As prepared for delivery
LONDON, UNITED KINGDOM - Thank you to Chatham House
for hosting this program on kidnapping for ransom.
It is certainly fitting that I join you here, at Chatham House,
to discuss the serious threat posed by kidnapping for ransom and to explore the
policy options available to counter this growing form of terrorist financing.
Chatham House, true to its tradition of bringing thoughtful
analysis to the most difficult international policy and security issues, has
been a leader in this issue as well, having published this summer a series of
insightful “Discussion Documents” on the closely related challenge of piracy
off the coast of Somalia.
In my view, the clear-eyed, “all options on the table”
approach exemplified by that series is precisely the right approach as we
devise better and more effective policies to countering piracy for ransom,
kidnapping for ransom, and the broader phenomenon of terrorist financing.
Combating these forms of illicit finance requires constant
vigilance and an adaptive approach, because the threat is both persistent and
In some respects, there is encouraging news on terrorist
Since 9/11 and 7/7, the 2005 suicide bombings in London, the
international community has achieved major successes in limiting terrorist
Usama bin Laden and several of his key financial
lieutenants, including Saeed al-Masri, Atiyah Abd al-Rahman, and Abu Yahya
al-Libi have not lived to see the most recent anniversaries of their most
brutal attacks. Their deaths, along with international efforts to combat
terrorist financing, have degraded the ability of al-Qa’ida’s central
organization, its “core,” to raise funds and carry out new attacks.
Indeed, over the past decade, close cooperation among
governments in Europe, the Gulf, and elsewhere, as well as between governments
and the private sector, has enabled the international community to take great
strides in defeating more traditional methods of terrorist financing.
The less encouraging news is that while al-Qa’ida has
experienced a decrease in funding, its affiliates in the Sahel and Yemen are
doing better financially, in large part by raising enormous sums of money
through kidnapping for ransom – or “KFR.”
But before I turn to the challenge of KFR itself, I want to
highlight the importance of the change we have seen in al-Qa’ida’s
organizational structure over the last few years.
The ability of Al-Qa’ida’s core to direct the activities and
attacks of its affiliates has diminished, with those affiliates increasingly
setting their own goals, specifying their own targets, and providing jihadist
The constant pressure that governments have applied to
al-Qa’ida’s core has made it more difficult for al-Qa’ida to fill leadership
positions, and so contributed to a general weakening of the hierarchical
relationship between the core and the affiliates.
Today, as a result, the affiliates resemble independent
franchises that take inspiration from al-Qa’ida’s core and attempt to advance
the basic objectives of the broader organization, but that act on their own
time-table and in ways that respond primarily to local concerns and conditions.
The nature of the current relationship between al-Qa’ida
core and its affiliates is also reflected on the financial front.
’ida’s core is not in the position to provide generous
funding to its affiliates, such as al-Qa’ida in the Lands of the Islamic
Maghreb, “AQIM,” operating in the Sahel, and al-Qa’ida in the Arabian
Peninsula, “AQAP,” operating primarily in Yemen. Instead, these al-Qa’ida
offshoots are self-sufficient, raising their own funds and themselves providing
support to the next generation of violent groups.
In response to this new reality, governments have had to
adapt, keeping one eye on the struggling al-Qa’ida core and the other on its
Spotting the Warning Signs: The Growing Threat from
the Al-Qa’ida Affiliates
Today, especially in Mali, but also to some extent in Yemen,
we see these al-Qa’ida affiliates gaining strength. And at the root of
their strength is the money they have amassed, including, importantly, through
kidnapping for ransom.
Kidnapping for ransom, of course, is neither terribly
sophisticated nor even all that novel. Indeed, examples of KFR date back
to biblical times.
Today, we see terrorist groups like AQIM and AQAP, sometimes
in coordination with local criminals, take foreign nationals hostage, and then
demand that their victims’ governments, employers, or families pay huge sums of
money – and perhaps make other concessions – to obtain their release.
Those taken hostage run the gamut, from aid workers to
tourists, from employees of private companies to diplomats or other government
AQIM and AQAP have turned this age-old tactic into a
successful money-generating scheme, turning kidnapping for ransom into our most
significant terrorist financing threat today.
The numbers speak for themselves.
The U.S. government estimates that terrorist organizations
have collected approximately $120 million in ransom payments over the past
AQIM, the al-Qa’ida affiliate that has likely profited most
from kidnapping for ransom, has collected tens of millions of dollars through
KFR operations since 2008. It raised significant funds from kidnapping
for ransom operations in early 2012, and was holding nine hostages as of the
middle of last month.
