From a military perspective, the term “flash to bang” is from the time when light is first observed until the sound of the munition detonation. In this context, “bang” represents the moment an attack occurs. “Flash” is a warning or alert that the attack is imminent or underway. When the bang occurs, the military concern is how mission performance is impacted. Does it degrade operational capacity? Dealing with flash and bang requires planning and processes to mitigate any diminished capacity and areas of vulnerability. Learn the value of taking actions or mitigating steps “left of flash.” This means getting in front of the flash point, identifying the threat and preventing, disrupting or diminishing any adverse impact should the attack occur. If bang occurs, immediate steps must be taken to minimize the damage, rebuild capacity and mitigate additional risk. This is referred to as “right of bang.” The most important lesson is not to wait for flash or bang. The focus must be on the importance of developing left-of-flash strategies.

Why should the concept of flash to bang matter to anti-money laundering (AML) professionals? It should matter because of the threat of terrorism and terrorist financing.

Since 9/11, law enforcement, intelligence services and first responders have used the term “left of boom” as a point of reference to stay ahead of and avert terrorist attacks. In contrast to “left of boom,” “right of boom” is the time directly following a terrorist attack. Clearly, left of boom is where AML professionals want to be from a national security and economic standpoint. Establishing and maintaining a position left of boom is extremely challenging. From an AML compliance perspective, AML professionals are highly committed to address the challenges of identifying and reporting terrorist financing.

As an industry, numerous financial institutions have processes in place to either proactively or reactively attempt to identify terrorist financing. However, it is unlikely that many financial institutions have developed a visible left- and right-of-boom mindset. Nor is it likely that they have established specific left-of-boom and right-of-boom policies and procedures.

In 1996, and again in 1998, Osama bin Laden declared war against the U.S., their Western allies and virtually anyone who was a nonbeliever of his espoused form or interpretation of radical and extremist Islam. Despite the deaths of bin Laden and many, many more Islamist terrorists, the war declared by bin Laden lives on.

Unlike military professionals, AML professionals are not considered to be warriors. However, in the war against terrorism, finance is a major weapon. In that context, AML professionals are on the front line, serving in the back office of financial institutions. What makes this more compelling is that financial institutions are either facilitation tools or detection mechanisms for the illicit flow of funds.

The Financial Battlefield

Finance is one of the biggest vulnerabilities for terrorists. The 9/11 Commission Monograph on Terrorist Financing¹ aptly stated, “Following the money to identify terrorist operatives and sympathizers provides a particularly powerful tool in the fight against terrorist groups.” Unfortunately, it is easier said than done. Identifying terrorist financing is extremely difficult. Complicating this challenge is the fact that AML compliance is inherently reactive. Developing left-of-boom strategies, staying left of boom and getting ahead of terrorist attacks requires proactive and innovative mechanisms. The unfortunate reality is successful terrorist attacks are inevitable. Therefore, as important as left-of-boom strategies are, right-of-boom policies and procedures must be developed to react, with a sense of urgency, to terrorist events.

AML professionals are on the front line, serving in the back office of financial institutions

In December 2018, the U.S. Treasury Department published the 2018 National Strategy for Combating Terrorist and Other Illicit Financing,² along with supporting risk assessments. The 2018 strategy stated, “U.S. banks face challenges in distinguishing terrorism-related financial transactions from licit activity.” This is where it is incumbent to face and mitigate the challenge of terrorist financing. It is possible, but not likely or probable, to identify terrorist financing. To increase or improve the probability of identifying terrorist financing requires understanding the terrorist threat; understanding funding flows; and planning both proactive and reactive processes to meet the burgeoning challenges.

From a military perspective, the time between flash and bang is nearly instantaneous. The timing from the point that an explosion is imminent to underway to occurring is a matter of a few seconds or less. Taking the flash-to-bang concept and placing it in an AML context, the timing can be significantly different. A terrorist attack goes from imminent to deployment to attack. In this setting, imminent takes on a broader meaning and the timing can range from instantaneous or spontaneous to minutes, hours, weeks, months or years. Notwithstanding how remote the chances are, that presents a potential lengthy window of opportunity to detect suspicious activity.

Invariably, terrorist attacks—regardless of how simple or complex—follow the terrorist attack cycle.³ The terrorist attack cycle is a six-step process including target selection, planning, deployment, attack, escape and exploitation. In the framework of the terrorist attack cycle, an imminent attack would begin with target selection and planning. This is where the time frame ranges from spontaneous to years. Time of deployment to time of attack generally takes minutes to hours or days. The lengthier the time frame, the more vulnerable terrorists are to detection. This is why establishing left-of-boom strategies is critically important to AML compliance professionals.

In terms of improving the likelihood or probability of identifying terrorist financing, start with understanding the threat environment. Islamist terrorism is the biggest terrorist threat facing the U.S. and their allies. The Islamic State poses the greatest organizational threat, while homegrown violent extremists represent the most significant individual threat. From a terrorist financing perspective, the 2018 National Strategy for Combating Terrorist and Other Illicit Financing⁴ states: “The most common method of terrorist financing (TF) in the United States involves individuals who knowingly provide funds to terrorists, terrorist groups, or their supporters abroad.” Most Western countries share the same vulnerabilities.

The next step of improving the likelihood or probability of identifying terrorist financing requires understanding funding flows. There are three basic funding streams regarding terrorism: Funds that flow to an organization; funds that flow through the organization to support operations; and funds that flow to individuals. From a financial institution perspective, the focus should be on who is being dealt with—organizations, individuals or both? In accordance with the 2018 strategy, the most common method of terrorist financing involves individuals who knowingly provide funds to terrorists, terrorist groups or their supporters abroad.

