May 13th, 2010
02:03 PM ET

Security Brief: Chasing Taliban’s overflowing coffers, cash couriers

The U.S. is waging a fight against the Taliban cash flow from illegal drugs like opium and the cash couriers who help prevent a paper trail.

Editor's note: This is the second of a three-part blog series on terrorist finances. In Part 1 we examined al Qaeda’s challenging financial situation. In Part 2 we'll examine at the Taliban’s money trail and in Part 3 we'll look at international coooperation (or sometimes the lack-thereof) in tracking terrorist financing. Bookmark our Security Brief section and check back Friday for Part 3.

With its columns and colonnades, the U.S. Treasury is one of the grandest buildings in Washington. But a handful of its staff are currently working in less salubrious surroundings. They’ve been dispatched to Kabul in an effort to stifle the Afghan Taliban’s cash-flow. Their mission: to detect money laundering schemes, investigate offshore accounts and cell-phone transfer, and try to rein in Afghanistan’s huge “informal” banking sector.

It is an uphill task. The United Nations Office on Drugs and Crime estimates the Taliban’s revenues from illicit drugs alone last year at $150 million. U.N. sources say that insurgents (a wider definition than the Taliban) made between $450 and $600 million out of the opiate business between 2005 and 2008. But it may be much more. The U.N. estimates the “narco-profits” made in Afghanistan at $2.8 billion. A huge sum is unaccounted for.

The Taliban tax every stage of the process: the farmers, processors and distributors. Bringing in the poppy crop is so important that Taliban attacks fall during the harvest, as fighters trade their guns for scythes.

In 2009 the crop amounted to an estimated 7,700 tons. That makes a serious amount of heroin. Currently the preliminary forecast for this year is for a similar harvest -– from an area of 300,000 acres. (The island of Manhattan is about 20,000 acres, to give you a sense of just how huge the cultivated area is.) UN officials in Kabul say that’s not encouraging -– as it may compound the oversupply of heroin relative to global demand.

Estimating this year’s crop is complicated by a mysterious blight known as the “poppy plague” which has affected many fields in Helmand province. But even if poppy plague reduces the crop, UN officials note that huge amounts of opium are in storage.

“Opium can be kept for many years, is easy to transport and the seeds can be taken if you are displaced,” one UN official in Kabul says. There’s concern that some of the opium in store will be released onto the market this year to benefit from an “irrational high in opium prices,” the official adds.

Some Taliban have branched out into extortion and kidnapping, shaking down trucking companies that resupply NATO, for example. And they don’t put the money in a checking account.

Financial dealings in Afghanistan are dominated by informal networks known as hawala, which may account for 80 percent of transactions. Essentially, a client who owes money to someone in another city or country gives cash to a hawaladeer who takes a commission and instructs a fellow broker elsewhere to pay out the cash. While the hawaladeer may use bank accounts to manage the transfers, their clients don’t. There is therefore no paper trail.

Treasury officials admit that closing down the hawala down is not an option. So the U.S. approach is to try to coax the hawaladeer into the regulated system and license them. Not that the Taliban will roll over and allow that to happen. They rely on the hawala to launder the “taxes” they levy on the drug trafficking process.

After years spent focusing on disrupting al Qaeda’s finances, U.S. Assistant Treasury Secretary David Cohen wants to bring the same focus and techniques to tackling the Afghan Taliban. Cohen leads the Treasury’s office of Terrorist Financing and Financial Crimes. He is encouraged by cooperation of other governments, especially in the Gulf, who are beginning to see the Afghan Taliban in the same light as al Qaeda. In the United Arab Emirates six men – five Emiratis and one Afghan - have gone to jail after being convicted last month of trying to funnel money to the Taliban.

One U.S. official says the U.S. is now helping Gulf governments to identify and chase down the “cash couriers” – people who literally carry bundles of hard cash to and from al Qaeda, the Taliban and other groups, outside the banking system.

But crucially Pakistan – on the frontline in the battle with militant groups – is one of eight countries that has shown “strategic deficiencies in alleged money laundering and terrorism financing.”

That was the conclusion earlier this year of the Financial Action Task Force, an inter-governmental body aimed at countering illicit financial transactions. Pakistan’s legislature recently passed an anti money-laundering bill to try to tighten regulation of the financial sector, but financial analysts says its implementation in a country where informal financial transactions thrive will be a challenge.

