(Page 9 of 22) - Terrorist Financing and Government Response in East Africa authored by Piombo, Jessica.

family/ethnic relationships.

Regarding the remittance system, there are two sources of

funds. First of all, large portions of these countries are Muslim, and therefore the Islamic
charity network serves to facilitate the flow of money.

Similar to the situation elsewhere

in other world regions, individuals who are contributing to the charities may not know
that the funds are being channeled to fundamentalist or radical groups, and therefore it is
difficult to ascertain whether or not they actually wish to fund terrorism.

Terrorist attacks are not a common method used to generate funds in this region.

Unlike Latin America, kidnappings for money are not widespread, and the involvement
in the narcotics trade is minimal. Even in West Africa, a region whose ties to the
international narcotics traffic are much more extensive than in East Africa, drug networks
have not become co-opted by terrorist organizations.

There is little evidence that

terrorist financiers in East Africa have attempted to buy into the narcotics trade (which is
more prevalent in West than East Africa anyway), though the organizations involved in
each – terrorism and narcotics – utilize the same smuggling networks. For example, the
same planes utilized in the qhat trade, widespread in the Horn, area easily used to
smuggle other things as well, such as money, arms and people.

Many factors in East Africa actually work to make the region less conducive to

certain forms of terrorist finance while rendering them more vulnerable to other methods
(mostly smuggling related). The sophistication of TF in East Africa is limited by the fact
that many countries in the region work on primarily cash economies and have antiquated
banking systems, or in the case of Somalia, no centralized system at all. Computerization
of the banking industry, outside of Kenya, tends to be minimal, though Ethiopia and
Eritrea, whose banking systems are not yet computerized, are working to migrate their
banking systems onto computer networks.

As the computerization and formalization of

the banking system improves, the attractiveness of the area for more sophisticated
methods of money laundering (currency conversion and speculation, transfers and
offshore banking, etc), will increase. The capacity for surveillance will likely lag behind
the technological innovation, which could provide windows that terrorist financiers could
exploit the new systems.

Many of the countries in the Horn have been devastated by civil wars (Sudan,

Somalia, Uganda and a recent border war between Ethiopia and Eritrea), which limits the
attractiveness of these areas to be used for money laundering through businesses and real
estate transactions. Investments in the conflict areas are risky, so investments as a form of
finance (whether storage or money laundering) is more widespread outside the Horn (i.e,
in Kenya and Tanzania). The wars also hinder the formalization of the banking industry:
without a government that controls the entire territory, formal banking in Somalia is non-
existent, and exists only in northern Sudan.

Author’s interview with Phillip Carter, East Africa Bureau Chief, Department of State, Washington, DC,

24 September, 2004.

For example, over 90% of Somalis are Muslim, 70% of Sudanese, ?? of Eritreans, and 45-50% of

Ethiopians. The Muslim population in East Africa tends to concentrate in the Horn Region, aside from
Tanzania’s predominantly Muslim Zanzibar Island. The majority of mainland Tanzanians are Christian,
10% of Kenyans and16% of Ugandans are Muslim; the remainder are mostly Christian. Data from the CIA
World Factbook, <www.worldfactbook.org>, accessed on 31 October 2004.

This is also a common argument made in regards to Hizbollah’s financing in West Africa, through the

Lebanese diaspora community.

Author’s interviews with Hefflin and Carter.

Carter interview.

INCSR 2003 report.