the primary finance
generating enterprises utilized by terrorists, however, several intelligence and law
enforcement agencies have warned that “terrorist organizations have tapped or will
tap into this global criminal infrastructure. Alien smugglers and fraudulent document
providers use their skills to facilitate the movement of terrorists across international
borders.”44
There has been at least one purported case in the United States. In November
2002, an indictment against Salim Boughader-Mucharrafille for multiple counts of
human smuggling was filed in U.S. district court.45 Boughader-Mucharrafille
reportedly pled guilty to two counts of human trafficking in March 2003 and served
most of a year-long prison term.46 Upon his release from prison and return to
Mexico, he was immediately re-arrested. In May 2006, a Mexican judge reportedly
sentenced Boughader-Mucharrafille to fourteen years in prison for his role in the
smuggling ring and on organized crime charges.47 The 9/11 Commission Staff
Report on Terrorist Travel cites an Immigration and Naturalization Services (INS)
background paper and Central Intelligence Agency (CIA) analytic report that claim
Boughader-Mucharrafille smuggled at least 200 “Lebanese nationals sympathetic to
Hamas and Hezbollah into the United States” from Mexico.48 According to press
reports, Boughader-Mucharrafille admitted that one of the individuals he helped
smuggle into the United States worked for al Minar, Hezbollah’s television station.49
There also has been speculation that terrorists may utilize human
smuggling/trafficking as a means to generate funds.
In addition to the criminal enterprises such as operating narcotics cartels and
smuggling operations, terrorists worldwide appear to have increasingly become
involved in street crime to finance their activities. This phenomenon may be the
result of the increasing decentralization and amateurization of terror. Street crimes
42 Ibid.
43 Ibid.
44 Ibid.
45 United States v. Salim Boughader-Mucharrafille et al., (S.D. Cal. November 2002) (No.
3048W).
46 Sandra Dibble, “Judge in Mexico City Sentences Smuggling-ring Leader to 14 years,” The
San Diego Union-Tribune, May 23, 2006, LOCAL; Pg. B-2.
47 Ibid.
48 Thomas R. Eldridge, Susan Ginsburg, Walter T. Hempel II, Janice L. Kephart, Kelly
Moore and Joanne M. Accolla and Alice Falk, 9/11 and Terrorist Travel: Staff Report of the
National Commission on Terrorist Attacks Upon the United States, available from
[http://www.9-11commission.gov], accessed on November 28, 2006, 67.
49 Pauline Arrillaga and Olga R. Rodriguez, “AP Investigation: Smuggler pipelines channel
illegal immigrants into U.S. from nations with terror ties,” The Associated Press, June 29,
2005.

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known to have been utilized domestically by terrorists include violent crimes such
as armed robbery and small-scale scams such as individual credit card fraud, to name
a few.
Robbery/Theft
According to an October 2005 indictment issued by the U.S. District Court for
the Central District of California, Kevin James, a prison inmate who founded the
radical group Jamiyyat Ul-Islam Is-Saheeh (JIS), recruited and directed followers to
conduct attacks on U.S. military, Jewish and Israeli venues in the Los Angeles area.50
It is charged that specific targets JIS intended to strike included U.S. military
recruiting stations, synagogues, El Al airlines operations, and the Israeli Consulate.51
To finance the operation, two JIS members, Gregory Patterson and Hammad Samana,
allegedly conducted a series of twelve armed robberies at California gas stations from
May 30 - July 5, 2005.52 A pretrial status conference is set for August 13, 2007.53
In addition to funding, there are instances where domestic terrorists have used
robberies to procure weaponry to use in attacks. Timothy McVeigh and Terry
Nichols conducted two robberies: One in Kansas in October 1994 (where they stole
explosives from a storage locker) and another in Arkansas in November 1994 (when
they robbed a firearms dealer).54
Fraud (Credit Card, Benefits, Food Stamps, etc.)
There are numerous examples of terrorists using a variety of fraud schemes to
raise funds, including credit card fraud, coupon and food stamps fraud, and benefits
fraud. A 2006 case in the United States involved Karim Koubriti and his co-
defendant Ahmed Hannon, who were found guilty of mail fraud, insurance fraud and
material support of terrorism in connection with his ‘economic jihad’ scheme to
defraud the Titan Insurance Company.55 In this case, Koubriti and Hannon
apparently falsely claimed to have been injured in a car accident and then filed a false
insurance claim with Titan. Koubriti and Hannon provided fictitious invoices for
50 United States v. Kevin James et al., (C.D. Cal. October 2005) Grand Jury Indictment.
51 Ibid.
52 Ibid.
53 United States v. James, et al. (C.D. CA updated May 2007) Criminal Docket for Case#:
8:05-cr-00214-CJC-ALL.
54 United States v. Timothy James McVeigh and Terry Lynn Nichols, (W.D. Okla. August
1995) (No. CR95-110), Grand Jury Indictment.
55 United States v. Koubriti, 435 F. Supp. 2d 666, (E.D. Mich. 2006). Koubriti and Hannon
were previously indicted as part of a Detroit-based terror cell purportedly preparing to
conduct attacks in the United States and abroad. Previously, Koubriti had been found guilty
of providing material support to a terrorist group and Hannon had been found guilty of
identification forgery, but these convictions were overturned in 2004 when the lead
prosecutor and star witness were accused of mishandling evidence and providing false
testimony, respectively. Koubriti and Hannon were also linked to Abdel-Ilah Elmardoudi
who is referenced in the “Phone Scams and Cell Phone Activity” section of this report.

