Here are a few examples of how charities have been used to finance terrorism:


Example 1: Non-profit front organisation

1. In 1996, a number of individuals known to belong to the religious extremist groups established in the south-east of an FATF country (Country A) convinced wealthy foreign nationals, living for unspecified reasons in Country A, to finance the construction of a place of worship. These wealthy individuals were suspected of assisting in the concealment of part of the activities of a terrorist group. It was later established that “S”, a businessman in the building sector, had bought the building intended to house the place of worship and had renovated it using funds from one of his companies. He then transferred the ownership of this building, for a large profit, to Group Y belonging to the wealthy foreigners mentioned above.

2. This place of worship intended for the local community in fact also served as a place to lodge clandestine “travellers” from extremist circles and collect funds. For example, soon after the work was completed, it was noticed that the place of worship was receiving large donations (millions of dollars) from other wealthy foreign businessmen. Moreover, a Group Y worker was said to have convinced his employers that a “foundation” would be more suitable for collecting and using large funds without attracting the attention of local authorities. A foundation was thus reportedly established for this purpose.

3. It is also believed that part of “S’s” activities in heading a multipurpose international financial network (for which investments allegedly stood at USD 53 million for Country A in 1999 alone) was to provide support to a terrorist network. “S” had made a number of trips to Afghanistan and the United States. Amongst his assets were several companies registered in Country C and elsewhere. One of these companies, located in the capital of Country A, was allegedly a platform for collecting funds. “S” also purchased several buildings in the south of Country A with the potential collusion of a notary and a financial institution.

4. When the authorities of Country A blocked a property transaction on the basis of the foreign investment regulations, the financial institution’s director stepped in to support his client’s transaction and the notary presented a purchase document for the building thus ensuring that the relevant authorisation was delivered. The funds held by the bank were then transferred to another account in a bank in an NCCT jurisdiction to conceal their origin when they were used in Country A.

5. Even though a formal link has not as yet been established between the more or less legal activities of the parties in Country A and abroad and the financing of terrorist activities carried out under the authority a specific terrorist network, the investigators suspect that at least part of the proceeds from these activities have been used for this purpose.

Example 2: Fraudulent solicitation of donations

6. One non-profit organisation solicited donations from local charities in a donor region, in addition to fund raising efforts conducted at its headquarters in a beneficiary region. This non-profit organisation falsely asserted that the funds collected were destined for orphans and widows. In fact, the finance chief of this organisation served as the head of organised fundraising for Usama bin Laden. Rather than providing support for orphans and widows, funds collected by the non-profit organisation were turned over to al-Qaida operatives.

Example 3: Branch offices defraud headquarters

7. The office director for a non-profit organisation in a beneficiary region defrauded donors from a donor region to fund terrorism. In order to obtain additional funds from the headquarters, the branch office padded the number of orphans it claimed to care for by providing names of orphans that did not exist or who had died. Funds then sent for the purpose of caring for the non-existent or dead orphans were instead diverted to al-Qaida terrorists.

8. In addition, the branch office in a beneficiary region of another non-profit organisation based in a donor region provided a means of funnelling money to a known local terrorist organisation by disguising funds as intended to be used for orphanage projects or the construction of schools and houses of worship. The office also employed members of the terrorist organisations and facilitated their travel

Example 4: Aid worker’s Misuse of Position

9. An employee working for an aid organisation in a war-ravaged region used his employment to support the ongoing activities of a known terrorist organisation from another region. While working for the aid organisation as a monitor for work funded in that region, the employee secretly made contact with weapons smugglers in the region. He used his position as cover as he brokered the purchase and export of weapons to the terrorist organisation.


Here is an article that I wrote on Canadian charities avoiding involvement with terrorism