For now the Taliban appear to have plenty of cash with which to buy weapons and other hardware, and to pay fighters. Some analysts say the US strategy of abandoning some outlying bases in remote areas close to the border with Pakistan may make the insurgents’ exploitation of the opium trade easier.

And in his analysis last year, General Stanley McChrystal said that even without the drugs trade, the Taliban and other groups would have income from levying taxes and fees at checkpoints and among villagers under their control, as well as from kidnapping and foreign donors.

“Eliminating insurgent access to narco-profits,” he wrote, “even if possible and while disruptive – would not destroy their ability to operate so long as other funding sources remained intact.”

Other analysts agree with McChrystal’s assessment. They don’t expect the Taliban’s coffers to be emptied in short order. Those Treasury officials laboring in Kabul and Washington have plenty of work ahead of them.

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Filed under: Afghanistan • Pakistan • Security Brief • Taliban • Terrorism
soundoff (123 Responses)
  1. beth

    These people are bringing this crop in through their Muslim people that live here in the USA

    May 14, 2010 at 7:06 am | Report abuse | Reply
  2. Seth

    I wonder how these guys get their arms from and how they manage to fund their operatins.I believe some wealthy individuals and countries are realy supporting them behind close doors. but they could be traced if the FBI's, KGB's etc seriously wants to locate them.

    It's now now clear only God can protect and save US. GOD HELP US ALL

    May 14, 2010 at 7:33 am | Report abuse | Reply
  3. ken philippines

    its nice to know that there are fungus infection eating up their opium crops... thats a brilliant idea i hope its not just nature-made but someone had thought of that to release fungus infection on their crops... that would be awesome to know

    May 14, 2010 at 7:39 am | Report abuse | Reply
  4. Danish

    Leave afghanistan and transfer all control to its goverment. Everything will be fine, No more casulties! No more inncoent killing! and No more drug supply to the world

    May 14, 2010 at 7:48 am | Report abuse | Reply
    • Reason

      How does this make any sense?

      June 28, 2011 at 10:23 am | Report abuse |
  5. Jeff

    Iran got the answer correct when they executed every drug addict they could find.

    May 14, 2010 at 8:00 am | Report abuse | Reply
  6. WHM

    I need a cigarette.

    May 14, 2010 at 9:15 am | Report abuse | Reply
  7. sim

    The Taliban are nothing other than narco-terrorists posing as religious zealots. It's a great angle and they're getting away with it–all of this is acceptable to Allah, of course, because the all-loving god hates anyone with white skin who doesn't wear a towel on his head or one over her face. Increase the flow of heroine and destroy the infidel. Allah is great.

    May 14, 2010 at 9:26 am | Report abuse | Reply
  8. TRex

    Wake up people, the Taliban and drug trade are run by Pakistan Army. The Afghans are the victims not the perpetrators.

    May 14, 2010 at 12:42 pm | Report abuse | Reply
  9. Cordopolitin

    Opium from Talliban is sold to NARCOMEX and...... part of a 50-100 BILLION a year suplement to the Mexican GDP.

    FOLLOW THE MONEY,

    Human FLESH is the second largest contribution to the GDP of NARCOMEX behind (meth made with raw materials from China, Coke from the FARC in Columbia, Opium from the Taliban, MJ from the 70% of farms that produce in Mexico (Mex stats) NarcoMEX a 50-100 billion international industry useing a missinformation campain from the play-books of Philip Morris but much WORSE.

    Someone should start connecting the dots for the normal reader.

    May 14, 2010 at 12:49 pm | Report abuse | Reply
  10. Mohammad A Dar

    To Samram-------–

    "In modern times the Rastafari movement has embraced Cannabis as a ----–

    "In modern times the Rastafari movement has embraced Cannabis as a.