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medical bills, lost wages as well as mileage and services accrued due to the purported
injuries.56 Koubriti’s motivation was two fold - “to commit fraud in order to both
support terrorist activities and to ‘cause economic harm to U.S. businesses’.”57
Many experts believe terrorists are becoming more creative in their fraud
schemes. According to media reports, “one enterprising pair of jihadists in Germany
hoped to fund a suicide mission to Iraq by taking out nearly $1 million in life
insurance and staging the death of one in a faked traffic accident.”58 Insurance fraud
is just one of many fraud schemes utilized by terrorist elements. In 2005, Matthew
Levitt testified before the Senate Committee on Homeland Security and
Governmental Affairs that there have been indications that terrorist elements have
funded activities through credit card fraud, welfare fraud, coupon fraud, stealing and
reselling baby formula, and food stamps fraud.59 In his testimony, Levitt cited “U.S.
officials [who] believe “a substantial portion” of the estimated millions of dollars
raised by Middle Eastern terrorist groups comes from the $20 million to $30 million
annually brought in by the illicit scam industry in America.”60
Phone Scams and Cell Phone Activity
Terrorists apparently have used a variety of cell phone scams to fund and
facilitate their activities. Some of these scams and bulk purchases of pre-paid cell
phones have received particular attention by the media and law enforcement in recent
years.61 In August 2006, Abdel-Ilah Elmardoudi was convicted for operating a phone
card “shoulder surfing” scheme in which he stole hundreds of telephone calling-card
numbers from unsuspecting travelers at the Minneapolis-St. Paul International
Airport and then “supplied them to overseas callers who used them” to make a total
of $745,000 in international calls from Egypt, Kuwait, East Africa, the Philippines,
the Middle East, and the Balkans.62 The end use of any funds generated by his
calling card schemes are unclear.
Elmardoudi was one of four Detroit-area men arrested in the wake of the
September 11th attacks who were allegedly part of a cell plotting to conduct attacks
56 United States v. Koubriti, 435 F. Supp. 2d 666, (E.D. Mich. 2006).
57 Ibid.
58 Kaplan, “Paying for Terror.”
59 Matthew Levitt, “Terrorists, Criminals, and Counterfeit Goods,” Statement before the
Senate Committee on Homeland Security and Governmental Affairs, May 25, 2005, CQ
Congressional Testimony, available from [http://www.lexis.com], accessed on April 10,
2007.
60 Ibid.
61 Arthur H. Rotstein, “DPS issues advisory concerning prepaid cell phone purchases,” The
Associated Press State & Local Wire, August 16, 2006, available from
[http://www.lexis.com], accessed on April 23, 2007.
62 Office of the U.S. Attorney, District of Minnesota, “Minneapolis Man Sentenced on
Federal Fraud Charges,” press release, September 25, 2006, available from
[http://www.usdoj.gov/usao/mn], accessed on November 9, 2006.

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against the MGM Grand in Las Vegas, NV, Disneyland in Anaheim, CA, a U.S.
military base in Incerlik, Turkey and a hospital in Amman, Jordan.63 Elmardoudi and
an accomplice, Karim Koubriti, were convicted of material support, but these
convictions were overturned. A third defendant was convicted on identification fraud
charges and the fourth defendant was cleared of all charges.64
Beyond calling card surfing, there has been increasing concern amongst law
enforcement and intelligence officials that terrorist elements could use pay-as-you-go
cell phones for both operational and fundraising purposes. Given the anonymity they
provide compared to other cell phone plans, analysts fear they could be used by
terrorists to communicate clandestinely or to hinder investigations when they are
used as detonators or Global Positioning System (GPS) devices within improvised
explosive devices. There have been numerous suspicious incidents regarding the
resale of such phones reported throughout the United States.65 There have been
several arrests around the country related to suspicious purchases of cell phones. In
some cases terrorism charges were initially filed against the defendants, such as in
Michigan and Ohio, but were dropped.66
Bribery
In addition to engaging in illegal activities to facilitate weapons procurement,
safe travel, and funds, terrorists may attempt to reduce the scrutiny they receive from
the law enforcement and intelligence communities. It is alleged that between 2003
and August 2006, several individuals, including men identified as Fnu Lnu,
Murugesu Vinayagamoorthy, Vijayshanthar Patpanathan, Gaspar Raj Maria Paulian,
Namasivaya Viswanathan, and Nachimuthu Socrates, were involved in multiple
counts of criminal activity in support of the Liberation Tigers of Tamil Eelam
(LTTE), a Sri Lankan group designated by the U.S. State Department as a FTO.67
According to the indictment, the men are alleged not only to have provided material
support for the LTTE, but also to have conspired to bribe U.S. government officials
in an effort to have the LTTE removed from the State Department’s Foreign Terrorist
63 United States v. Koubriti et al., (E.D. Mich 2002) (No. 01-80778), Indictment.
64 In 2004, Elmardoudi and Koubriti’s convictions were overturned when it was discovered
that the lead federal prosecutor in the case had withheld evidence from the defense and a
Department of State special agent involved in the case provided false testimony.
Department of Justice, “Former Federal Prosecutor, State Department Agent Indicted for
Obstruction of Justice and Presenting False Evidence in Terrorism Trial, “ DOJ press
release, March 29, 2006, available from [http://www.usdoj.gov] accessed on December 4,
2006.
65 According to press reports, DHS and FBI issued an alert in 2006 regarding a potential
terrorist nexus with suspicious bulk cell phone purchases. Mike Wagner, “‘Like gold for
terrorists’,” The Columbus Dispatch (Ohio), August 16, 2006.
66 Associated Press, “Authorities Back Off Accusing Bulk Cell Phone Buyers in Ohio and
Michigan of Direct Terror Link,” August 15, 2006.
67 United States v. FNU LNU et al, (E.D. N.Y. January 2007) (No. 2006R01615)
Indictment.

