The Liberation Tigers of Tamil Eelam (LTTE) was founded on 5 May 1976 under the leadership of Velupillai Prabhakaran. Its objective was to be the champion of the Tamil people in Sri Lanka – Hindus who make up 18% of the population – against the majority Buddhist Sinhalese. The group was active from 1976 to 2009 and was responsible for several violent conflicts with the Sri Lankan government, however, it was not until May 1992 that India proscribed the LTTE as a terrorist group.
Total numbers of fighters killed from both sides, including civilians, has been estimated to be 100,000. However, Paul Wilkinson in “Terrorism versus Democracy: The Liberal State Response”, offers a more researched figure stating 64,000 people were killed in the fighting over the 26 years of conflict.
The LTTE was one of the most well-funded terrorist organizations in the world, and its financing methods were varied and sophisticated. A vital component of the group’s business and administrative acumen was its capability to create, establish and maintain a reliable stream of financial resources to sustain the funding requirements for its organisation and operations.
Prefered Financing Methods
In the early days of the conflict, the LTTE leadership suspected that the demand for financial resources may not be met domestically. The Tiger’s leader Prabhakaran had earlier associated with Sri Lanka’s criminal gangs who trafficked in black market goods and operated extortion and protection rackets. Such experience enabled the LTTE to run its own protection rackets and extort civilians for “taxation”. In the Jaffna peninsula the LTTE collected a percentage of goods smuggled into the region. However, a reliance on the local Tamil economy would never meet the LTTE’s financial requirements. To sustain itself there would be a need to “go abroad” to tap the Tamil diaspora.
In “Fundraising, organised crime and terrorist financing”, Windle offers five main funding streams exploitable by terrorist groups. Legitimate investments, state sponsorship, donations and extortions, charities and crime. Windle clarifies that these five income sources should not be considered as conclusive or distinctive but positioned between being completely legitimate to completely illegitimate.
Clarke has referred to and placed some of the LTTE’s fund raising activities into the categories of the grey economy and the dark economy. Income from diaspora support, charities, fraud, legal businesses and money laundering – all within the so-called “grey economy”. Within the “dark economy” Clarke notes the LTTE sourced revenue from kidnapping for ransom (KfR), armed robbery and theft, smuggling, trafficking and counterfeiting, extortion and protection and external state support.
During the early years, the LTTE received direct support from the Indian Government’s foreign intelligence agency, the Research and Analysis Wing (RAW).
This support, which commenced as early as 1981, included weapons and training in addition to salaries for several LTTE leaders.
The significance of the Tamil diaspora movement was quickly recognised as a steady source of reliable income if exploited astutely. According to Manoharan, it was the volume of funds from overseas that sustained the group’s insurgent activities and these became the preferred source of revenue to sustain the LTTE’s requirements. Further, these external funds made up approximately four-fifths or eighty percent of the total LTTE revenues which originated from three primary sources. Firstly, there was the diaspora contributions – not always generous donations – secondly the profits from entrepreneurial and legal commercial ventures and thirdly, the proceeds from the trafficking of drugs.
Following the ethnic riots of 1983, thousands of Tamil refugees fled overseas to India, Australia, Canada, and the United Kingdom. This sowed the seeds for the Tamil diaspora. Large numbers of Tamil’s abroad are university graduates with professional education in medicine, engineering and finance with a considerable capacity to not only lobby for LTTE support but make very considerable cash contributions to the group. These contributions were known to become on-going and regular revenue from which the Tigers could depend upon. The global diaspora thus, became a vital and preferred part of the organization’s fund-raising.
Other preferred revenues were to come from the counterfeiting of passports and visas, money laundering, arms trafficking and other organised criminal activities. The LTTE was not directly involved in these activities. Rather it had linkages with Tamil gangs involved and therefore it derived a financial share.