A good example that illustrates understanding the terrorist financing threat environment and the funding flow is the case involving a young Alabama woman, Alaa Mohd Abusaad. Abusaad was indicted on October 31, 2018 by a federal grand jury in Birmingham, Alabama, for providing material support to al-Qaeda. Abusaad was a radicalized individual who raised and sent money to terrorist operatives who provided the funds to al-Qaeda. Abusaad instructed an FBI undercover employee (UCE) how to send money to her money facilitator contact overseas. The money was to be sent in small increments (under $400) through a money services business (MSB) using false identification. Abusaad told the UCE that sending money is the same as doing jihad. Abusaad also stated that money is always needed and that there could not be a war without weapons. In this case, the money was sent through an MSB. In other cases, money is sent through bank wire transfers and ATM transactions. One of the challenges posed by this type of case is a cheaper, faster and easier movement of money. The Abusaad case represents a fundraising network that was disrupted by the FBI through an undercover operation.

By combining knowledge of the terrorist and terrorist financing threats with understanding for the funding flows, financial institutions can develop proactive and reactive processes to respond to flash-to-bang terrorist activities in an effective and efficient manner.

Left-of-Boom Strategies

A terrorist attack goes from imminent to deployment to attack

In regards to terrorism, left of boom means getting ahead of terrorist activities before attacks occur. It requires proactive and innovative strategies to include targeted transaction monitoring, vigilance and situational awareness. The most important element of any left-of-boom strategy is a meaningful and sustainable public and private sector partnership. The fundamental part of a successful public-private partnership is collaboration through information sharing. This would result in identifying more specific scenarios to develop rules for targeted monitoring. Leveraging public and private sector perspectives and capabilities would serve to enhance vigilance and situational awareness.

Terrorist financing should be viewed as a battlefield in the war on terrorism

In the context of breaking down the terrorist attack cycle, there could be considerable pre-boom (attack) financial activity. Target selection and planning involve numerous steps that each require funding consideration. Target selection will probably require travel and surveillance. Planning will require equipment and/or weapons purchases and could include additional travel and/or surveillance. Deployment should require travel. Depending on the level of simplicity or sophistication, there will be funding requirements. The more effective the public and private collaboration, the more likely warning signs or alerts can be identified and mitigated.

Constant critiquing of processes; assessment and comparison of terrorist events; maturation and improvement of information sharing channels; and training, to include tabletop exercises, will enhance left-of-boom strategies.

Right-of-Boom Strategies

Unfortunately, regardless of how robust left-of-boom strategies are, society will continue to experience deadly terrorist attacks. Hence, AML professionals must be prepared to respond in an urgent reactive manner. Right of boom is the immediate response to the attack. Law enforcement, intelligence services and first responders will respond directly to a terrorist event at the crime scene and behind the scenes through other channels. Financial intelligence is one of those channels—a very important channel. Financial institutions should respond to terrorist events internally by monitoring negative news, as names and other evidence are revealed, and by conducting other monitoring techniques. This is where it is incumbent to develop and enhance timely right-of-boom policies and procedures.

In addition to the reactive strategies in keeping with the terrorist attack cycle, financial institutions should have a process for assessing the escape and exploitations elements of the cycle. Are there financial fingerprints that can be followed in reactive or more proactive processes in the post-attack environment? For example, in the event one or more terrorists escape the attack scene, it is possible they will use a credit card, debit card or access their bank account through other means. That type of financial intelligence is essential to law enforcement in completing a terrorist attack investigation.

Conclusion

This is a dangerous world that poses a constant threat to terrorism. Finance is one of the biggest vulnerabilities to terrorists. In that vein, AML compliance professionals play a pivotal role in the war against terrorism. Since the terrorist attacks of 9/11, law enforcement, intelligence services and first responders have embraced the flash-to-bang concept and have striven to stay ahead of and avert terrorist attacks. This is referred to as left of boom. Proactive or left-of-boom terrorist financing strategies can be devastating to a terrorist by disrupting and denying them the access to money. Much the same, right-of-boom, or urgently reactive, strategies in the immediate aftermath of a terrorist event can be extremely beneficial to law enforcement.

Terrorist financing should be viewed as a battlefield in the war on terrorism. It is incumbent that financial institutions develop flash-to-bang mindsets to assist law enforcement in the fight against terrorist financing by establishing visible left- and right-of-boom policies and procedures. Financial institutions are the repositories for the financial intelligence required to disrupt terrorism both proactively and reactively. The more the flow of funds to terrorists are disrupted and denied and the faster those individuals who support terrorism by donating funds through financial institutions are identified, the more the threat of terrorism is diminished. 

Dennis M. Lormel, CAMS, internationally recognized CTF expert, president & CEO, DML Associates LLC, Lansdowne, VA, USA, dlormel@dmlassocllc.com

1. John Roth, Douglas Greenburg and Serena Wille, “Monograph on Terrorist Financing, Staff Report to the Commission,” CyberCemetery, August 21, 2004, https://govinfo. library.unt.edu/911/staff_statements/911_TerrFin_Monograph.pdf
2. “National Strategy for Combating Terrorist and Other Illicit Financing 2018,” U.S. Department of the Treasury, December 20, 2018, https://home.treasury.gov/system/files/136/nationalstrategyforcombatingterroristandotherillicitfinancing.pdf
3. “Defining the Terrorist Attack Cycle,” Stratfor, February 23, 2012, https://worldview.stratfor.com/article/defining-terrorist-attack-cycle
4. “National Strategy for Combating Terrorist and Other Illicit Financing 2018,” U.S. Department of the Treasury, December 20, 2018, https://home.treasury.gov/system/files/136/nationalstrategyforcombatingterroristandotherillicitfinancing.pdf