*EPF504 07/18/2003
Funds From Intellectual Property Crimes Appear to Support Terrorism
(IPC becoming terrorists' preferred method of financing) (500)

Washington -- A U.S. government official has advised Congress that although no direct link has been established "between profits from the sale of counterfeit merchandise and specific terrorist acts," there are indications that a linkage exists.

In addition, there are concerns that intellectual property crimes (IPC) could be "highly attractive to organizations seeking lucrative and low-risk funding mechanisms to support terrorist activities," according to Asa Hutchinson, under secretary for the Border and Transportation Security Directorate at the U.S. Department of Homeland Security.

Hutchinson and interested parties from outside the U.S. government appeared before the House International Relations Committee on July 16 at a hearing investigating whether proceeds from counterfeited goods are being used to fund terrorism.

In a statement strongly supportive of Hutchinson's remarks, Ronald K. Noble, Secretary General of Interpol, told committee members that in his opinion "Intellectual Property Crime is becoming the preferred method of funding for a number of terrorist groups." He added that there are enough examples "of the funding of terrorist groups in this way [so that] we must take preventative measures now."

According to Noble, law enforcement does not generally treat IPC as a high-priority crime, nor does it always thoroughly investigate IPC cases. "Investigations, when initiated, often tend to be seizure-based and do not extend to following onward flows of money," he said. "Interpol does not believe an investigation into intellectual property crime is over when there is a seizure of counterfeit or pirated goods. We think further work needs to be done to trace the proceeds, and to establish links, if possible, with groups benefiting from these funds."
"Because of the growing evidence that terrorist groups sometimes fund their activities using the proceeds," Noble said, "it must be seen as a very serious crime with important implications for public safety and security."
He said a "militant active in Europe, known for his activities in radical fundamentalist organizations over the last decade, has been recently convicted for trafficking in counterfeit goods," adding that the "individual's counterfeiting associates are also known members of radical fundamentalist groups" that are reportedly still involved in large-scale counterfeit goods trafficking.
Noble told the committee that an individual was arrested for piracy and suspected fundraising for Hezbollah in February 2000 and that the "individual sold pirated music CDs, Sega, Sony and Nintendo game discs to fund a Hezbollah-related organization." Among the discs recovered were ones containing images and short films of terrorist attacks and interviews with suicide bombers. The discs were allegedly used as propaganda to generate funds for Hezbollah.
Noble also noted that IPC deserves more attention because it is global in scale and scope, relatively low-risk with high return, and offers the possibility of direct or indirect involvement for terrorist groups. In addition, he said, the investigations are receiving scant resources compared to illicit narcotics or counterterrorism investigations.

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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