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Organization (FTO) list.68 Initial oral arguments in the case are expected to begin in
June 2007.69
Immigration and Identity Crimes
In an effort to hide their identity, terrorists commit a range of identity,
document, and immigration offenses. In order to conceal her well known face so as
to commit additional skyjackings, Leila Khaled, an accomplished Popular Front for
the Liberation of Palestine (PFLP) terrorist who was part of the team that hijacked
TWA flight 840 in 1969, reportedly underwent several plastic surgeries.70 The 9/11
hijackers committed a wide variety of immigration offenses in order to enter the
United States. The 9/11 Commission Staff Report on terrorist travel concludes: The
19 hijackers used 364 aliases,71 several had fraudulently altered their passports,72 two
hijackers lied on their visa applications, and several violated the terms of their
visas.73
Incitement
To date, there are few, if any, examples of individuals convicted for inciting
violence on behalf of a terrorist group in the United States, despite widespread
terrorist propaganda campaigns aimed at encouraging followers and like-minded
extremists to take action both at home and abroad, as will be discussed below. This
may be due to the difficulty of successfully proving criminal intent to incite violence
by our legal standards.
It is evident that over the last decade terrorist groups have increasingly utilized
a decentralized, leaderless-resistence74 organizational structure. Concomitantly,
68 Ibid.
69 United States v. Thavaraja et al, (E.D. N.Y. updated May 2007) Criminal Docket for
Case#: 1:06-cr-00616-RJD-6
70 The Guardian staff reporters, “‘I made the Ring from a Bullet and the Pin of a Hand
Grenade’: When Palestinian Liberation Fighter Leila Khaled, right, Hijacked her first Plane
in 1969, She Became the International Pin-up of Armed Struggle. Then She Underwent
Cosmetic Surgery so She could do it Again. Thirty years on, She talks to Katharine Viner
about Being a Woman at War,” The Guardian (London), January 26, 2001.
71 ‘to include variations of their names and noms de guerre,’ The National Commission on
Terrorist Attacks Upon the United States, “9/11 and Terrorist Travel,” 1.
72 Passports of two of the 9/11 hijackers were found after the attacks to have been
“manipulated in a fraudulent manner. They contained fraudulent entry-exit stamps (or
cachets) probably inserted by al Qaeda travel document forgers to hide travel to Afghanistan
for terrorist training. Our analysis of their travel patterns suggests that several more
hijackers whose passports did not survive the attacks were likely to have had similar false
stamps in their passports.” Ibid.
73 Ibid., 1-5.
74 According to Simson L. Garfinkel, “Leaderless Resistance applies specifically to groups
(continued...)

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groups have increasingly adopted methods of training and instruction that ultimately
rely on inciting others to action through media channels. By its own proclamation,
al Qaeda fancies itself the ultimate inciter, proclaiming to be the “pioneering
vanguard” for the Islamist jihad against the West.75 The group’s founder Abdullah
Azzam saw the role of the group as the “vanguard who would radicalize and mobilize
those Muslims that had hitherto rejected their extremist message.”76 Intelligence
analysts have long worried that al Qaeda’s fatwas, internet messages, and video- and
audio-tapes were attempts to incite its followers and sympathizers to action.
One good example of incitement related to terrorism is found in the UK, with
the conviction of Abu Hamza al-Masri. Al Masri served as the imam of the Finsbury
Park Mosque, which boasts shoe bomber Richard Reid and “20th hijacker” Zacarias
Moussaoui as former regular attendees. Al Masri was notorious for the vitriol he
preached and his threats against Christians, Jews and Westerners. In February 2006,
al Masri was convicted of 11 charges related to inciting racial hatred and soliciting
murder.77 Al Masri’s incitement efforts are not atypical, and may be indicative of a
growing trend among Islamist terrorist elements. Many training manuals and attack
instructions are posted on Jihadi websites, alongside virulent threats against the West,
which intelligence analysts credit for facilitating and inspiring non-connected would-
be jihadis to action.
In the United States, there is a long history of leaderless resistence-style
organizations that utilize vitriolic rhetoric and instructions for action which
opponents claim are clear efforts to incite followers to violence. Many of the single-
issue domestic extremist groups operating currently in the United States (including
environmental, animal rights or anti-abortion groups) have adopted such structures.
However, many of these groups have been careful with regard to their language and
defend their material as protected by First Amendment and not criminal incitement.
In the United States, there are numerous instances where environmental and
animal rights extremists have provided instructions on how to construct weapons or
74 (...continued)
that employ cells and that lack bidirectional vertical command links — that is, groups
without leaders.” Rather than receiving commands, independent cells and like-minded
individuals act alone, based on their interpretation of a symbolic leader’s pronouncements -
often circulated by propaganda, the internet, and other media. This style has been adopted
by numerous terrorist and extremist organizations, including groups operating domestically,
notably some of the anti-abortion extremist groups, environmental and animal rights
extremist groups, and white supremacists. This strategy is associated with Louis Beam, who
attributed its origins to Col. Ulius Loius Amoss, but adapted it to pursue his white
supremacist agenda. (See Simson L. Garfinkel, “Leaderless Resistance Today,” First
Monday, Volume 8, No. 3, March 2003, available from [http://www.firstmonday.org/
issues/issue8_3/garfinkel/], accessed on May 15, 2007.
75 Rohan Gunaratna, “The Post-Madrid Face of al Qaeda,” Washington Quarterly, available
from [http://www.twq.com] accessed on August 27, 2006.
76 Ibid.
77 BBC staff, “Abu Hamza Loses Race-hate Appeal,” BBC, November 28, 2006, available
from [http://www.bbc.co.uk] accessed on December 12, 2006.

