Forensic Analysis of Terrorist Counter-Financing to Combat Nuclear Proliferation

Proliferation financing is a new term for the old work of terrorist counter-financing, which is critically important and yet often underappreciated and misunderstood within the nuclear security community. The work of that community is complicated by global politics, regional tensions, the expansion of international commerce, and the emergence of additional nuclear states; all of these factors create new challenges for international safeguards. With confirmed reports of weapons being produced in countries plagued by poverty and corruption, some believe it is only a matter of time before tactical weapons wind up in the hands of the oil-rich Islamic State (ISIS). Further threats come from continuing improvements in advanced isotope separation methods that are both small and difficult to detect. Non-state actors like ISIS therefore pose a threat that is qualitatively different from earlier generations of state-based enemies and massive nuclear warheads. This new threat can be countered effectively only by promoting both a culture of information sharing and good governance by competent local authorities. Such steps are necessary because proliferation financiers currently exploit several cracks in the global financial system as well as a series of difficult-to-implement export controls. Strong empirical evidence links the spread of WMDs to the success of such financiers in working behind the scenes, subverting the best efforts of the international community to stop them. In order to more effectively counteract the threat they pose, the international community will have to recommit to counter-financing efforts, at once one of the most effective, underappreciated, and underutilized tools in the fight against nuclear proliferation. In particular, this paper takes a transactional approach to mitigating proliferation risk, making four key recommendations: (1) fully implement United Nations Security Council Resolution 1540; (2) integrate and standardize the global SWIFT and IBAN systems; (3) improve shipping and trade document verification practices and training; and (4) improve global recordkeeping. By raising awareness of some of the most common deceptive financial practices and the ways in which, by establishing an effective public-private partnership, those practices can be combated more effectively through collaborative international counter-financing efforts, the risk of nuclear proliferation can be reduced even as rogue nations and non-state actors work to increase it.