Author: Chinki Gera, Geeta Institute of Law
LinkedIn Profile: https://www.linkedin.com/in/chinki-gera-0109b6325
To the point
Dark economics denote illicit financial systems exploited by organized crime and corruption to fund terrorism with an uptick in organized crime across many regions, particularly Sub-Saharan Africa and Southeast Asia, terrorist organizations have relied more and more on organized crime in payment of their costs. Terrorists usually control regions with immense natural wealth, such as gold or timber and extract taxes on local people when they either engage in illegal extraction or are engaging in legal extraction. The terrorist group Jama’at Nustratal-Islam wal-Muslimeen (JNIM) in Mali adds to its own income stream through artisanal gold mining, including taxing artisanal miners at each stage in their operation and taking a portion of the miners gold as long as the miners paid the tax.The political and regulatory vacuum of weak governance also creates an environment for drug and arms trafficking (i.e., smuggling) as well as supporting and funding terrorist organizations. By using informal financial systems, such as hawala, funds can move freely around borders without detection, making capital flows very difficult to trace or lock down. Corruption is a key component of the dark economy. In corrupt nations, the state institutions are often equally complicit or ineffective in regards to deterring illegal activity. Complicity or ineffectiveness can absolve accountability for criminal enterprises and terrorist groups and ever so often can facilitate the breakdown of law and order, needed for development.
An effective response to the dark economy requires a comprehensive approach including efficient legal and regulatory frameworks, cooperation and coordination on an international scale, enhancing transparency and accountability in failed or weak states.
Abstract
The convergence of organized crime and terrorism has given rise to a “Dark Economy”, where the impunity of drug trafficking, arms trafficking and corruption have become the lifeblood of extremist actors. This dynamic endangers the state’s sovereign legitimacy, promotes instability in regions and undermines the global security agenda. Organized terrorist organizations are no longer reliant on the diminutive support of states, but are acting as pseudo-state actor and are facilitating finance through crime. This includes collecting rent on illegal activity in their control zones, like illegal mining and illegal logging. Terrorist organizations also utilize money laundering protocols along with informal financial systems, like hawala, to facilitate movement across international borders, which enables them to finance their activities while avoiding state countermeasures. The emergence of THE Dark Economy necessitates a connection of response beyond one state, an international organization and law enforcement; it necessitates an extensive blend of legal frameworks, collaborative measures and a coordinated enforcement approach to dismantle the private financial models of terrorists.
Use of Legal Jargon
In order to counter terrorism and organized crime, there is need to depend on a palette of legal doctrines, instruments and measures to mitigate the effects of these crimes. One of the more critical linchpins to the puzzle is extradition (the delivering up of persons directly involved with transnational organized crimes) to a jurisdiction where they will be prosecuted. This applies particularly to cases involving the laundering of financial proceeds from illicit activities, whereby cash is hidden among numerous financial transactions performed to wash the cash into legitimacy. International conventions, such as the United Nations Convention Against Transnational Organized Crime, provides countries with a legal framework for cooperative actions in the fight against organized crime as a whole. These sorts of international instruments indicate that signatory countries must criminalize offenses involving organized crime and take steps toward mutual legal assistance. When law enforcement is serious about disrupting the financial basis of terrorist organization, then asset forfeiture doctrine must be included within the range of doctrines. This apparatus of law permits authorities (via applications or orders to take with) to seize property that is the proceeds of criminal acts. Moreover, universal jurisdiction allows states to prosecute certain crimes, like terrorism financing, no matter where the crime happened. Universal jurisdiction would help mitigate the ability for perpetrators to hide behind jurisdictional barriers when committing crimes. Together, these laws provide a foundation for international action against the dark economy that funds terrorism. The ability to successfully implement these laws requires a strong legal system, cooperation among countries and respect for the rule of law.
The proof
Empirical evidence highlights the crucial role that illegal economies play in financing terrorism. A 2017 report by Global Financial Integrity estimated that the turnover of 11 major illegal markets, including the drug trade and illegal mining, range between $1.6 trillion and $2.2 trillion each year. These significant numbers emphasize the size of the underground economy and its capacity to finance extremism. Case studies exemplify this relationship. In the Sahel, terrorist groups such as JNIM have exploited illegal gold mining, taking payments from miners for security and a percentage of the profit.
Similarly, in Myanmar, the jade industry covering nearly half of the country’s GDP, has been manipulated by military elites and criminal networks depriving resources that were meant to develop the country. Corruption is a further contributor to this challenge, as it provides the ability to divert state resources to unlawful actors. A report published by Transparency International noted that 47 of 54 African countries received a failing or near failing grade on their efforts to guard against corruption in their defence sectors. By not guarding against corruption, criminals can divert military resources towards criminal enterprises, and thereby create an environment for furthering the dark or illicit economy.
These cases provide compelling evidence of the complicated relationships between organized crime, corruption and terrorism financing point to the need for multi-factored and multi-level approaches to address these complex threats.
Case Laws
1. United States v. Harouna Touré & Idriss Abdelrahman (2015)
In this case, two individuals were arrested in Ghana under an operation by the U.S. Drug Enforcement Administration (DEA). They thought they were participating in a drug trafficking deal with the Revolutionary Armed Forces of Colombia (FARC), but they were fooled by the DEA’s informants claiming to be members of the FARC. The case concerns the difficulties of transnational crime and the difficulty of trying to accurately delineate criminal and terrorist conduct.
2. CJNG Case (May 2025)
First time, when a Mexican national was indicted in U.S. court for material support to a cartel-designation terrorist organization (CJNG). The indictment described the drug dealing and trafficking, grenade shipments, gun conspiracies and cash smuggling.
Conclusion
The complex interplay between terrorism, organized crime and corruption has created a widespread dark economy threatening both global security and development. Terrorist organizations, supported in many cases by foreign states, now increasingly rely on illicit activities including drug trafficking, arms smuggling and resource exploitation as methods of funding their operations. The financing of these activities often makes use of state institutions through corrupt practices or to divert public resources directly to criminal enterprises. To combat this multi-faceted threat, we need to take a multi-faceted approach with legal, economic and diplomatic methods. Strengthening international judicial regimes, such as the United Nations Convention against Transnational Organized Crime can strengthen the ability of states to work together to combat illicit outputs. There also needs to be strong anti-corruption projects put in place to limit the chance of state institutions being complicit in or ineffective against, criminal enterprises. Economic initiatives. In particular, transparency in Simon extraction industries and greater financial tracking, can reduce the financial webs that sustain terrorism. Diplomatically, we can work with international partners to disrupt transnational criminal organizations and prevent the creation of illegitimate economies. In conclusion, the dark economy that supports terrorism remains a complex and growing challenge. Coordinated global efforts across economic measures, legal restructuring and diplomatic engagement will be needed to combat its impact and support a more secure and stable international order.
FAQS
1. What is the dark economy in terrorism?
The dark economy can refer to the illegal financing networks that support the economy of terrorism through drug trafficking, arms smuggling, and corruption.
2. How do terrorist groups fund their operations?
Terrorist’s groups usually will either participate in illicit activities within their areas of control or they will tax illicit activities in their area of influence, for example illegal logging or mining.
3. How does corruption relate to the dark economy?
Corruption in state institutions allows for public resources to be diverted to criminal enterprises, thus enabling terrorists and terrorist organizations to operate.
4. How can international cooperation disrupt the dark economy?
Increased international legal frameworks to cooperate between states can help dismantle transnational criminal organizations funding terrorism.
5. What are the economic implications of the dark economy?
The dark economy undermines legitimate economic activity, diverts resources from development to preserve criminal enterprises and sustains instability in a given region.
