The Analysis of Non-profit Organisations in Terrorism Financing in Indonesia

Despite the Indonesian anti-terrorism financing law that was introduced in 2013, recent cases of terrorism financing through non-profit organisations continue to emerge. Concerns exist regarding the evolving and mutating mode of operation employed by terrorist organisations to evade the detection techniques of intelligence and law enforcement agencies. Therefore, there is a need for updated research on the evolving modus operandi, trends, and other distinctive characteristics of terrorist organisations and non-profits after 2013. Additionally, this study examines and evaluates the effectiveness of Indonesia's regulatory framework in combatting the financing of terrorism by non-profit organisations. Finally, it is necessary to develop new approaches and strategies to tackle the exploitation of non-profit organisations in terrorist activities. This research contributes to the fit and relevant new approaches and strategies in coping with terrorism financing through non-profit organisations in Indonesia's unique circumstances, following 2013.

This research is essentially a mixed-method approach of a qualitative and comparative study, comparing Indonesia before and after 2013, through interviews blended with various case studies and policies to elucidate an in-depth explanation of the phenomenon. This research interviewed 30 research participants from government agencies with authority over, and working within terrorism financing and non-profit organisations. Furthermore, the case study selection examined and analysed 11 cases of non-profit organisations in terrorism financing in Indonesia from 2004 until 2020.

This research contributes both in theoretical and practical areas, and it provides updated knowledge on the three focus areas. First, through the FATF terrorism financing typology model that is centered on examining terrorist funding sources, funds transmission methods, and funds expenditures, this study identified a shift from unlawful activities (e.g., robbery) to legitimate activities (e.g., non-profits, member contributions) as funding sources for terrorism after 2013. Similar patterns have been observed in the transmission of funds through the banking system and the carrying of cash by couriers. However, a post-2013 examination revealed the emergence of financial technologies (e.g., Cryptocurrency, PayPal, and E-Money). Despite the insignificance of the new method's results, this study contends that financial technology could pose a threat in the future if used as an alternative means of transmitting funds for terrorist financing. Regarding funds expenses, similar patterns were identified in direct funding within both periods, such as financing terror attacks, paramilitary training, arms, explosive and logistic purchasing, and recruitment. Additional expenses after 2013 were also identified, such as property leasing, supporting legitimate businesses, and networking development in the education area. This research highlighted the networking development in the education areas of terror groups after 2013, which indicated a shifting of terror group orientation from short-term goals to preparing for long-term glory in order to gain political power.

Second, the original contribution of this research is introducing a new model that examines the high-risk characteristics of non-profit organisations involved in terrorism financing in Indonesia. On the basis of the developed model, this study concluded that a high-risk, non-profit organisation is a complicit, unregistered entity that employs humanitarian, religious, and educational guises. Most of the exploitation is carried out by non-profit employees affiliated with the terrorist group. It raises funds using personal bank accounts, primarily through social media platforms. In addition, it also raises domestic funds, intending to distribute them to hotspot regions, such as terrorist group strongholds, conflict zones, and disaster zones. This study contends that the newly introduced model examines vulnerable non-profits in terrorism financing effectively and can be adopted for future research across jurisdictions.

Third, using the analytical framework developed by the Targeting Terrorist Finance Project of Brown University’s Watson Institute, this study determines the adequacy of Indonesia's regulatory frameworks and preventative strategies for registered non-profit organisations. In contrast, administrative sanctions and regulations did not apply to the unregistered entities. This study argues and strongly recommends that the Indonesian government give greater attention to unregistered non-profits, which are the most susceptible to abuse in terrorism financing. The strategy can be implemented by promoting the self-regulated organisation model to safeguard the internal aspects of unregistered non-profits against potential terrorism financing risks. In addition, other deficiencies and gaps in the implementation of regulations, such as a lack of tools, capability, and sectoral ego on the part of relevant ministries, also result in deficiencies in monitoring and supervision. The study recommends strengthening internal government through capacity-building programmes, joint auditing, oversight, as well as establishing cooperation with a number of other ministries that operate in areas with potential risks associated with terrorism financing.