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conduct attacks (e.g. How to build an incendiary device that can flatten a two story
building). Some have provided home addresses and contact information for
individuals the movement considers enemies with encouragement for supporters to
express their outrage. In one case, Planned Parenthood successfully sued the
American Coalition of Life Activists (ACLA) for its role in inciting attacks on
doctors who perform abortions in 1999 in a civil case.78 ACLA created wanted
posters for doctors that performed abortions. Subsequently, one of its members
posted the information on his website and struck through the names when those
doctors were killed or greyed out the names when they were maimed by anti-abortion
extremists.
Training
There have been reported cases where terrorist elements have conducted para-
military training exercises in the United States or attended training abroad to prepare
for terrorist activities against the United States. Several individuals, dubbed the
“Portland Seven,” were convicted on terrorist material support charges after they
apparently conducted martial arts and weapons training in anticipation of mounting
jihad against the United States.79 A group purportedly tied to the Pakistani terrorist
organization Laskhar-e-Toiba conducted paintball training for similar purposes in
Northern Virginia in 2000.80
In other cases, individuals went abroad in search of jihad training. In April
2006, Hamid Hayat was convicted of providing material support to terrorists after he
was found to have attended a jihadi training camp in Pakistan for a period of time
between October 2003 and November 2004.81 The Department of Justice asserted
that following his training, Hayat returned to the United States “to wage jihad upon
receipt of orders.”82
78 Planned Parenthood v. American Coalition of Life Activists, 41 F. Supp. 2d 1130, 1999,
U.S. District Court for the District of Oregon.
79 October Martinique Lewis, Ahmed Bilal, Muhammad Bilal, Maher “Mike” Hawash,
Jeffery Leon Battle, Patrice Lumumbard Ford and Habis Abdulla al Saoub “all named in the
15-count superseding indictment that included charges of conspiracy to levy war against the
United States, conspiracy to provide material support and resources to al Qaeda, conspiracy
to contribute services to al Qaeda and the Taliban, conspiracy to possess and discharge
firearms in furtherance of crimes of violence, possessing firearms in furtherance of crimes
of violence and money laundering.” All, except Habis Abdulla al Saoub, who was killed in
Afghanistan in 2003, are currently serving sentences for their role in this conspiracy.
Department of Justice, “October Martinique Lewis Pleads Guilty to Money Laundering
Charges in ‘Portland Cell’ Case,” Press Release, September 26, 2004, available from
[http://www.usdoj.gov/opa/pr/2003/September/03_crm_532.htm], accessed on November
10, 2006.
80 United States v. Masoud Khan et al., 309 F. Supp. 2d 789, (D. Or. 1999) aff’d 290 F.3d
1058 (9th Cir. 2002), cert denied 539 U.D. 958 (2003).
81 Department of Justice, “Hamid Hayat Convicted of Terrorism Charges,” Press Release,
April 25, 2006, available from [http://www.usdoj.gov] accessed on November 2, 2006.
82 Ibid.

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According to the United Nations, there is a convergence of organized crime and
ideologically driven terrorist groups. Antonio Maria Costa, a UN official with the
Office on Drugs and Crime, reportedly believes the “world is seeing the birth of a
new hybrid of organized-crime-terrorist organizations.”83 For example, media reports
suggest that “Jihadists have penetrated as much as a third of the $12.5 billion
Moroccan hashish trade.”84 According to the Brussels-based World Customs
Organization, “counterfeiting is one of the fastest growing industries in the world
with an estimated market worth more than [$]500 billion each year, or 7 percent of
global trade!,” the illegal profits of which often go to fund terrorist organizations.85
Extent of Terrorist Precursor Criminal Activity in the
United States
While there have been few comprehensive empirical studies to gauge the extent
of terrorist precursor criminal activity in the United States to date, largely due to the
lack of data, there are some indications that such activities may be widespread. As
previously mentioned, there are numerous reports that suggest terrorist precursor
criminal activity is occurring across the globe, with criminal trends emerging within
each region. Some analysts have suggested that terrorist precursor crime may be
even worse in the United States given the high per capita income of its citizenry,
open society, and the presence of numerous terrorist groups with a known presence
in the United States,86 as well as large expatriate communities that foreign terrorists
may attempt to tap.
One of the only attempts to provide a comprehensive review of terrorist activity
within the United States is the American Terrorism Study (Study), which chronicles
individuals convicted of terrorist-related offences in the United States as the result
of an official FBI terrorism/domestic security investigation.87 The Study categorizes
specific activities and conducts trend analysis. The Study, based on a limited data
83 Kaplan, “Paying for Terror.”
84 Ibid.
85 World Customs Organization, “En route towards the future, Council 2006,” Special
Report, No. 51, October 2006, available form [http://www.wcoomd.org], accessed on
December 17, 2006, 20.
86 Steven Emerson, American Jihad: The Terrorists Living Amongst Us, (New York: Free
Press, 2003), & Dale Watson, Section Chief for International Terrorism Operations, FBI,
“Hearing on Foreign Terrorists in America,” Testimony before the Senate Committee on
Judiciary Subcommittee on Technology, Terrorism, and Government Information, February
24, 1998, FDCH Political Transcripts, available from [http://www.lexis.com], accessed on
April 10, 2007.
87 Brent Smith and Kelly R. Damphouse, The American Terrorism Study Data (Fayetteville,
AR: University of Arkansas).

