Does Counterfeit Fashion Fund Terrorism?

According to fashion writers and historians, every woman’s wardrobe should contain that versatile “little black dress” (LBD). The origins of the phrase and the simple, yet elegant, black cocktail dress predate that worn by Audrey Hepburn as Holly Golightly in the iconic 1960s film Breakfast at Tiffany’s and stretch back in the annals of time to the designs of Coco Chanel and Jean Patou in the 1920s.

As a staple fashion icon, it can be worn with everything to go to anywhere-from the dressy to the dress down. But it can also mean “dressed to kill,” if the LBD in question is a fake? If the sale of such counterfeit fashion was funding another kind of black icon—the black flag of ISIS, or so-called Islamic State.

Would every woman still covet one if the black were tinged red with the blood of innocent civilians or martyred jihadists on the streets of Europe? Would the dress still have its lure and appeal?

There has long been suspicion that counterfeit fashion goods and their sale in the United States and Europe raise millions for what have become cash-rich terrorist causes across the Middle East. The recently recaptured cities of Mosul and Raqqa have given up their grisly secrets of torture and murder in the name of a cause that ruled its so-called “caliphates” with fear and brutal repression and have been bank-rolled in part through the sale of counterfeit fashion—little black numbers, handbags, fake designer sneakers, DVDs, car parts, alcohol, and tobacco.

Recent research converts the anecdotal into the factual for the first time as undercover journalists and researchers have followed the murderous and lucrative trail of the criminal gangs right to the streets of Europe—Paris, Barcelona, and other major cities—to the markets and curbsides where feckless buyers of fake goods hand over their cash.

They, for their part, have no idea—or simply don’t care—that their purchases are putting weapons in the hands of the jihadists who will then turn them on innocent consumers in those same cities where a shopping spree becomes a murderous spree.

The research, for the first time, finally lays to rest the lie that the purchase of counterfeit goods is a victimless crime.

Counterfeit Fashion: The Evidence in Black and White

Louise Shelley, PhD, professor at George Mason University and author of Dirty Entanglements: Corruption, Crime, and Terrorism, wrote in the December 2017 NATO Review:

“The Arab Spring started with hope and deteriorated into a prolonged conflict, with great human suffering, and massive loss of life and infrastructure. The Syrian conflict, like many others in the world, has been financed, in part, by illicit trade. This illegal cross-border trade is dependent on corrupt officials. Smuggling of drugs, humans, oil, antiquities, cigarettes, and other contraband has provided funds to buy weapons and sustain fighters both of President Bashar Al-Assad and of rebel and terrorist groups.

“Contemporary illicit trade in Syria today, in which many diverse elements of illegal commerce converge, helps facilitate many destabilizing phenomena—the perpetuation of deadly conflict, mass human displacement, and the propagation of environmental degradation. Those profiting from the smuggling in Syria include corrupt government officials, criminals, and terrorists such as Al-Nusra and so-called Islamic State. Through their corruption, state actors undermine the state from within. Illicit trade today, when executed by non-state actors who do not need the state or seek to destroy the state, ensures the destruction of the existing order and of human life. The Syrian situation exemplifies illicit trade and its enabler-corruption-at its worst in the contemporary world.”

In the French Unifab report Counterfeiting and Terrorism, published in 2016, the authors argue that counterfeiting represents up to 10 percent of world trade and costs an estimated 40,000 jobs each year in France alone. Across the developed West, this equates to nearly 2.5 million jobs.

During 2015, the report argues, counterfeiting in France represented a global turnover of $1.7 billion, more than drugs and prostitution combined. Across the world, counterfeiting represents nearly €43 billion (~$49 billion) per year against just €28 billion (~$32 billion) for all forms of drug trafficking, according to a Transcrime report.

Despite these staggering figures and the fact that counterfeiting is both a criminal and civil wrong, law enforcement does not view it as a major priority. The report authors said, “The proven presence of counterfeiting within terrorist organizations raises questions about the adequacy of current criminal penalties and particularly how they are applied.”

Andrew Bradshaw, president of the Asian Coalition Against Counterfeiting and Piracy (ACACAP), made up of brand owners and IP legal experts, said:

“Terrorism and counterfeiting are inextricably linked. Compared with drug or human trafficking, counterfeit importation and sales are a relatively safe option, with enforcement bodies prioritizing other crimes. Put simply, the risk versus reward is attractive.

“Despite proven links to terrorist funding, the government appears unwilling to raise the profile and threat level of counterfeiting despite atrocities at home and abroad. Cuts to enforcement services in recent years have exasperated the problem and allowed counterfeiting to flourish and provide a ‘safe haven’ for terrorist funding. This is dysfunctional decision-making at its worst.