For its part, AQAP has collected millions of dollars through
kidnapping operations since 2009, and was holding two hostages as of this past
And kidnapping for ransom is not confined to these al-Qa’ida
Tehrik-e Taliban Pakistan has raised several million dollars
in ransoms in recent years. And the Philippines-based Abu Sayyaf Group,
which relies primarily on criminal activity for its funding, has obtained more
than $2 million in ransom payments since 2008.
What’s worse, the size of the average ransom payment is
increasing. In 2010, the average ransom payment per hostage to AQIM was
$4.5 million; in 2011, that figure was $5.4 million.
It is therefore not surprising that the size of ransom
demands appears to be increasing, too, with AQIM reportedly demanding £70
million for the release of four French citizens taken hostage in Niger in
Such demands may also be evolving beyond ransoms to
protection money. One al-Qa’ida affiliate was planning to extort
substantial annual payments, amounting to millions of euros a year, from a
European-based company, in exchange for a promise not to target that company’s
interests in Africa.
Now, as disturbing as these numbers and trends are, even
more disturbing is what terrorist groups do with the money they obtain from
They use ransom money to help fund the full range of their
activities, including recruiting and indoctrinating new members, paying
salaries, establishing training camps, acquiring weapons and communications
gear, staging deadly attacks, and, as I noted earlier, helping to support the
next generation of violent extremist groups.
Thanks in part to ransom payments, AQAP has amassed the arms
and recruits to terrorize parts of southern Yemen, and has started to institute
harsh punishments for violations of Sharia law, including public executions of
uncooperative tribal leaders.
Even more dramatically, ransom money is supporting the
expansion of AQIM’s influence and control in northern Mali, which it is using
as an active area of operations as well as a safe haven.
Within AQIM’s safe haven, the residents and historical
treasures of Mali have been anything but safe.
AQIM and its allies have destroyed UNESCO World Heritage
sites in Timbuktu, including sacred Sufi shrines. There are also reports
of AQIM planting mines around the ancient city of Gao.
And they have begun to enforce a particularly severe form of
Sharia law, cutting off the hand of an alleged cattle thief and stoning to
death an unmarried couple with two children. In the meantime, thousands
of northern Mali’s residents have succumbed to hunger and disease.
Moreover, it has become increasingly clear that AQIM is
using revenues from kidnapping for ransom to expand its reach and influence.
As of earlier this year, AQIM was expected to provide
hundreds of thousands of dollars in financial support to other Africa-based
The Vicious Cycle of KFR: Ransoms Lead to Future
Kidnappings and Future Attacks
Sir Arthur Helps once wrote, “nothing succeeds like
success.” That observation rings true, unfortunately, for terrorists
turning to kidnapping for ransom to raise the funds they need to maintain and
expand their operations.
Simply put, kidnapping for ransom has become today’s most
significant source of terrorist financing because it has proven itself a
frighteningly successful tactic. Any payment of ransom provides an
incentive for further kidnapping operations; each transaction encourages
Making matters worse, the success of today’s kidnappers
attracts the attention of tomorrow’s would-be kidnappers, who then seek to
learn the tricks of the trade.
We know this to be true. In late 2011, AQIM shared the
strategies and tactics it used in kidnapping operations with other extremist
This is a genuinely vicious cycle.
Ransom payments lead to future kidnappings, and future
kidnappings lead to additional ransom payments. And it all builds the
capacity of terrorist organizations to conduct attacks.
We must find a way to break the cycle.
Refusing to pay ransoms or to make other concessions to
terrorists is, clearly, the surest way to break the cycle, because if
kidnappers consistently fail to get what they want, they will have a strong
incentive to stop taking hostages in the first place.
There is empirical evidence to support this.
We know that hostage takers looking for ransoms distinguish
between those governments that pay ransoms and those that do not – and make a
point of not taking hostages from those countries that do not pay ransoms.
As a matter of long-standing policy, both the U.S. and UK
governments do not pay ransoms or make other concessions to kidnappers.
And recent kidnapping for ransom trends appear to indicate
that hostage takers prefer not to take U.S. or UK hostages – almost certainly
because they understand that they will not receive ransoms if they take
American or British hostages, and because they fear a kinetic response if they
Indeed, our information reveals that in 2011, AQIM was
planning to target mainly Europeans, not Americans, for kidnapping operations
because AQIM believed that some European governments would pay ransoms while
the U.S. government would not.