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set,88 found that approximately one-third of the various activities that terrorists
engage in to facilitate attacks were criminal.89
Division of Labor within Terrorist Organizations
The organizational structure related to terrorist precursor criminal activity in the
United States (i.e., the breakdown of labor within a terrorist group or cell with regard
to criminal enterprises) may influence which countermeasures are most effective.
Some larger, more experienced terrorist groups are structured in such a way that
fundraising, recruitment, and operational activities are delegated to separate
divisions.90 Organizations like HAMAS separate their ideological and military
wings, a move that provides spiritual leaders like the former Sheikh Yassin an air of
plausible deniability about attacks and shields them from potential arrest and
prosecution for involvement in these activities. In analogous organizations, criminal
acts may be carried out by low-level supporters or operatives who are ostracized from
the group’s leadership in an effort to shield the latter from potential exposure to law
enforcement. However, there are always exceptions to the rule. For example, the
Charlotte, NC-based Hezbollah cell that was engaged in a multi-million dollar
cigarette smuggling ring reportedly “responded directly to Sheikh Abbas Haraki, a
senior Hezbollah military commander in South Beirut.”91
88 The authors of the American Terrorism Study acknowledge their research is limited to a
relatively small data set: only the information that is available regarding individuals who
were successfully convicted of terrorist crimes in the United States as the outcome of a FBI-
led terrorism investigation. This Study was initially funded by a National Institute of Justice
(NIJ) grant (1999-2000, Grant #1999-IJCX-0005) and later supported by the Oklahoma City
National Memorial Institute for the Prevention of Terrorism (MIPT) (Grant #106-113-2000-
64). The authors relied on court records. As such, intelligence regarding terrorist precursor
crimes, individuals who were acquitted or never brought to trial on specific terrorist charges,
and/or individuals who were convicted but not due to a FBI case were left out of this data
set. However, this is one of the only extensive quantitative analyses on domestic terrorist
activity in the United States to date. The Study includes information on 447 indictees
charged with 2,851 counts from 1978-1999. This represents an estimated 75% of all federal
terrorism indictments from this period. The author of this report acknowledges that there
are other research initiatives that examine terrorist activity in the United States, however,
many of those studies rely on open source data and related media reports. For the purposes
of this report, the latter were not included.
89 Brent L. Smith, Kelly R. Damphouse, Paxton Roberts, Pre-Incident Indicators of Terrorist
Incidents: The Identification of Behavioral, Geographic and Temporal Patters of
Preparatory Conduct (Washington DC: Department of Justice, March 2006), 33.
90 For example, the 9/11 Commission found that al Qaeda is organized into several
committees, each with distinct missions and responsibilities. For example, the Military
Committee is responsible for “proposing targets, gathering ideas for and supporting
operations and managing training camps,” whereas, the Finance Committee is responsible
for “fundraising and budgetary support for training camps, housing costs, living expenses,
travel, and the movement of money allocated to operations.” 9/11 Commission, “Overview
of the Enemy: Staff Statement No. 15,” available from [http://www.9-11commission.gov/
staff_statements/staff_statement_15.pdf], accessed on May 1, 2007, 3.
91 Matthew A. Levitt, “Islamic Extremism in Europe,” Statement before the House
(continued...)

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It is likely that within smaller more amateur terrorist cells, direct interaction
with leadership increases, compartmentalization of duty decreases, and a more even
distribution of preoperational duties is adopted. For example, Ahmed Ressam (the
would-be Millennium bomber) and his group of like-minded jihadis were reported
to all be involved in a series of criminal activities, to include credit card fraud, pick
pocketing, shoplifting, and stealing identity documents for resale to mujahideen.92
Given the differences among groups and individual cells, identifying terrorist
precursor activity will not serve as a universal counterterrorism panacea. Such an
approach may be extremely effective against some groups (those heavily involved in
criminal activity) but less effective against others (those not involved, or not
significantly involved, in criminal activity). The same goes for types of operatives:
entry-level members assigned to fundraising efforts may engage in criminal activities
on a greater scale then high-level commanders, potentially rendering the former more
vulnerable to capture than the latter.
In addition to division of labor, decentralization of the flow of funds and goods
may further frustrate interception and intelligence efforts. It has been suggested that
some terrorist groups are careful about co-mingling funds and thus separate funds
intended for different general purposes (e.g. training vs. operations vs. propaganda,
etc). Some may separate funds for specific operations in an attempt to protect those
channels from discovery or leading to a greater discovery by the security officials.
This practice may frustrate law enforcement and intelligence efforts to identify and
thwart future activity and/or link plots or acts to specific groups. Ultimately, a
group’s or cell’s approach to precursor crimes can impact how the United States
designs effective countermeasures.
Potential for Identification and Infiltration
To some extent, terrorist precursor criminal activity actually may provide
additional opportunities for detecting the groups that engage in such activity. Each
criminal act (as well as non-criminal operational support actions) in which terrorists
engage has the potential to expose the elements that perform it. Furthermore,
demonstrated criminal intent and/or evidence of criminal activity provides
justification for intelligence and investigation efforts. Precursor criminal activity also
provides opportunities to thwart not just individuals but potentially large parts of the
terrorist group. According to congressional testimony, the FBI utilizes the Enterprise
Theory of Investigation (ETI) when investigating criminal enterprises, especially
those involved in human smuggling and human trafficking.93 ETI is an “intelligence-
91 (...continued)
Committee on International Relations, Subcommittee on Europe, April 27, 2005 available
from [http://www.cq.com], accessed on November 1, 2006.
92 Hal Bernton, Mike Carter, David Heath and James Neff, “The Terrorist Within: The Story
Behind One Man’s Holy War Against America, Chapter 6 — It Takes a Thief,” A Special
Report, The Seattle Times, June 23-July 7, 2002, available from
[http://seattletimes.nwsource.com], accessed on November 2, 2006.
93 “Statement of Chris Swecker,” submitted to the U.S. House of Representatives
Committee on Homeland Security Subcommittee on Management, Integration and
(continued...)

