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Terrorist Financing and Money Laundering

Author

Listed:
  • Tim Krieger

    (University of Paderborn)

  • Daniel Meierrieks

    (University of Paderborn)

Abstract

Terrorism causes enormous costs to society. Since the 9/11 attacks, the “war on terror” has therefore been an important challenge to all civilized countries. In the present contribution we analyze the root causes and costs of terrorist activity, thereby setting the stage for discussing the need for measures against terrorist financing. We argue that running a terrorist organization requires substantial financial resources which are transferred to the groups through clandestine and often illegal channels. Anti-money laundering policies may appear useful measures to stop transfers to terrorist groups; however, they are not sufficient means to deal with all facets of terrorist financing. Compared to similar activities of organized crime, terrorist financing involves “reverse” money laundering. This is a consequence of some fundamental differences between terrorism and organized crime, which also lead to different implications in terms of choosing appropriate counter-measures.

Suggested Citation

  • Tim Krieger & Daniel Meierrieks, 2011. "Terrorist Financing and Money Laundering," Working Papers CIE 40, Paderborn University, CIE Center for International Economics.
    • Handle: RePEc:pdn:ciepap:40
    as

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    File URL: http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/ciepap/WP40.pdf
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    References listed on IDEAS

    as
    1. Thomas Gries & Tim Krieger & Daniel Meierrieks, 2011. "Causal Linkages Between Domestic Terrorism and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(5), pages 493-508, June.
    2. Ferwerda Joras, 2009. "The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime?," Review of Law & Economics, De Gruyter, vol. 5(2), pages 903-929, December.
    3. Alan B. Krueger & Jitka Maleckova, 2003. "Education, Poverty and Terrorism: Is There a Causal Connection?," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 119-144, Fall.
    4. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June.
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    7. Nitsch, Volker & Schumacher, Dieter, 2004. "Terrorism and international trade: an empirical investigation," European Journal of Political Economy, Elsevier, vol. 20(2), pages 423-433, June.
    8. Brigitte Unger & Gregory Rawlings, 2008. "Competing for criminal money," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 10(3), pages 331-352.
    9. Sarah Brockhoff & Tim Krieger & Daniel Meierrieks, 2010. "Ties That Do Not Bind (Directly): The Education-Terrorism Nexus Revisited," Working Papers CIE 26, Paderborn University, CIE Center for International Economics.
    10. Axel Dreher & Martin Gassebner & Lars-H.R. Siemers, 2007. "Does Terror Threaten Human Rights? Evidence from Panel Data," KOF Working papers 07-156, KOF Swiss Economic Institute, ETH Zurich.
    11. Tim Krieger & Daniel Meierrieks, 2016. "Does Income Inequality Lead to Terrorism?," CESifo Working Paper Series 5821, CESifo.
    12. Gassebner, Martin & Jong-A-Pin, Richard & Mierau, Jochen O., 2008. "Terrorism and electoral accountability: One strike, you're out!," Economics Letters, Elsevier, vol. 100(1), pages 126-129, July.
    13. repec:pri:indrel:dsp01bk1289895 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Michael Brzoska, 2011. "Counter-Terrorist Financing: A Good Policy Going too Far?," EUSECON Policy Briefing 7, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    terrorist financing; causes and costs of terrorism; money laundering; organized crime vs. terrorism; anti-terrorist financing policies;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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