That does not mean that the U.S. government abandons its
citizens who are taken hostage. Far from it.
Last January, for instance, U.S. Special Forces rescued a
European and an American aid worker taken hostage by Somali gunmen, killing all
That kinetic response demonstrated U.S. resolve, and put
would-be hostage takers on notice that they should not expect the United States
to abandon either its citizens or its commitment to make no concessions if they
take Americans hostage.
Protecting All Innocent Lives
Now, however straight-forward the “no concessions” policy
may be – and however committed my government is to implementing it – let me
assure you that we recognize the real and painful choice that is involved in every
There is, of course, a vitally important human dimension to
Governments have a solemn obligation to safeguard the lives
and well-being of their citizens. Employers have a duty to protect their
employees. And the families of those taken hostage are impelled by
unbreakable bonds to seek the release of their loved ones.
In that sense, the governments, employers, and families of
hostages all face a gut-wrenching dilemma. Not to pay ransoms to
terrorists is to jeopardize innocent lives. But to pay ransoms is to help
sustain terrorist groups that are dedicated to taking many other innocent
We acknowledge this dilemma – this tragic choice – but
believe that so many lives are at risk of terrorist violence around the globe
that the equation tips decidedly in favor of a “no concessions” policy.
Treasury’s Multi-Faceted Efforts to Counter KFR
Of course, the United States’ efforts to counter kidnapping
for ransom go well beyond our no-concessions policy. They begin before
any U.S. citizen is taken hostage, and they continue beyond the resolution of
any hostage crisis. To be clear, President Obama has demonstrated that
the United States is committed to fighting kidnapping for ransom. U.S.
policy is to actively deny hostage takers the benefits of ransom, prisoner
releases, policy changes, or other acts of concession.
In Africa, we are working with those governments most
vulnerable to kidnapping for ransom, especially in the Sahel. Our aim is
to help governments develop the legal and regulatory framework, as well as the
operational capacity, for effective anti-money laundering and counterterrorist
Put plainly, the U.S. Treasury Department works with
vulnerable states to ensure that they criminalize the financing of terrorism
according to international standards, and that they are able to identify and
freeze terrorist transactions and assets.
We do this because we know that the financial tools
necessary to identify, trace, and even intercept terrorist funds are vital to
combating kidnapping for ransom.
But you need not take my word for it.
Less than two weeks ago, the Nigerian press reported that an
accountant for the violent extremist group Boko Haram had been arrested after
he made several money transfers that aroused the suspicion of bank
officials. Those officials alerted security agents,
who took both the accountant and an associate into custody.
The pair was reportedly carrying over £17,000 worth of cash.
Here’s another example. Three journalists and their
guide were kidnapped in the southern Philippines, having mistakenly believed
that they had received safe passage to interview the leader of a terrorist
group. A local mayor and his son helped negotiate an initial ransom
payment of $45,000.
As part of a subsequent investigation, the Philippine
Anti-Money Laundering Council came to suspect that the terrorist group had
orchestrated the journalists’ kidnapping with help from an unlikely source.
Thanks in part to the cooperation of bank officials, approximately
$45,000 was ultimately recovered from accounts belonging to that same mayor and
The larger point is that Treasury and others’ longer-term
efforts to help governments around the world develop and employ basic
anti-money laundering and counter-terrorist financing tools have already borne
Meanwhile, Treasury will continue to employ its own
financial tools to disrupt kidnapping for ransom and the terrorist groups that
use KFR, including by identifying and sanctioning hostage takers and their
Whether associated with KFR or not, terrorists sanctioned or
“designated” under U.S. law are not only publicly identified, but they are
prevented from using the U.S. financial system. Many non-U.S. financial
institutions voluntarily forbid designated terrorists from transacting or
holding accounts out of a desire to protect their integrity and
reputations. And terrorists who are also designated at the United Nations
are subjected to a global asset freeze, as well as a world-wide travel ban.
Prevention, “No Concessions”, and Denial of Benefits
Of course, as important as these actions are, Treasury is
only one part of the broader U.S. government effort. And the broader U.S.
government effort is only one part of the world-wide effort that will be
necessary to defeat kidnapping for ransom.
You see, if only a few, like-minded governments join in
adopting the measures I have described – including “no concessions” policies –
the result could simply be that hostage takers turn their attention elsewhere,
perhaps to the citizens of countries they view as more likely to pay ransoms.