Critical to the continuation of these conduits of financial support was the ability for seamless movement from sources to locations where the LTTE was able to access these funds. Avoiding interception by the Financial Action Task Force (FATF) or domestic combating mechanisms aimed specifically at stemming the flow of LTTE funds, was essential. Manoharan estimates about US$2 million was raised each month from the diaspora. Diversifying the raising of funds was the LTTE’s association with narcotic cartels and other militia who were active in narco-terrorism. Quantities of drugs close to 1000kg equating to revenues of US$250 million on the international market are estimated to have been smuggled annually. These reliably lucrative methods complemented the preferred means of fund raising.
Demonstrating a degree of proficiency in other fraudulent revenue raising activities the LTTE engaged efficiently in casino, social security (in France), immigration, and credit card fraud (in the UK). In Toronto in 1999, the Royal Canadian Mounted Police reported the proceeds from bank and casino fraud were being sent to Sri Lanka by Tamil street gangs.
Equally important to the LTTE were wealthy individual donors or patrons. For example, Davis notes revenues in the 2000s came from a wealthy supporter resident in California who donated approximately US$6 million to the Tigers (Davis, 2021). The LTTE had representatives in at least fifty-four countries worldwide. The Tamil diaspora, was indeed, a well from which the Tigers could regularly return to drink.
Evidence suggests the LTTE received drugs and arms “on consignment” from traditional criminal enterprises in Myanmar and India. Upon receipt, the Tigers sell the consigned drugs then pay for the weapons and repeat the cycle. This was a reliable method to build their arsenals.
It was the volume of funds from overseas that sustained the group’s insurgent activities and these became the preferred source of revenue to sustain the LTTE’s requirements. These external funds made up approximately eighty percent of the total LTTE revenues which originated from three primary sources. Firstly, the diaspora contributions, secondly, profits from entrepreneurial and legal commercial ventures and thirdly, proceeds from the trafficking of drugs.
In The Liberation Tigers of Tamil Eelam Insurgency in Sri Lanka, Chalk estimates each month the group reaped US$800,000 from Canada, US$500,000 from Scandinavia, US$400,000 from the United Kingdom, US$250,000 from Australia, and another US$200,000 from the United States. These methods of raising finances explain why they were preferred over other means. They were reliable, easier to move through the international banking system and quickly accessible when needed.
Current research indicates the fund-raising methods used by LTTE were, and continued to be, practised by many of the most prominent internationally proscribed terrorist groups. Achieving the most lucrative method of fundraising for an insurgent group has been aptly described as “the business side of terrorism” by Clarke who posits that the LTTE enjoyed “a diversified funding portfolio” which reliably generated revenues for all its organisational and operational requirements.
Not unlike civilian industry there exists a need for a business model or models to be designed to generate funds for terrorist activities. “Many of these business models have peripheral benefits allowing for the movement of goods and personnel. These business models include taxation, extortion and protection rackets, kidnapping for ransom, drug trafficking, piracy, illegal gambling and counterfeiting of goods and currency”. The LTTE realised the capacity for recurrent earnings from these methods and subsequently became proficient in all of them.
The financing of terror has three simplified stages. Fundraising, fund-moving and fund-using or as Jesica Davis lists in greater detail; deploying, managing, storing, investing, moving and obscuring funds. These are typical financial management activities of most terrorist groups particularly those in control of territory as was the LTTE in the north-east of Sri Lanka. Other examples include the Islamic State and the Afghan Taliban.
Davis further identifies six key financing mechanisms.
- Donations
- Criminal activities
- State sponsorship
- Exploitation of charities and non-profit organisations
- Money laundering techniques to hide the origin and tracing of funds.
- Self-financing – generation of funds from own businesses.
Importantly these mechanisms are not mutually exclusive. Terrorist groups often use a combination of methods to create revenues for organisational and operational activities.
Other research on terrorist businesses suggests creativity and vision. For example, the plantation businesses of the Indonesian based Jema’ah Islamiyah (JI) reveals the production and exporting of palm oil – a legitimate business. ISIS imagined, inspired and created businesses that traded in herbal medicine and chemical stores businesses. According to the American Security Project (ASP), donations and state-sponsored terrorism, extortion and taxation, illegitimate businesses and kidnapping for ransom all contributed to the bottom line for proscribed groups such as ISIS, Boko Haram, Al Shabab and the Afghan Taliban.
