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ETAs Financial ActivitiesETA has been credited with building a sophisticated fnancial

network essential to its survival and the longevity o its terroristcampaign. During the 1970s, ETA raised most o its unds

through a revolutionary taxthat it illegally imposed on small

and medium businesses o the Spanish Basque region inaddition to proceeds rom criminal activities that included bank

robberies, kidnapping o businessmen and extortion. Eventually,the group improved its strategy to sustain a highly centralised

organisational structure with semi-clandestine networks basedin France and Spain and perhaps some countries in Latin

America.

A notable development was the creation o a centralised

fnancial network, organised around the banned UdalexteEmpresas, ETAs main fnancial body which was based in Spain1.

Other structures ulflled undraising and channeling tasks

such as the Basque Socialist Coordination (KAS), ETAs generalsta that was outlawed in 1998 or allegedly laundering unds

derived rom kidnapping and racketeering through a web oront businesses and organisations2; its successor EKIN, banned

in March 2001 on suspicion o double accounting3; and the

Batasuna political party banned in August 20024.

The Spanish National High Court corroborated much o thisinormation based on extensive evidence and reportedly

stated that the ETA terrorist organisation is made up of not only

armed activists, but also non-armed members of a network of

organisations, which comprises its mass, institutional, media,

international, and ideological fronts, among others5. In additionto KAS and EKIN, the summary named Xaki (ETAs international

network), the Joxemi Zumalabe Foundation (a collectivedisobedience sub-unit) and other ETA entrailssuch as the

now deunct Basque newspaper, Egin, which unctioned as

an inormation service to all wings o the organisation, and itsparent organisation the Orain Group.

Assessing ETAs post-verdict fnancial structure may prove

dicult, as many key leaders have been prosecuted and

ETA-linked organisations shut down. However, it is possible toassume that those political parties and media outlets linked to

the organisation are at a minimum, collaborating operationallyor possibly even fnancially.

In regard to ETAs fnancial uture, there is no better predictor

than the past. Thereore it is worth examining the criminal

methods that ETA has historically used to raise and movemoney.

In recent years, ETAs fnancial structure has tended to

emphasise the interpenetration between the ormal economyand the criminal economy6. With an estimated annual budgeto over 10 million in 20027, ETAs portolio o assets and

activities has been transnational, diversifed and linked to theormal fnancial system.

Sources o unding remained derived to a minor extent romtraditional activities such as extortion and k idnappings, as

exemplifed by the June 2006 arrest o 12 ETA members,including one o the groups ounders Julen Madariaga, or

having extorted revolutionary taxesin a racketeering case

spanning 20 years8.

However, the group gradually diversifed into low-level andorganised crime activities. ETA has allegedly generated revenue

rom the sale o counter eit clothes and handbags in southern

Spain9. Reports also claim a possible involvement in cigarettesmuggling, the most recent case relating to a 2004 investigation

by Swiss authorities o a decade-old cigarette and money

laundering operation involving over US$1 billion, suspected ohaving bankrolled ETA10.

The group has been implicated in narcotics tracking since

at least 1984 and is currently purported to be involved inhigh-profle narcotics-or-weapons schemes, meaning that

it uses cocaine, heroin and hashish to pay or illegal arms

shipments11. Such an operation was uncovered in 2001 byItalian police. It involved the supply o heavy weapons, such as

missile launchers and explosives, to ETA by the Camorra crimeorganisation based in Naples, Italy, in return or cocaine and

hashish shipments.

The agreement allegedly provided that the Camorra, through

its representative Felice Bonneti, would secure the weaponsoriginating rom Pakistan and Uzbekistan via military

contacts in the Czech Republic. In return, ETA would providecocaine supplied by narco-terrorist groups in South America,

presumably the Revolutionary Armed Forces o Colombia

(FARC), in exchange or a quota o the weapons delivered toETA12.

Finally, the group is also linked with arms tracking operations

originating in or transiting through the ormer Yugoslavia which

is also known as the Balkan Link.ETA is suspected o havinghad connections with prominent arms and narcotics trackers

in Croatia and Bosnia such as Mohamad bin Saleh bin Hmeidi,a Tunisian linked to a Bosnian Faction in the Croatian Army, and

Radian Koradji, a ormer Bosnian Serb leader wanted or warcrimes13.

For storing, moving and laundering money, ETA seems to avourlow to no regulation jurisdictions. These jurisdictions provide

alternatives to the high-regulation jurisdictions o the US andEurope, which terrorists perceive as risky due to more stringent

regulations14. Consequently, ETA has been known to hold

accounts in oshore tax havens such as Switzerland15 and tohave fnancial interests in countries such as Nicaragua, Mexico,

Cuba, Venezuela, Uruguay, and the Dominican Republic16.

