In the first days of the “war on terror,” before the United States had launched air strikes against the Taliban or Special Forces raids on Osama bin Laden’s compounds, President George W. Bush signed Executive Order 13224. The presidential decree, which dates from September 23, 2001, targeted al Qaeda’s money by “prohibiting transactions” with suspected terrorists. “Money is the lifeblood of terrorist operations,” Bush said at the time. “We’re asking the world to stop payment.” Five days later, the UN Security Council followed suit, calling on states to “prevent and suppress the financing” of terrorism in its first substantive resolution since the 9/11 attacks.
More than 15 years later, the war on terrorist financing has failed. Today, there are more terrorist organizations, with more money, than ever before. In 2015, for example, the self-proclaimed Islamic State (also known as ISIS) had a budget of up to $1.7 billion, according to a study by King’s College London and the accounting company Ernst & Young, making it the world’s richest terrorist group. That same year, the total amount of all frozen terrorist assets amounted to less than $60 million. Only three countries—Israel, Saudi Arabia, and the United States—had seized more than $1 million.
Driven by the assumption that terrorism costs money, governments have for years sought to cut off terrorists’ access to the global financial system. They have introduced blacklists, frozen assets, and imposed countless regulations designed to prevent terrorist financing, costing the public and private sectors billions of dollars.
Large amounts of terrorist funds never enter the global financial system.
This approach has probably deterred terrorists from using the international financial system. But there is no evidence that it has ever thwarted a terrorist campaign. Most attacks require very little money, and terrorists tend to use a wide range of money-transfer and fundraising methods, many of which avoid the international financial system. Instead of continuing to look for needles in a haystack, governments should overhaul their approach to countering terrorist funding, shifting their focus