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driven investigative technique which seeks to identify the full scope of a criminal
organization,”94 in contrast to an approach that focuses on the arrest and prosecution
of individual members of a larger network involved in criminal acts. It is unclear if
the FBI and its field offices, as well as the other organizations in the law enforcement
and intelligence communities whose work deals with these terrorist precursor crimes,
vigorously and comprehensively employ enterprise-focused approaches to terrorist
precursor crime investigations. Whether an investigation is narrowly or broadly
focused could potentially influence terrorist behavior and, as such, impact future
efforts to uncover terrorist activity in the United States.
Some might argue that exposing terrorist engagement in criminal activity could
potentially discredit a terrorist group in the eyes of its supporters. However, as more
terrorist organizations turn to criminal activity to fund and facilitate their agenda, and
as their supporters increasingly accept such justifications, there is a distinct
possibility that such an approach could have negative consequences. For example,
groups could become more clandestine in their activities or adopt new techniques and
novel scams, making it difficult for law enforcement and intelligence agencies to
identify them. There are indications to suggest that thwarting a group’s ability to
engage in criminal activities aimed at fundraising, recruiting, training, and arming
could potentially weaken the organization and eventually cripple it to the point where
it is no longer a threat.
Precursor Crimes for Fundraising and Longevity of
Terror Campaigns
Margaret Thatcher is attributed with saying that it is necessary to starve
terrorists of the oxygen of publicity on which they depend, in order to reduce the
threat they pose. There is some research that suggests that it is just as important to
cut off funding. James Fearon has researched the longevity of civil wars and
concludes that civil wars last longer when rebels have access to finances generated
from contraband goods like narcotics and gems.95 Some of the conflicts he
examined, specifically the Colombian civil war, are dominated by organizations that
blur the lines between terrorists, criminal gangs, and guerrilla organizations, like
Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de
Colombia, or FARC) and United Self-Defense Forces of Colombia (Autodefensas
Unidas de Colombia, or AUC).96 Fearon’s theory may have implications beyond
civil wars, and specifically for the longevity of terrorist campaigns. Indeed, Bruce
93 (...continued)
Oversight, March 8, 2006, available from [http://www.fbi.gov/congress/congress06/
swecker030806.htm], accessed on April 3, 2007.
94 Ibid.
95 James D. Fearon, “Why Do Some Civil Wars Last so Much Longer than Others?”
available from [http://www.stanford.edu/group.ethnic/], accessed on October 25, 2006, 11.
96 Both FARC and AUC are designated as Foreign Terrorist Organizations (FTOs) by the
U.S. government, U.S. State Department, “Foreign Terrorist Organizations (FTOs,” Fact
Sheet, October 11, 2005, available from [http://www.state.gov/s/ct/rls/fs/37191.htm],
accessed on January 20, 2007.

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Hoffman has argued that when comparing the relative longevity of ethno-nationalist
campaigns to those run by left- and right-wing terrorist groups, the former’s
resilience is “doubtless a product of the relative ease with which they are able to draw
sustenance and support from an existing constituency...”97 A cursory review of some
of the longest terrorist campaigns of the latter half of the 20th century through today
finds numerous well financed organizations, relative to their terrorist peers, to
include al Qaeda, Palestine Liberation Organization (PLO), Irish Republican Army
(IRA), FARC, Hezbollah, amongst many others.
In addition to longevity, some claim that there is a correlation between a group’s
level of finances and its ability to cause mass destruction. While overall, access to
technology and technical information, as well as creative deployment, has allowed
modestly-funded terrorist groups to conduct medium- to large-scale attacks, there
appears to be a positive correlation between extensive funding and the potential for
mass destruction. The most catastrophic attacks and attack plots have traditionally
been hatched by the best financed groups of our time, like Aum Shinrykio98 and al
Qaeda.99 These groups have demonstrated an interest in Chemical, Biological,
Radiological, and/or Nuclear (CBRN) weapons, and appear willing to pay large sums
to obtain deadly agents/material and the scientific expertise to generate them. There
are claims, which vary in credibility, regarding al Qaeda’s CBRN programs,
including multiple attempts to obtain fissile material; discovery of labs and
videotapes in Afghanistan suggesting production and/or experimentation with
chemical weapons; and attack plots that sought to deploy CBRN.100 RAND estimates
on the cost of al Qaeda’s CBRN programs and the numerous al Qaeda “scams
97 Hoffman, Inside Terrorism, 171.
98 Aum Shinrikyo (Aum), categorized by the U.S. government as a FTO, is the Japanese cult
that aimed to “take over Japan and then the world, but over time it began to emphasize the
imminence of the end of the world.” U.S. State Department, Country Reports on Terrorism,
updated April 30, 2007, available from [http://www.state.gov/s/ct/rls/crt/2006/82738.htm],
accessed on May 1, 2007. In an effort to spark Armageddon, Aum launched a sarin gas
attack on the Tokyo subway system in March 1995. At the time of the attack, Aum was
estimated to have over $1.4 billion dollars in assets, “Threats to America: Are We
Prepared?” Testimony of James K. Campbell, CDR U.S. Navy before the Senate Judiciary
Subcommittee on Technology, Terrorism and Government Information and the Senate
Select Committee on Intelligence on Chemical and Biological Weapons, April 22,
1998,available from [http://www.lexis.com], accessed on May 3, 2007.
99 In 2002, the United Nations, citing numerous government officials and terrorism experts,
estimated that al Qaeda’s financial portfolio was “around $30 million, although some have
put the figure as high as $300 million.” United Nations, “Second Report of the Monitoring
Group Established Pursuant to Security Council Resolution 1363 (2001) and Extended by
Resolution 1390 (2002),” available from [http://www.un.org/Docs/sc/committees/
1267/1050E02.pdf], accessed on May 2, 2007.
100 Center for Nonproliferation Studies, “Chart: Al-Qaida’s WMD Activities,” Weapons of
Mass Destruction Terrorism Research Program, Updated May 13, 2005, available from
[http://cns.miis.edu/pubs/other/sjm_cht.htm], accessed on February 13, 2007. These claims
vary in reliability and degree of corroboration, however there are several well documented
allegations made by reputable sources and government officials.

