Cover: Countering Violent Nonstate Actor Financing

Countering Violent Nonstate Actor Financing

Revenue Sources, Financing Strategies, and Tools of Disruption

Published May 16, 2023

by Trevor Johnston, Erik E. Mueller, Irina A. Chindea, Hannah Jane Byrne, Nathan Vest, Colin P. Clarke, Anusree Garg, Howard J. Shatz

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Research Questions

  1. How do VNSAs finance their operations, and what do they use this financing for?
  2. What kinetic and nonkinetic CTF methods have been successful in disrupting this financing and why?
  3. Which CTF methods have been counterproductive and why?
  4. How can the U.S. Army support efforts to disrupt VNSA financing?

Violent nonstate actors (VNSAs) obtain money from multiple sources, both licit (e.g., donations and legitimate businesses) and illicit (e.g., extortion, smuggling, theft). They use that money to pay, equip, and sustain their fighters and to provide services to local populations, which can help build support for the groups, allowing them to extract resources, gain safe havens, and challenge state authority and territorial control. In this way, financial resources can prolong conflicts and undermine stabilization efforts after the fighting ends. Countering VNSA financing plays a critical role in degrading such organizations.

Various means are available to disrupt financing. These include kinetic means, such as destroying resources or neutralizing leadership, and nonkinetic means, such as targeted financial sanctions and legal remedies. The counter–threat financing (CTF) tools that work best for transnational groups may not work as well for national ones, and some tools may prove counterproductive in certain situations. Which tools to use in a given case is not always obvious.

The authors draw lessons from efforts against five VNSA groups to discover, in each case, how they financed their activities and for what purposes, as well as which methods to counter this financing worked best and which were counterproductive. The authors then consider what the U.S. Army can do to support counter–terrorism financing efforts.

Key Findings

Revenue sources vary systematically across different types of groups and contexts

  • Communist groups, for example, tend to exploit a variety of local revenue streams, including extortion and theft; Islamist organizations disproportionately depend on external state support.
  • In most cases, it is helpful to tailor efforts to the group type and to address multiple revenue streams; in some cases, especially for groups relying on external support, targeting a specific source may be more useful.

A group may spend resources on both violent and nonviolent activities

  • VNSAs with more-diverse financial portfolios tend to be more violent, especially those using extortion and relying on external state support.
  • As their financial portfolios expand, national groups tend to increase their violent activity at a greater rate than do transnational groups.
  • National groups also appear to be more inclined than transnational ones to spend on local goods and services as their portfolios expand.

There is no easy formula for degrading VNSA finances; the mission involves a search of finding the right tools for the task in a given situation

  • The choice of tools is diverse, including nonkinetic methods (such as sanctions and specific laws) and kinetic methods (such as disrupting smuggling networks, killing or capturing VNSA leaders, and engaging in combat operations).
  • Common elements across cases include the use of legal authorities to block access to the legitimate economy, working with effective local governments and international partners, striking at VNSA logistics, reducing VNSA governance of territory, and coordinating nonkinetic and kinetic actions.

Recommendations

  • The Army could encourage service members across various specialties — such as intelligence, law enforcement, finance, and information technology — to pursue the Additional Skill Identifier "Counter Threat Analyst." Guard and Reserve personnel would also be suitable candidates.
  • Especially given the dynamic threat environment, the Army should consider funding a CTF course to provide regular and updated training. The course should include the legitimate financial sector because VNSAs use it; illicit means of raising and moving money; database organization, especially from unstructured data; and analysis.
  • The Army could consider placing personnel with the U.S. Treasury or agencies that work CTF.
  • The Army could consider funding, at least in part, the equipment necessary for the CTF effort.
  • Joint doctrine should expand and update its discussion of the role of local partners in CTF efforts and consider ways to better utilize partners' capabilities to complement U.S. efforts.
  • The joint force should consider evaluating the long-standing CTF structure to explore whether reorganizing or redefining roles would be beneficial.
  • CTF cells may need to further augment their staffs with computer scientists and other technical analysts to better counter cybercrimes and the exploitation of other emerging technologies.

Research conducted by

This research was sponsored by the Office of the Deputy Chief of Staff, G-3/5/7, U.S. Army and conducted by the Strategy, Doctrine, and Resources Program within the RAND Arroyo Center.

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