Killing The $100 Bill Won't Stop ISIS, But Youll Hate What Will

If you believe media coverage of a recent Harvard paper, the G20 countries could deal a serious blow to ISIS by changing up their currencies. But experts say it’s not all about the Benjamins.

The study’s authors argue that removing high denomination bills from circulation would make it harder for terrorist groups to move money and fund attacks, thus financially strangling their operations. They urge the G20 group to stop printing big bills, and phase them out of legal tender.

“Eliminating high denomination notes will not stop the financing of terrorism, but without eliminating high denomination notes, it will be very difficult to get traction on stemming such flows,” the authors write.

But counter-terrorism and money laundering experts disagree. They say banning big bills wouldn’t make a dent in the operations of terrorist networks like ISIS operations. And the measures they think would damage terrorism’s cash channels might make you uncomfortable.


Why terror networks don’t need big bills

Colin Clarke, an associate political scientist at the RAND institute who’s written on terrorism financing, says that banning big bills would be a “minor inconvenience in the short run” for terrorist organizations. 

Moyara Ruehsen, a professor at the Middlebury Institute of International Studies in Monterey, is also unconvinced that banning big bills will help prevent terrorist financing. The certified anti money laundering specialist told FORBES that ISIS doesn’t depend on big bills as much as people think.


“In the case of ISIS, most of their budgetary spending is inside Syria and Iraq, where large bills don’t have as much utility,” Ruehsen explains. For example, fighters don’t want to be paid in large denomination bills.

“Those fighters need to buy food for their families, cigarettes, whatever. If everybody only has $100 bills, that’s a problem,” she says.


ISIS has large cash reserves, but that doesn’t mean they rely on cash. “It just means they robbed a bank,” she says. ISIS does make money from the black market oil trade, according to the FORBES list of the World’s 10 Richest Terrorist Organizations. But Ruehsen says oil sellers would much rather be paid in local currency, even if Turkish lira are more difficult to transport. Failing that, she says they trade for consumer goods like clothes and food.

Clarke emphasized the adaptive nature of terrorist groups. For example, Hezbollah is known to have transnational money laundering operations, sometimes involving large cash sums. He points to a 2003 crash of a Beirut-bound plane in Benin, which was found to be carrying $2 million in cash donations to Hezbollah.

He still doesn’t think Hezbollah would be stymied if big bills were disappear from circulation.  “Would it make smuggling large amounts of cash more difficult? Yes of course it would. But at the end of the day though this is a pretty minor impediment to a terrorist group.” 

Eliminating big bills wouldn’t restrict terrorist activity in Western countries either, since terror cells there aren’t financed by big cash influxes from abroad. A study of 40 European jihadi cells by the Norwegian Defence Research Establishment found that the vast majority were financed by members’ own legitimate activities. One of the San Bernardino shooters took out a legitimate loan for $28,500 to finance the attack, rather than receiving the proverbial briefcase of cash from a foreign operative.

“One of the trends we’re seeing is local and parochial sources of income” for terrorist groups, Clarke agrees. He says that terrorist attacks are relatively inexpensive, and can be funded through local petty crime or credit loans. “If you plan to martyr yourself you’re not too concerned with your credit score,”  he adds.

The unpalatable way to stop terror money

So what can governments do to economically challenge ISIS? Two things, Ruehsen says. The first is to loosen EU restrictions on privacy, and make it easier for investigators to mine financial data. “Europeans place a lot of value on data privacy,” she says, as Google GOOGL +0.69% discovered in the “right to be forgotten“ ruling. Ruehsen says investigators need to be able to track bank account data and wire transfers without a warrant, to discover terrorism funding sources. 

There are considerable political hurdles to that approach, of course. Clarke says that the public tends to demand greater scrutiny in the months following terrorist attacks, and as the memory fades, they advocate for more privacy.

The next step, according to Ruehsen, is to form a network of international trade transparency units to combat false trade invoicing, she says. False trade invoicing is hard-to-detect way of transferring and laundering money.

“Let’s say that a terror cell in Bosnia wishes to send $100,000 to another cell in Paris.  Rather than transport cash, they can import cheese from France. The cell in Paris would not even have to ship the cheese, but both sides would line up trade documentation, including a letter of credit, and rather than invoice it at its true value of $50,000 of cheese, they would say the cheese was really worth $150,000.” The Paris cell could cash the check from the Bosnian bank for $150,000 and it would look like an ordinary transaction.

A trade transparency unit monitors trade data to spot unusual trades and inaccurate pricing, which could be indicative of false trade invoicing.

Terror groups adapt faster than you think

“The biggest misconception [about terrorism funding] is that we can cut off their sources of funding easily,” Ruehsen says. The two measures above would be a good first step in fighting the financing of terrorism, but she emphasized that criminal groups of all kinds quickly switch up their methods to evade detection. 

“When we have tried to go after one particular source of funding, they will find another source of funding,” Ruehsen says.“They’re smart people.” 


“There’s so much unknown out there,” Clarke says. He expects to see terror groups experimenting with bitcoin and the dark web next. What’s more, Clarke says it’s hard to get Congress and the public excited about combating terrorism funding. “We’re so enamored of the kinetic stuff, being able to blow stuff up,” he says. “It’s just not sexy to say we put sanctions on twelve financiers.”