A rising concern amongst law-enforcement and military agencies around the world has been the question of how terrorist organizations finance their apparatus and their operations. Among the different responses which could be given to improve security, is the suppression of cash, which is considered a medium of choice for terrorist organizations. The perspective is attractive to some supporters, but numerous experts warn it may be the worst possible solution.
Cash has been regularly decried as the terrorist's friend, by many law enforcement agencies and government officials. In asymmetric warfare, operational stealth in every aspect, including the financing of operations, is crucial. And what is more stealthy than cold bills discretely hidden into a suitcase, ask the opponents of cash? According to supporters of the ongoing war on cash, the outright suppression of currency would choke terrorist organizations financially, as it would force them into the computerized world, where the government can control every single citizen. But would it really be that simple?
In fact, cash is only one of the many ways terrorists finance their operations, and it's not even the main one. Bank-scams and student loan scams are a favorite of theirs, as it holds the triple advantage of increasing their movement's funds, depleting their opponents', and making for delicious propaganda. Denise Hutchings covered a 2015 trial in which several American nationals were judged for having set up schemes designed to finance their terrorist affiliations. She reported : "Allegations charge that two of the defendants obtained money by applying for and obtaining credit cards from multiple financial institutions. They withdrew money using these cards with no intention of repaying the amounts obtained from the financial institutions. They made various fraudulent financial transactions and also took steps to evade collection efforts." The selling of precious antique artefacts looted in the conquered cities also makes for a solid financing source, along with the more haphazard but no less lucrative ransoming activities.
The main and steadiest source of financing come from the oil resources which have been taken under control and from the taxation system which has been implemented in the caliphate. Eline Gordts studied the matter for the Huffington Post: "ISIS is in control of 60 percent of Syria's oil production capacity. ISIS appears to only be producing around 50,000 barrels. The same thing is happening in Iraq. The capacity of the fields under ISIS control is about 80,000 barrels a day. The militants started producing around 20,000, increased to 40,000 and declined again after the start of the U.S. strikes and the joint operations launched between Erbil and Baghdad, between the Kurdish Peshmerga forces and the Iraqi army." By selling well below market prices, they ensure customers will not mind the origin of the fuel.
Finally, a large part of their finances come, as was revealed gradually in recent years, from perfectly official and governmental sources: In 2014, then-US Treasury Under-Secretary for Terrorism and Financial Intelligence David Cohen noted : "Qatar, a long-time US ally, has for many years openly financed Hamas, a group that continues to undermine regional stability. Press reports indicate that the Qatari government is also supporting extremist groups operating in Syria." So whom would a cash-ban hurt more: us or them?
Killing off liberties and making our societies more government controlled is the secondary objective of terrorist movements. The aim of terrorist organizations is either to harm our societies directly or indirectly. Either their actions are properly carried out and we suffer an attack, or we implement security measures which hamper them very little, but destroy our own freedom. The recent successes of the Islamic State hinge on this double-edged strategy. Civil liberties watchdog fear that the dissolution of cash would hand over terrorist organizations a tremendous victory. Paul Mason warns that liberties would be severely limited in a cashless society. "If a cyber-attack or computer malfunction took down a digital-only payment system, there would be no cash reserves in households and businesses to fall back on. The second is more fundamental and concerns freedom. In most countries, the ability to take your cash out of the bank and to spend it anonymously is associated with many pleasurable activities -- not all of which are illegal but which exist on the margins of society." Depriving a citizen of his rights to conduct his business as he chooses on the basis that he might use his freedom for bad reasons is something George Orwell wrote a bestseller on.
Upon extensive scrutiny, it appears that most of the publicly-stated objectives of a cash-ban would be counterproductive at best, catastrophic at worst. Although not pointed at terrorist activities, but rather tax avoidance and black markets, the Indian government implemented at the end of last year a brutal ban on cash. With no notice, the Prime minister announced that cash was no longer valid tender for daily operations, so as to force his own population to declare all revenues and belongings. The result was disastrous, with no sign yet of any fall in illicit activities, but tremendous damage to the healthy part of the economy. It is likely a similar reform aimed at quelling terrorist activities would have the same boomerang effect.