Funding Terrorism in Southeast Asia: The Financial Network of Al Qaeda and Jemaah Islamiyah
NBR Analysis vol. 14, no. 5

Funding Terrorism in Southeast Asia
The Financial Network of Al Qaeda and Jemaah Islamiyah

by Zachary Abuza
December 1, 2003

While terrorism is asymmetrical warfare and operations are relatively cheap, maintaining terrorist organizations does cost a significant amount of money. Shutting down terrorist funding is a difficult but not futile task. It is an important investigative tool and gives law enforcement officials a mechanism to deal with institutions, such as charities or remittance firms, rather than individuals.

The war on terrorism has continued apace in Southeast Asia, and governments in the region deserve credit for the arrests of more than 200 Jemaah Islamiyah (JI) members through September 2003, including more than 30 in Singapore, 80 in Malaysia, 80 in Indonesia, about 12 in the Philippines, and 8 in Thailand and Cambodia. Several members of JI’s regional shura, its leadership body, have been arrested, including operations chief Riduan Isamuddin (Hambali), Mohammed Iqbal Rahman (Abu Jibril), Agus Dwikarna, and Faiz bin Abu Bakar Bafana, while its spiritual leader, Abu Bakar Ba’asyir was tried in Indonesia for treason. [1]

These arrests are significant, especially as JI is not a large organization, with perhaps 500 to 1,000 members. The fact that it is now focusing on soft targets such as tourist venues may indicate institutional weaknesses—the result of two years of intensive investigations and arrests— and it is less able to plan and execute terrorist attacks than it was a year ago, especially against hardened targets such as U.S. embassies. JI still maintains its capacity to attack soft targets, though, as demonstrated by the J.W. Marriott Hotel bombing in Jakarta on August 5, 2003, and one would be foolish to underestimate its capabilities to launch devastating terrorist attacks throughout the region.

In addition to the arrests, regional security forces have stepped up their surveillance of suspected Islamist militants, and have tried to better monitor the sale of explosives, chemical components used in bomb–making and military stockpiles. [2] The glaring exception to their success in fighting terrorism has been on the financial front. The mechanisms for funding terrorism remain largely remain largely untouched in Southeast Asia, and to date almost no terrorist assets or funds have been seized in the region. The assets of two leading JI members, Hambali and Abu Jibril, were blocked by the United States under Executive Order 13244 in January 2003, but this took place 18 months after Abu Jibril was arrested. Indeed, this is a problem around the world; as of September 2003, only $136.7 million in Al Qaeda–linked assets had been frozen.

In early 2003, the U.S. Treasury Department’s Office of Foreign Asset Control drew up a list of 300 individuals, charities, and corporations in Southeast Asia believed to be Al Qaeda and JI funders. Due to inter–agency disputes, diplomatic concerns, and tactical considerations, the list was winnowed down to 18 individuals and 10 companies. Only on…

[1] Ba’asyir was acquitted of the treason charge, though in September 2003 he was sentenced to four years for subversion and immigration violations. In December, an appeals court cleared him of the subversion charge and reduced his sentence to three years. The prosecution had requested a 15-year sentence.

[2] See, for example, “It’s All Too Easy to Buy a Bomb in Indonesia,” Straits Times, November 2, 2002; and “Seized: 1 Tonne of Chemicals for Bombmaking,” Straits Times, December 17, 2002.