Other businesses created specifically to fund terrorism objectives of a legitimate nature include travel agencies, herbal medicine and electronic stores. This suggests the methods used by the LTTE were not unique, however, the dependency on revenues from the Tamil diaspora and legitimate businesses established by the LTTE are evident.
Combating the Financing of Terrorism
The first of the main measures used to counter preferred financing methods of the LTTE were criminalisation and policing of terrorist financing activities at the international and domestic levels. The second is the use of military force, which includes targeted strikcs, the control of territory and the capture of key individuals. Next is the exploitation of financial intelligence and the use of financial information for surveillance. Fourth is the exclusion of terrorist financing actors through application of international and domestic sanctions and the seizure of assets and fifth is the regulation of the private sector assigning some responsibility for preventing terrorism to financial institutions and the private sector.
The Government of Sri Lanka limited its methods of disrupting the financing of LTTE’s activities to what Clarke describes as kinetic activities. These actions were direct physical force as an alternative to non-physical or indirect methods. For example, raids on suspected LTTE financing networks, seizure of assets and interdiction of illicit transactions were executed by law enforcement agencies or the Sri Lankan military. Many years passed before the international community (governments abroad) commenced non-kinetic actions to oppose the LTTE’s strategies for funding itself. For example, it was not until the closing chapters of the conflict that Canada and the United Kingdom proscribed the group as a terrorist organization. The events of 11 September 2001 helped to accelerate these actions. Following the drafting of legislation in those jurisdictions, procedures were implemented to counter the LTTE’s financial activities.
The Government of Sri Lanka endeavoured to raise an awareness of the dangers and risks associated with supporting or providing funds to the LTTE. This was done using print, electronic, digital (social) media and outreach programs. More successful was the strengthening of international cooperation where “diaspora countries” shared information and coordinated efforts aimed at disrupting the LTTE’s fundraising networks. International organisations such as the Financial Action Task Force (FATF) also played a part in developing and implementing effective anti-money laundering and counterterrorism financing policies.
In March 2001, following diplomatic initiatives by the Government of Sri Lanka, the LTTE was listed as a proscribed terrorist organization. Consequently donations, contributions and fund raising to and for the LTTE became a criminal offence in countries such as India, the United States, the United Kingdom, Australia, Canada and South Africa. Subsequently, donations contributed willingly in the past, had to be coerced from “supporters”. Soon after, the United States and the United Kingdom authorities began to restrict LTTE fund raising activities. It then became necessary to turn to organized crime and human smuggling for revenues. As soon as the LTTE was proscribed as a terrorist organization, arrests and prosecutions of LTTE operatives and associates began. Consequently, in 2005, an estimated $US12 million was lost from revenues generated by Canadian connections when the Canadian Government declared the LTTE a proscribed terrorist organization.
In consideration of the main measures used to counter the LTTE’s financing methods, a wider view of the methods used to combat financing techniques beyond the LTTE is worth noting.
Davis articulates six main approaches to countering the methods used to finance terrorism beyond the Liberation Tigers of Tamil Eelam.
- International cooperation. Countries share information and collaborate to disrupt the movement of funds.
- Enhanced regulations. Governments introduce laws that require financial institutions to report suspicious transactions, freeze assets of suspected terrorists and maintain up to date records of their customers.
- Targeted financial sanctions. Governments impose targeted financial sanctions against individuals and organisations. For example, freezing assets, restricting access to financial services, and prohibiting financial transactions with designated individuals or organisations.
- Risk assessment. Financial institutions conduct frequent risk assessments to identify vulnerabilities and enhance their systems to detect and prevent terrorist financing.
- Public-private partnerships (PPP). Governments and financial institutions collaborate and enhance the sharing of information and the development of effective countermeasures.
- Capacity building to strengthen systems of developing countries that lack the resources and expertise to effectively combat terrorist financing.