So our goal is not to strengthen only our own defenses,
while leaving others to fend for themselves. Our goal is to force
terrorist groups to abandon kidnapping for ransom by strengthening all of our
The way we see it, we have three primary lines of defense
against kidnapping for ransom.
Our first line of defense is prevention.
The foundation for prevention has already been laid.
More than 160 countries, including all members of the European Union, are
obligated to cooperate in the prevention of hostage-taking under the 1979
International Convention against the Taking of Hostages.
But this is as much a practical necessity as it is an
international legal commitment. There is no better strategy to counter
KFR than to keep potential victims out of harm’s way in the first place.
In the piracy context, shipping industry organizations and
navies from around the world have collaborated to produce a set of “Best
Management Practices” to help prevent hijackings. These practices appear
to be working.
One of the Chatham House papers I mentioned earlier suggests
that those ships that have implemented “Best Management Practices” – such as
tracking and avoiding pirate skiffs, increasing speed near suspicious vessels,
and being outfitted with razor wire or high-pressure sprays to prevent
unauthorized boarding – may be four times less likely to be hijacked than those
that have not.
Reuters recently credited defensive measures such as these
as partly responsible for a drop of almost 50% in incidents involving Somali
pirates in the first half of this year as compared to the same period last
Given this success, it would seem to make good sense to
develop a set of personal security best practices for the KFR context.
For example, governments should post – and relevant industry
and professional associations should disseminate – accurate travel advisories
concerning high-risk areas.
More generally, international organizations, corporations,
and non-profits should train their employees to spot and evade danger, and
insurance companies should continue to work with their clients to identify new
avenues for mitigating risk.
And all of us must be willing to play our parts in helping
to detect or disrupt kidnapping plots and to delegitimize the broader practice
of kidnapping for ransom.
Governments can establish confidential tip lines and reward
programs and strengthen cooperation among national and local law enforcement
and financial intelligence units.
Civic and religious leaders in areas prone to kidnapping for
ransom can condemn the tactic and work to persuade hostage takers to release
their victims without obtaining concessions.
And yet, we must recognize that we cannot prevent all
kidnappings from taking place.
When prevention fails, our second line of defense is to
encourage governments to refuse to make concessions to terrorists. As I
discussed earlier, there is no question that ransoms lead to both future
kidnappings and future attacks, so we need to break this vicious cycle by
having governments, in particular, refuse to pay ransoms.
In parallel, we should consider all other options, up to and
including rescue operations where appropriate, to obtain the safe release of
In effect, we must convince potential hostage takers that
the likelihood of payment is too low, and the likelihood of a forceful response
too high, to make kidnapping operations worthwhile.
Still, we recognize that some ransoms may be paid.
When that occurs, our third line of defense is “denial of
benefits” – preventing hostage takers from enjoying the proceeds of their
Hostage takers cannot enjoy the proceeds of their crimes if
they are behind bars, or, as in the case of that Philippine mayor and his son,
if the ransom money they received is frozen or recovered.
So governments must work with the private sector to locate,
arrest, and prosecute hostage takers, and to locate, freeze, and recover their
In an ideal world, hostage takers would be denied the
benefits of their acts shortly after their victims are safely recovered.
But in the real world, denial of benefits may take time to
The identities of hostage takers are not always clear, not
least because hostages may be passed within and among terrorist groups to
complicate potential rescue operations. Meanwhile, hostage takers work
hard to minimize their “paper trail” by dealing primarily in cash and operating
across porous borders in areas where the movements of both money and people are
In other words, the struggle against kidnapping for ransom,
like the broader struggle against global terrorism, is most certainly a
long-term effort that will require us to outlast – and continually outthink –
To be sure, combating kidnapping for ransom poses terribly
difficult practical and moral challenges.
Preventing kidnappings in the first place and denying
terrorists the benefits of ransoms if they are paid pose difficult practical
challenges. But these practical difficulties are not insurmountable.
The moral question – namely, balancing the specific
obligation to secure the freedom and safety of those taken hostage against the
broader societal imperative of depriving terrorists of the means to plan and
execute mass murder and oppression – is more difficult to resolve.
But at the end of the day, the obligation to deprive
terrorists of the financial means to plan, develop, and execute their deadly
attacks demands that we find a way to deny terrorists access to ransom payments.
That includes, in our view, adopting and implementing a policy of refusing to
That may be easier said than done, but it can be done, if we
build the consensus and capacity necessary to do it together.