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involving the sale of radiological waste and other non-weapons-grade material”101 run
into the millions of dollars.102 In addition to its chemical and biological programs -
which produced nerve agents sarin and VX - “throughout the 1990s, Aum Shinrikyo
tried without success to hire Russian nuclear experts, to purchase Russian nuclear
technology and data, to mine uranium, and to steal sensitive nuclear power plant
information.”103
An anecdotal story regarding the arrest of 1993 World Trade Center bomb
mastermind Ramzi Yousef lends some credence for the apparent correlation between
funding and mass destructive capability. As U.S. federal agents flew with Yousef
over Manhattan as they escorted him back to the United States after he was arrested
in Pakistan, one of the FBI officials reportedly asked Yousef to look out the window
and commented that the twin towers were “ still standing” despite Yousef’s efforts
to bring them down.104 Yousef purportedly retorted, “They wouldn’t be if I had
enough money and explosives.”105
Precursor Crimes’ Effect on Threat Environment
More generally, the question of how the domestic occurrence of terrorist
precursor crimes alters the threat environment has not been answered. Beyond
potentially providing funds that could be directly used to finance an attack on a U.S.
target, how does precursor criminal activity affect the threat to the United States?
There are two conflicting schools of thought: The first, the ‘don’t-bite-the-hand-that-
feeds-you’ theory suggests terrorist groups engaged in fundraising and other logistical
support activities in the United States are unlikely to mount attacks within that
country’s borders for fear of losing lucrative funding streams. A contrasting
approach, the ‘presence-equals-threat’ theory, suggests that the groups fundraising
or providing support functions within the country present a viable and immediate
threat to the United States as those support networks could easily go operational.
The ‘don’t-bite-the-hand-that-feeds-you’ theory may explain why anti-American
Islamist groups with a presence in the United States, such as HAMAS and Hezbollah,
have avoided attacking targets in the United States to date. This leads one to ask, if
U.S. funding channels were to dry up, would groups present in the United States
become more willing to conduct attacks on our soil? Irrespective of funding levels,
are there issues that might cause such a group to determine that the cost of attacking
the United States on its own soil was in its strategic interest? And if so, are the cells
currently operating in the United States capable of carrying out operations?
101 RAND, “Combating Nuclear Terrorism: Lessons from Aum Shinrikyo, Al Qaeda, and
the Kinshasa Reactor,” Research Brief, Project Air Force, available from
[http://www.rand.org/pubs/research_briefs/RB165/RAND_RB165.pdf], accessed on
February 14, 2007.
102 Ibid.
103 Ibid.
104 Simon Reeve, The New Jackals: Ramzi Yousef, Osama bin Laden and the Future of
Terrorism, (Boston: Northeastern University Press, 1999), 109.
105 Ibid.

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It is important to consider the fundamental questions surrounding terrorist
precursor crimes before charting a counterterrorism strategy that deals with this
activity. The following strategic questions are worthy of further consideration:
! What is our national strategy for dealing with terrorist predicate
crimes, do we have a coherent strategy, or do individual agencies
approach this issue differently?
! What metrics are used to measure the success of U.S. strategy(ies)
for terrorist precursor activity?
! Is that strategy(s) effective? Are there unintended consequences that
actually work against the strategy’s stated goals?
Implications for Congress
The existence of domestic terrorist precursor criminal activity has myriad, far-
reaching implications. The presence of terrorist precursor activity within U.S.
borders has relevance for areas of congressional oversight and interest, such as
existing laws for enforcement and prosecution of precursor crimes; funding of
various counterterrorism programs; and oversight of numerous agencies engaged in
such activity to ensure coordination.
Issues directly related to the terrorist precursor crime phenomenon include
concerns whether existing terrorism material support statutes and the way they are
interpreted and utilized are sufficient for effectively prosecuting individuals who
conduct terrorist precursor crimes. Another related issue is the role the private sector
role plays in identifying, reporting, and helping facilitate the prosecution of fraud
schemes, many of which may be utilized by terrorist groups to raise funds, including
credit card fraud, coupon fraud, and benefits fraud. Furthermore, the question of the
role and the effectiveness of the banking and financial sector in identifying and
thwarting terrorist financing is an important issue. It is beyond the scope of this
report, however, to explore each of these topics in-depth. The next section provides
a single, narrow prism through which to examine the congressional implications of
terrorist precursor criminal activity: the identification of terrorist precursor criminal
activity by agencies at all levels of government and the subsequent collection of
intelligence on and investigation of such activity.
Federal Role in Intelligence/Investigation of Precursor Crimes
Traditionally, federal intelligence agencies were primarily responsible for
counterterrorism. Since the September 11th terrorist attacks, however, there have been
changes to that approach, and additional federal agencies have become closely
involved in counterterrorism activities. For instance, the FBI has begun to transition
into a more prevention-focused, intelligence-driven agency in order to combat
terrorism. As agencies continue to enhance their ability to detect and deter terrorism
several questions are raised: Do they utilize a consistent approach in dealing with
precursor crimes? If so, what is the accepted formula for collecting intelligence vs.
enforcement? Are precursor crimes that are committed in the United States or by
U.S. residents/citizens abroad a priority for these agencies? What is their assessment

