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Terror Financing in Bangladesh

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  • February 13, 2009
    Fellows' Seminar
    Only by Invitation
    1030 to 1300 hrs

    Chair: Arvind Gupta
    Discussants: Bhaskar Roy and Sanjay Bharadwaj

    “Terror Financing in Bangladesh” by Dr. Anand Kumar outlined key factors that contribute to terror financing in Bangladesh. Dr. Kumar’s primary argument was that sustenance and maintenance of terror organizations is often built on the edifice of a strong financial base and that terror cannot make much headway without finance.

    The author at the outset drew attention to the issue of state accountability in dealing with terrorism as terrorist activities often emanated from domestic territorial space. He emphasized that intelligence gathering, law enforcement, and imposition of new financial controls were important levers to curb the functioning of terrorist groups. In this context, he argued that the Government of Bangladesh has made only half hearted attempts to contain terrorist activities in its soil.

    The presentation focused on three aspects: the Beneficiary Groups and Institutions involved in terrorism; the sources of terror finance in Bangladesh; and, the responses of the Bangladesh Government and international institutions. Finally, the paper briefly touched upon the policy relevance of the findings.

    Main Beneficiary Groups and Institutions

    Dr. Kumar argued that the main beneficiaries of terror finance in Bangladesh have been Jamaat-e-Islami and Ahle Hadith Andolon Bangladesh (AHAB). Both organizations have maintained links with Islamic groups like Jagrata Muslim Janata Bangladesh, Jamaatul Mujahideen Bangladesh, Alhikma, Harkat ul Jihad etc. Money is used for recruitment and training purposes. Funding is also being channelled to build a large number of mosques and madarsas, which are playing an instrumental role in radicalizing society at the district and village levels.

    Sources of Terror Financing

    Some sources listed as potential feeders for financing terrorist activities, as argued by Dr. Kumar, were Islamic NGOs, Saudi charities, individuals, money laundering, fake currency, drugs and underworld. Dr. Kumar asserted that post 9/11, Islamic NGOs have increasingly become important in the fight against terrorism. In order to support the argument, he cited the steps taken by United States to halt the flow of funds to terrorist organizations through Executive Order 13224 and related elements of the USA Patriot act. He argued that as oversight mechanisms were absent, no financial scrutiny of the Islamic charities is undertaken, which further complicates the problem of tackling terror financing. The Saudi Government’s patronage of charities such as International Islamic Relief Organization (IIRO) and the World Association of Muslim Youth (WAMY) was also brought to attention. He cited the example of Al Haramain, a Riyadh based Muslim Charity, which was opened in Cox Bazar in 1992 to help Rohingya refugees but continued to operate in Bangladesh uninterrupted despite it being banned by the United Sates and Saudi Arabia. The connection between Al Haramain and terrorism was revealed in 2002, when linkages were made between Al Haramain and its suspected links to terror funding and trafficking of women and children under the garb of providing Islamic education. As far as individual support is concerned, links to Bin Laden were cited. Dr. Kumar argued that funds were flowing into Bangladesh in the form of Hundi through Jessore, Chittagong and Dhaka. He added that Bangladesh in recent years has also become a major source of fake currency. Fake currency was being printed in Chapai Nawabgunj and then being dumped into India. The nexus between drugs and terror finance also became evident when in 2005, the National board of Revenue found that business companies in Bangladesh were smuggling heroine to U.K. and that profits accrued form trafficking in narcotics often went for funding Islamist groups.

    Responses of Bangladesh Government and International Institutions

    Policy to tackle terror financing was expedited after the series of bomb blasts in 2005. The BNP enacted the Foreign Donations (Voluntary Activities) Regulation (Amendment Act, 2004). However, political motivations have often been an impediment for sustained political action and an overt emphasis on NGOs let the real culprits go scot-free. The enactment of Money Laundering Prevention Act, 2002 also proved ineffective as it was full of operational loopholes. Similarly the dismal record of Bangladeshi Banks in checking terror finance was also brought to attention. The author argued that Bangladeshi banks have received approximately 236 suspicious transitions since the MLPA was enacted in 2002, but till date there has been no progress on the issue due to procedural problems.

    The author further argued that pressure from the United States has proved ineffective in triggering a behavioural change within Bangladesh. However, he also noted the renewed interest of the United Nations in dealing with the problem of terror financing in Bangladesh since 2001. In 2005, Government of Bangladesh became a party to the UN International Convention for the suppression for the financing of terrorism. The Asia Pacific Group on Money Laundering is another key forum where Bangladesh is engaging to get transparency into the system of terror finance.

    The author concluded by stating that the issue of terror finance was a daunting challenge facing the government and political will needed to be strengthened in order to tackle the issue in a holistic manner.

    Some of the points raised during the discussion were:

    • One should be careful of classifying all charities as sources for terror finance. Classification of Madarsas is also needed.
    • Domestic, regional and international issues responsible for terror financing should also be analysed.
    • Causes of terrorism are generally found in the lack of development in Bangladesh, which is perhaps becoming an important catalyst for recruiting people.
    • One needs to revisit pre 1971 years of undivided Pakistan to seek linkages between Pakistan and terrorism in Bangladesh. ISI links to terror financing should also be explored.
    • Sources on linkages between terror financing and their sources should be more diversified.

    The seminar was chaired by Dr. Arvind Gupta, LBSC Chair, IDSA. Mr. Bhaskar Roy and Prof. Sanjay Bharadwaj were the external discussants; and Dr. Uttam Sinha and Capt. Alok Bansal were internal discussants

    Prepared by Medha Bisht, Research Assistant at the Institute for Defence Studies and Analyses, New Delhi.

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