It may sound strange but, the gruesome Charlie Hebdo terror attacks which claimed 17 lives in January 2015 were financed by selling counterfeit Nike sneakers. Back in 2004, Interpol seized worth US$1.2 million of fake brake pads which had links with Lebanese terrorist organization Hezbollah. Even the Madrid train bombing was funded by the sale of counterfeit CDs. There are many similar reports, from across the world which establish a direct link between counterfeiting and terrorism.
According to OECD (Organization for Economic Cooperation and Development) Deputy Secretary-General, Doug Frantz counterfeit goods are the largest contributor to the world’s underground economy.
There has been a close link between counterfeiting, organized crime and terrorism. While organized crime directly draws money from the sale of duplicate products, terrorism gets it funding indirectly mostly from notorious crime syndicates located in different parts of the world or directly operating on a micro level.
According to a report by EY (Ernst & Young), “Individuals who may not be involved in large scale counterfeiting and piracy are engaging in small scale counterfeiting of FMCG goods, software piracy etc. It is no coincidence that members of sleeper cells are involved in the counterfeiting of such goods. This highlights the fact that such a small level of counterfeiting and piracy activities are in line with the capabilities of small individual members who are self-financed and do not depend on funding from core terror networks.”
A different model which finances terrorist activities is based on monetary support from criminal organizations. The EY report states that a significant share of counterfeiting activities is under the control of criminal organizations who have indirect links with terrorists.
It has also been found in some cases that organized crime syndicates have transformed into terrorist organizations. Such crime syndicates have years of experience in selling fake products, smuggling, illegal arms dealing and illegal drug trade. With enough expertise, they do not take much time switching into a terrorist organization.
A few days back, Alastair Gray who is a popular counterfeit investigator gave an incredible speech on the link between counterfeiting and terrorism at a TEDx session. Here is an excerpt from his speech mentioned on tinyTed.com, “Counterfeiting is set to become a 2.3- trillion-dollar underground economy, and the damage that can be done with that kind of money, it’s really frightening because fakes fund terror. Fake trainers on the streets of Paris, fake cigarettes in West Africa, and pirate music CDs in the USA have all gone on to fund trips to training camps, bought weapons and ammunition, or the ingredients for explosives.”