In reviewing the findings in this essay, the following should be noted.The type of business chosen to provide funding appears to be influenced by the available skills and expertise within the group. Importantly, the LTTE is likely to have completed an assessment of the counter- terrorism measures in place. For example, the existence of the monitoring of cross-border movement of funds, new anti-terrorist financing laws and diligent law enforcement agencies with a focus on detecting terrorist financing activity. Understanding that money provides the resources for which terrorist groups purchase goods and materials and pay for training and ultimately deliver attacks of terrorism, the countering of terrorist financing was introduced as a key pillar of counterterrorism.
The FATF’s global implementation of key counter-terrorist financing measures has made it a criminal offence to finance terrorism. Further, it uses targeted financial sanctions to freeze the assets of terrorists and their financiers and to disrupt the movement of terrorism-related finance in the jurisdictions which take part in the FATF’s global network on anti-money laundering and countering terrorist financing (AML/CFT).
It was not until the LTTE was proscribed as a terrorist organization in nations states where Tamil diaspora were resident that its methods for funds raising were significantly affected. Until that time there had been negligible to only moderate success in disruption of the flow of LTTE funds.
Davis argues “like terrorist financing, counterterrorist financing has been conceptualised too narrowly in much of the academic and practitioner literature, focusing almost exclusively on how to stop terrorists from raising and moving funds by criminalising these activities and enforcing counterterrorism financing laws”.
The measures proposed by Davis highlight the need for collaborative approaches to combat the financing of terrorism with respect to existing groups perpetrating political violence and terrorism. These are lessons for governments, financial institutions and international organisations. The development of co-operative strategies to prevent the misuse of financial systems exemplifies a starting point. These strategies require regular reviewing and updating where necessary to be relevant to the evolving nature of the contemporary threat.
However, challenges will remain in combating terrorist financing given the diversity of fund-raising methods over wide regions. As groups become wealthier, individuals are encouraged to join and emboldened to remain (ASP, 2015). As a result, terrorist organisations continue to exist – and flourish.
BIBLIOGRAPHY
Books
Clarke, Colin P. Terrorism, Inc, The Financing of Terrorism, Insurgency, and Irregular Warfare. Santa Barbara, CA: Praeger, 2015.
Davis, Jessica. Illicit Money: Financing Terrorism in the Twenty-First Century. Boulder, CO: Lynne Rienner Publishers, Inc., 2021.
Martin, Gus. Understanding Terrorism: Challenges, Perspectives, and Issues. Thousand Oaks: Sage Publications, 2003.
Wilkinson, Paul. Terrorism versus Democracy : The Liberal State Response.Oxon: Routledge, 2011.
Windle, J. Fundraising, Organised Crime and Terrorist Financing. In Silke, A. (Ed). The Routledge Handbook of Terrorism and Counter-Terrorism. Abingdon:Routledge, 2018
Journals
Chalk, Peter. “The Tigers Abroad: How the LTTE Diaspora Supports the Conflict in Sri Lanka.” Georgetown Journal of International Affairs 9, no. 2 (2008): 97–104. Accessed March 23, 2023 from http://www.jstor.org/stable/43133783.
Manohoran, N. “Financial Fodder – External Sources of LTTE Funds.” IPC Journal of Peace and Conflict Studies, October 20, 2004.
Websites
American Security Project. “How are terrorist projects financed”. Accessed March 22, 2023 from https://www.americansecurityproject.org/how-are-terrorist-organizations-financed/
A. Samarasinghe, S.W.R. de. “The Liberation Tigers of Tamil Eelam – LTTE.” Political Economy of Internal Conflict in Sri Lanka. Clingendael Institute, 2003. Accessed March 23, 2023 from http://www.jstor.org/stable/resrep05513.10.
Liberation Tigers of Tamil Eelam (LTTE) Sri Lanka. Liberation Tigers of Tamil Eelam (LTTE) Terrorist Group, Sri LankaAccessed April 11, 2023 from https://satp.org/terrorist-profile/srilanka/liberation-tigers-of-tamil-eelam-ltte.
Vittori, Jodi. “Terrorism Cannot Live on Idealism Alone.” Terrorist Financing and Resourcing, 2011, 13–23. Accessed April 2, 2023 from https://doi.org/10.1057/9780230117716_2.