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of the breadth and diversity of criminal activity terrorist groups are engaging in
within the United States? Which groups are the most active in the United States?
Testimony at congressional hearings in recent years suggests that intelligence
sharing and coordination in general has been improving between the various
intelligence and law enforcement agencies involved in counterterrorism. Specifically
with regard to terrorist precursor criminal activity in the United States, this issue may
be worth further examination. Is there a coherent strategy for dealing with precursor
crimes across agencies? Have agencies made sufficient progress coordinating with
other agencies on individual cases related to terrorist precursor crimes? Are
additional congressional measures needed to ensure the effective coordination of
terrorist pre-cursor crimes strategy amongst disparate agencies?
Based on information available, it is unclear whether there is a coordinated,
federal-wide strategy for approaching terrorist precursor crimes occurring within the
United States. A similar question relates to the intelligence and law enforcement
communities’ assessment of how the presence of such activity affects the security
environment.
SLT Role in Intelligence/Investigation of Precursor Crimes
Since the September 11th attacks, there appears to be consensus that the
stakeholders responsible for counterterrorism need to be expanded to include non-
traditional partners, such as state, local, and tribal (SLT) law enforcement, amongst
others. There is far less agreement over what kind of role SLT forces should play or
how to further incorporate counterterrorism efforts into their daily duties. Given the
proliferation of proposed players, many of which have overlapping jurisdictions, the
issue of defining the ‘lanes in the road’ amongst federal, state, local, and tribal law
enforcement and intelligence agencies begs further examination.
Of all the terrorism prevention roles that have been discussed for SLT agencies,
identifying terrorist precursor crimes is perhaps the most natural. Given their existing
skill sets, legal authority to investigate and prosecute such offenses, sheer numbers,106
and intimate familiarity with their jurisdictions, SLT personnel are “well-positioned
to develop information on crimes, activities, and organizations that support terrorist
organizations” during the course of their normal duties.107 Further issues include
What is the current level of involvement of SLT agencies in identifying terrorist
precursor activities? Are there appropriate ways to strengthen that involvement
through additional training programs or exercises? Do SLT agencies have access to
current intelligence regarding precursor criminal trends and other terrorist modus
106 According to the most recent, publicly-available statistics from the Department of
Justice’s Bureau of Statistics, there were nearly 800,000 sworn law enforcement officers in
the United States in 2000. Only 88,496, (11%) worked for federal agencies while
approximately 711,000 (89%) were state, local and tribal law enforcement officers. U.S.
Department of Justice, “Law Enforcement Statistics,” U.S. Department of Justice Website,
available from [http://www.ojp.usdoj.gov], accessed on April 29, 2006
107 K. Jack Riley, Gregory F. Treverton, Jeremy M. Wilson and Lois M. Davis, State and
Local Intelligence in the War on Terrorism. Santa Monica, CA: RAND Co, 2005, 1.

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operandi that could assist them in identifying such activity within their own
jurisdictions?
SLT agencies can utilize homeland security grant monies to fund such training,
but the availability of training is unclear. There appear to be few, if any, federally
certified courses available to SLT agencies that specifically focus on terrorist
precursor crimes. That said, there are numerous classes that examine pre-incident
indicators and other terrorism-related trends that may address the precursor crime
issue.
With regards to overall integration of SLT agencies in the area of terrorist
precursor crime investigation and intelligence efforts, anecdotal information suggests
it is likely that progress in these three areas varies significantly from agency to
agency. Given the importance of preventing future attacks and the potential role SLT
agencies could play in identifying terrorist precursor activities within their
communities, Congress may further examine the role that SLT agencies play in
identifying and thwarting terrorist precursor crimes.
Coordination of Federal and SLT Efforts
It is also important to examine the intersection between counterterrorism efforts
conducted at various levels of government and/or the potential for such involvement.
How do federal agencies currently engage SLT agencies in this area? At what point
do SLT agencies contact federal agencies when they believe they have identified a
nexus to terrorism in the course of examining criminal activity? What happens next:
Is the case taken over by federal agencies or is it worked in concert? Moreover, do
current regulations on collecting intelligence, at each level of government, provide
sufficient protections for civil rights while ensuring appropriate leverage for agencies
working on counterterrorism? Have relevant agencies at all levels of government
received adequate training on these regulations and do they fully understand what
they do and do not prevent the agency from doing?
As demonstrated by the wealth of questions generated by examining just one
aspect of terrorist precursor crimes, their identification and subsequent investigation,
several areas deserve further attention. The challenge posed by domestic terrorist
precursor crimes is complex. For example, on occasion, seemingly straightforward
countermeasures applied to terrorist precursor activity may have resulted in
unintended and unforeseen consequences. In some cases, well-intentioned
countermeasures could actually exacerbate some terrorist threats and/or result in
relatively few benefits given their overall cost.108
108 For example, scholars, and media sources have recently questioned the effectiveness of
anti-money laundering strategies. Several recent studies suggest that such regulations are
ineffective, and increasingly so given the cost/benefit ratio and increasing electronic nature
of the financial industry. For example, Mariano-Florentino Cuellar argues that the fight
against money laundering “delivers less than what it promises,” in the article “The Tenuous
Relationship between the Fight Against Money Laundering and the Disruption of Criminal
Finance,” Journal of Criminal Law and Criminology, Winter 2003. In October 2005, the
editors of the Economist suggested that post-9/11 efforts to thwart terrorist financing via
(continued...)

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In addition to the complexity of the problem at hand, the complexity of the U.S.
counterstrategy, as demonstrated by the sheer number of agencies involved, can be
daunting. There are numerous agencies involved in the U.S. countermeasures, many
with overlapping legal and geographic jurisdictions. This oversight issue may require
additional attention at a level of detail beyond the scope of this report.
108 (...continued)
regulation may have cost billions of dollars, while “yield[ing] depressingly few tangible
results.” “Looking in the Wrong Places: Hindering Flows Across International Financial
Networks is Costly and Does Not Stop Terrorists’ Primary Activity,”The Economist,
October 20, 2005, Print Edition.