One recent example involves the August 2004 arrest in Mexico

o several ETA suspects accused o setting up a covert fnancial

network to unnel unds rom Spanish to Mexican banks or ETAmember activities in Mexico. Reportedly the unds were sent ascash transers and cashiers checks so that the transactions and

individuals would be dicult to trace or identiy17.

ConclusionETA has engaged in a dizzying array o licit and illicit ways to

support its organisations terrorist violence. The Spanish courtsverdict revealed the ar-reaching extent and shape that terrorist

networks can take via their seemingly legal ront organisations.

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Criminal activity is another means that terrorist groups use toraise money to support their cause. To combat the fnancing

o terrorism, it is imperative that fnancial institutions and otherat risk institutions remain cognisant o the realities o terrorist

movements and their guises. Terrorist movements include

not only the paramilitary arm but also the entire network ofnanciers, acilitators, logisticians, political parties and other

aliated nongovernment organisations.

These associates and ronts can take on many shapes and

sizes and may seem innocuous at frst glance. However, it isnecessary or institutions at risk to implement enhanced due

diligence procedures whereby these individuals and entitiesare screened and identifed. Rigorous know your customer and

your customers customer procedures are the bedrock o the

fght against terrorist fnancing.

Reerences

1 Kaldor, Mary & Muro, Diego, Religious and Nationalist Militant

Groups,(LSE Publications: 2003), p.177. http://www.lse.ac.uk/Depts/global/Publications/Yearbooks/2003/2003Chapter7e.pd

2 Carbajal, Gil, Spain/ETA Correspondent Report, Voice o

America (May 28, 1998). http://www.globalsecurity.org/military/library/news/1998/05/980528-eta.htm

3 http://ehwatch.org/docs/pp_cronics_eng.doc

4Fast Facts: Look at Spains ETA,Fox News (December 03, 2004).http://www.oxnews.com/story/0,2933,113922,00.html

5ETAs Heart ,El Pais, December 20, 2007.

6 Napoleoni, Loretta, The new economy of terror,Democracy& Terror (January 26, 2005). http://www.mahoum.com/

press7/225E61.htm

7 Linan Macias, Juan Miguel, Counterterrorism: An Example of

Co-operation,Speech or the seminar on The role o the EAPC incombating terrorism, NATO On-line library (February 22, 2002).

http://www.nato.int/docu/speech/2002/s020222i.htm

8 Bright, Arthur, Raid on ETA shadows peace process with

terror group,The Christian Science Monitor Online ( June 21,2006). http://www.csmonitor.com/2006/0621/dailyUpdate.

html?s=mesdu

9 Trocki, Victor, Rise in Counterfeit Market Linked to TerroristFunding, Carratu International (June 26, 2002). http://www.pressbox.co.uk/Detailed/6073.html

10Money Laundering: Switzerland Gives In On Fraud, Intelligence

Online, n. 478 (June 11, 2004).

11 Curtis, Glenn E. & Karacan, Tara, The Nexus Among Terrorists,

Narcotics Trackers, Weapons Proliferators, and Organised Crime

Networks in Western Europe,Library o Congress (December

2002), p. 9. http://www.loc.gov/rr/rd/pdles/WestEurope_

NEXUS.pd

12 Ibid, pp. 9-10.

13 Ibid. p. 11.

14 Gillespie, James, Follow the Money: Tracing Terrorist Assets.Paper prepared or a Seminar in International Finance, Harvard

Law School (April 15, 2002), p. 7. http://www.law.harvard.edu/

programs/pis/pds/james_gillespie.pd

15 Curtis, Glenn E. & Karacan, Tara, The Nexus Among Terrorists,

Narcotics Trackers, Weapons Proliferators, and Organised Crime

Networks in Western Europe,Library o Congress (December

2002), p. 13. http://www.loc.gov/rr/rd/pdles/WestEurope_

NEXUS.pd

16 Turbiville, Graham H., ETA Terrorism, the Americas, and

International Linkages,Crime & Justice International, Volume 20,

Number 81 (July/August 2004), pp. 4-5. http://www.cjcenter.

org/documents/pd/cji/Cji0407-08.pd

17 Thompson, Barnard R., ETA guerillas in Mexico innocents

abroad?Mexidata (March 15, 2004). http://www.mexidata.ino/

id155.html

About the authorJohn Solomon is Director o Threat Finance Research at World-

Check and adjunct Fellow at Nanyang Technological University.

He specialises on how the dark side o globalisation aectsbusiness and security, including compliance with the myriad

regulatory and best practice guidelines or anti-corruption,counter-terrorism and anti-money laundering.

Solomon publishes widely, speaks at conerence events aroundthe world and is oten quoted by the media. Profcient in Arabic,

he holds a Master s degree in Middle East and Central AsianSecurity Studies rom the University o St Andrews in Scotland,

and is pursuing his doctorate in the Department o War Studies,

Kings College London.

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