EXTREMIST CHARITIES AND TERRORIST FUND-RAISING IN INDONESIA

[Jakarta, 31 March 2022] Charities have emerged as an important source of funds for violent extremist organisations in Indonesia over the past two decades. Funds raised through humanitarian appeals, both from committed supporters as well as the unsuspecting public, defray organisational expenses,  finance terrorist operations and support arrested members and their families. The Indonesian government has made major progress in stemming the flow of funds to terror groups since the adoption of a comprehensive anti-terrorist financing law in 2013. But more needs to be done to monitor charitable organisations suspected of terrorist links.

Extremist Charities and Terrorist Fund-Raising in Indonesia, the latest report by the Institute for Policy Analysis of Conflict (IPAC), examines how charities have evolved to serve as an important source of funding for violent extremist organizations in Indonesia and the measures that are needed to curb their activities.  

“Although there are important differences between various extremist organizations, they have followed a similar model for using charities,” says Sidney Jones, IPAC Senior Adviser. “This involves identifying a concrete humanitarian need; giving it a religious justification; raising funds as broadly as possible; claiming transparency by periodically publishing accounts; and then diverting funds for jihad and support to arrested members.”

The new report analyses three violent extremist organisations that have used charities to raise funds. The first was KOMPAK, which collected funds from the general public for arming and supplying Muslim fighters in Ambon and Poso, during the communal violence in 1999 and the early 2000s. The second and the most formidable was Jemaah Islamiyah (JI), which raised funds not just for short-term needs, such as sending members for combat training in Syria, but also to build a mass base. JI charities include the Hilal Ahmar Society of Indonesia (HASI,) whose head, Dr. Sunardi, was recently killed by the police during an arrest operation, as well as the Abdurrahman bin Auf Foundation (ABA) that amassed a small fortune from donation boxes placed in minimarts across the country. The third consists of the many pro-ISIS groups that used funds raised through humanitarian appeals to aid the families of imprisoned and killed ISIS supporters and to fund jihad operations. The funds were also used to maintain ideological conformity by denying support to those who cooperated with Indonesian authorities.

Indonesian law enforcement measures against extremist charities are linked to its efforts to meet the international standards on combatting terrorist financing and money laundering set by the Financial Action Task Force (FATF). Indonesia was removed from the FATF blacklist after enacting its first comprehensive law against terrorist financing in 2013 and putting a few other regulatory measures in place. Despite these improved measures, Indonesia remains the only G-20 country that is not a full member of the FATF.

Since it is hosting the G-20’s 17th Heads of State and Government Summit in Bali in November 2022, Indonesia is making a concerted effort to earn that membership by improving its enforcement record. The FATF standards, however, are tied to the process for freezing the assets of individuals and organisations designated as terrorists on a U.N. list that is deeply flawed. There are also domestic political factors to consider, as stricter regulation of religious charities may result in a backlash from mainstream Islamic groups that have been historically opposed to government interference. For now, the best solution would be a technical one: to increase the capacity of the National Zakat Agency (BAZNAS), the Center for Reporting and Analysis of Financial Transactions (PPATK), and the Ministry of Finance to perform detailed audits on charities suspected of ties to extremist organisations.

“Thanks to declining ISIS influence, massive arrests, and improved government efforts at disengagement, extremist groups are weaker now than they have been in many years,” says Jones. “ This could be a particularly opportune time to try new technical measures to curb  extremist charities, but critical to their success will be a clear and credible definition of “violent extremist”, so that legitimate Muslim charities, or indeed any other humanitarian charities, are not inadvertently penalised.”