    To Mohammad A Dar:
    So now you are in direct contact W/God; WOW Dude or Damsel!! Let's get you a robe! No alcohol either/ Let's tackle France & Italy & Australia & California for

    WHAT MUHAMMAD REALLY SAID: I have not played God as you mentioned but it was your statement in defiance of God's commandments which prompted me to answer in the correct way. Neither I have called my self Dude or Damsel!! nor I claim them, they are reserved for a reasoner or the follower of a reasoner, like a AGURU, Guru to be short or BAGWAN (The one who eats the flesh of dead after cremation, (watch AGORI on U TUBE, An Ignorant) A for as wearing rob is concerned, it does help a person stay within the limits, unlike being in a langi. wearing it in subordination to a ignorant persons (The GOON) reasoning, that human being have evolved form the Langoors (Baboons). Accepting a animal as their father and mother. living like the Langoors, dressing up like a langoor reasoning like a Langoor and praying to a Langoor (Baboon) as God. Human are created Superior and are superior to each and every thing else in the universe. Human are subject to the La. the Truth, The limits, like every thing else. Nothing in the Universe exists without the limits. even the universe it self. Un deniable truth. Denying the limit amounts to nothing but Ignorance and is the way of the Goons. As for as the thing you called modern religion is nothing but a product of human reasoning to indulge people in illegality to be enslaved by some crooks. Goons way is, to live in illegality, preach the illegality and die in illegality. Do you know the meanings of Modern, I am sure you do not, other wise you would not have used this word. Preaching or living out side the limit is not Hun, Great, Han, In greatness but Hin. Hindered, left behind or The slave. To be free is to obey the La. limit, The truth, otherwise it is a criminality. By the blessing of our god, we have authority over it. As for as things mentioned on the name of prophet Mohammad peace be upon him, are concerned, you have played with them, specially the last one. If you insist, show me where he has been mentioned to command illegality. He never did. Because he was the man of the La. The turth, unlike the Goons.

    May 14, 2010 at 1:59 pm | Report abuse | Reply
  11. Mohammad A Dar

    Wake up people, the Taliban and drug trade are run by Pakistan Army. The Afghans are the victims not the perpetrators.
    Posted by: TRex---------–And this BS is the brain child of a Hin. Hindered, the low life from the country called, The land of the Hindered. HINDUSTAN.

    May 14, 2010 at 2:10 pm | Report abuse | Reply
  12. Taylor

    Wow... Frank buddy... You really don't know anything do you?
    1. You will not reduce demand by reducing the supply. You'll only ensure that the Taliban gets MORE money for their existing crops. (of which they have thousands of pounds stored from past years)
    2. If you destroy the crops you ruin the livlihood of 60-70% of all afghans creating a welfare state and breeding ground for more terrorists.
    3. They CAN'T grow anything else that is as profitable or even close to as profitable as Poppy/Opium. We tried getting them to grow corn but the subsidies that our government gives our farmers an unfair advantage and the Afghan corn crop was basically worthless.

    The only solution is to legalize drugs in America and treat drug addiction as what it is. Not a criminal act, but a medical problem. Those who haven't figured this out yet, quite frankly, aren't paying attention and listen to too much Faux News.

    May 14, 2010 at 3:50 pm | Report abuse | Reply
  13. Fuad Hasan

    OK go and choke there source of money so that they cannot buy ammunition to fight against you and common people but you have to think something more such as creating alternative job, make them better educated with modern education planning, make them believed that you are not their foe and your ultimate goal is to exorcise the "fundamentalism ghost" from their society and after all try to dispel their discontents relating to Israel and Palestine which is the most fatal bane for the USA for which not being a direct beneficiary America is paying the price day after day and as a result the nation is on the brink of being bankrupt. Just ask yourself how much you have to pay for those two wares. Do you believe that the extremists breeds from discontents and it is easy to recruit those those malcontent folks for extremism.Israel is making America "THE SCAPEGOAT" once again.I just don't know when it (USA) will realize the reality. May be after loosing its hegemony it will do so. I am afraid.

    May 15, 2010 at 2:41 am | Report abuse | Reply
  14. Vijah Shah

    The fact that Taliban is able to use the international banks for its financial transactions is a failure of the system... The article doesn't say anything about the US Government's aid to Pakistan raching the hands of taliban! Taliban cannot exist without the training camps in and support from Pakistan...

    While the newsmedia is full of Taliban's invovement in the Bomb Attempt in New York, this blog is totally misleading and out of touch with the reality on the ground.

    May 15, 2010 at 4:02 am | Report abuse | Reply
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