Blood from Stones:The Secret Financial Network of Terror by Douglas Farah

This one is definitely a scary read. Douglas Farah is a journalist who has followed the story of terrorist financing, encompassing groups such as Hezbollah and al Qaeda, around the globe. The title, besides being a take on an old proverb, refers to the conflict diamonds of the African continent. He first began to pick up the trail of terrorist involvement in the trade of diamonds mined in Liberia and Sierra Leone, when he was investigating the financing of rebel forces there. Buying diamonds from dictators such as Taylor in Liberia and RUF commanders gave al Qaeda a foolproof way to conceal their cash from intelligence agencies investigating banking records trying to shut down terrorist cells.


Farah also describes the hallawa system, in wide use in the Muslim world, which uses a network of friends or family to make funds available across individual boundaries based on trust, or "hallawa." The way it works is, for example, a Pakistani working in the UAE who wants to send cash home to his family, without paying the taxes imposed at the border, visits a hallawa broker in the UAE. He gives his money to the broker, who then calls a nephew, perhaps, in Pakistan, who is also a hallawa broker, and tells him to make the money available to the original man's family. No cash actually changes hands between the brokers, who have their own internal accounting system, opaque to the usual investigative tactics of law enforcement or intelligence agencies.

He also gets into the world of gold smuggling, which centers, in the Arab world, in the UAE, especially Dubai. While gold may be heavy, it's much less bulky than carrying an equivalent amount of cash across borders. Gold also has no serial numbers and isn't subject to inflation or devaluation in the way that many currencies can be.

Finally, Farah devotes some time to the whole area of Muslim charities, many of which are involved in funneling large amounts of cash to terrorist groups in Palestine, Chechnya, and other hot spots. These charities have been allowed to operate freely in the United States for many years, and only after 9/11 was there any sort of crackdown on their activities. In this section, Farah spends a lot of time criticizing the US intelligence community for its "willful" blindness in many of these areas. He and other journalist had evidently attempted for years to bring these matters to the attention of the FBI and CIA, but they just weren't interested.

Anyway, take away from it what you will, this is a great primer on terrorist financing, conflict diamonds, arms smuggling, and a few other subjects.