“It is imperative that brands, coalitions, and trade bodies re-focus their resources and efforts to identify the source and the money behind counterfeiting rather than follow tired anti-counterfeiting programs. ACACAP is developing intelligent strategies to support our members, and by raising the importance of asset identification and the creation of financial disincentives, we believe that we can affect counterfeiting and one method of funding for terrorist groups and supporters.”

Evidence of the links between terrorism and counterfeiting was provided in the jihadist attack on the offices of French satirical magazine Charlie Hebdo in January 2015. Investigations into the two brothers who carried out the attack—which killed twelve people and injured twelve others in the assault and another at a nearby Jewish supermarket—discovered they funded their attack through the selling and distribution of counterfeit goods, including cigarettes.

Another Islamist extremist also funded his activities through this illegal pathway; so much so, he was nicknamed “Mr. Marlboro” by the authorities who arrested him.

There are a myriad of cases linking counterfeiting to terrorism through byzantine journeys for fake brands and armaments from the Middle East into Europe, according to Dr. Louise Shelley and the report from UNIFAB.

In its foreword, the report said, “We aim to provide insight into the links between terrorism and counterfeiting, as well as demonstrating that this illegal activity is a favorable method for financing terrorist actions.”

It argues that, if proven, the criminal code as it relates to terrorism and counterfeiting could deal out stiffer sentences of up to twenty years imprisonment, but that law enforcement has been reluctant to pursue actions.

This is underlined by the comments of EU Commissioner Michel Delebare, who said, “International counterfeiting flows seem increasingly more related to cross-border criminal organizations which finds that counterfeiting generates a more profitable traffic which is criminally and financially less risky and much less severely prosecuted by European states than, for example, drug trafficking.”

In November 2015, Christian Eckert, the EU minister, said, “There is now an undeniable link between counterfeiting and terrorism, especially with regard to the Paris attacks in January 2015. It has been proven that many jihadists are at the very heart of counterfeit trafficking, so fighting counterfeiting allows the fight against terrorism.”

In 2014, before the Charlie Hebdo attack, France adopted new laws strengthening the fight against counterfeiting. However, the UNIFAB report said, “It is regrettable that this legislative work has not led to the identification of links between counterfeiting, organized crime, and terrorism, even though MPs taking part in the Parliamentary debate were able to recall them.”

According to the UN Commission, counterfeiting is now the second-largest source of criminal income worldwide—from luxury products to mass-market consumer goods, auto spare parts, hygiene products, toys, and tools.

Furthermore, these activities were well known to the authorities. According to another report, “Said Kouachi (one of the brothers involved in the Charlie Hebdo attack) was caught by customs at Roissy Airport two years ago (2013) in an attempt to fraudulently import products. He was receiving fake Nike trainers from China by parcel post. The offense resulted in just a fine.”

His brother Cherif was also known to police for trafficking fake goods.

According to surveillance reports, police were convinced that he was more involved in counterfeiting, categorized as a “petty crime,” than terrorism, and surveillance on him and his brother was stopped in June 2014, six months before they burst into the Paris newsroom of Charlie Hebdo.

This is indeed further evidence of the authorities’ segmentation of crimes and their low-priority view of the trade in counterfeit fashion and other goods, rather than seeing it as part of a holistic organized crime issue.

What followed was more disastrous for the citizens of Paris. In November 2015, 132 people were killed, and 300 more injured in the most serious attack on the capital since World War II.

Two of the attackers, Ibraham and Salah Abdeshlam, hailed from the deprived Belgium city of Molenbeeck, where radicalization is an everyday occurrence and counterfeiting thrives as a lucrative activity.

The mayor of Molenbeeck, Francoise Shepman, called upon the federal government to help fight crime through intelligence. “It is necessary to act at the level of intelligence and give us the capacity to fight delinquency, drug trafficking, counterfeiting, and offenses against our social laws. To me, there is a great proximity between these phenomenon and radicalization. They infect community life-they are thugs who have become radicalized.”

Piracy

European journalist Remy Sabathie said, “Organized crime, which is well entrenched in counterfeiting, and particularly in the area of piracy, tends to gain control of the entire production and distribution chain of pirated films. However, some terrorist groups are experiencing the same phenomenon whilst still retaining the false political demands, whilst their core business is directed to lucrative trafficking, such as piracy.”

This activity helps to fund their recruitment campaigns as well as their operations such as intelligence gathering, training, weapons acquisition, and attacks, according to the RAND Corporation, a nonprofit institution with aims that include the improvement of policymaking.

The means, the distribution of fake DVDs also serves as propaganda, one of the terrorists’ great recruitment tools.

Roslyn Mazer, a lawyer and journalist and former member of the criminal division of the US Department of Justice, wrote a study in which she said, “Recent developments suggest that many governments suspected of supporting Al Qaida are corrupted by, or at least ignorant of, highly lucrative trafficking of counterfeit and pirated products, which generates enormous flows of money for the benefit of terrorists.”

The European gateway for counterfeit fashion and fake goods is through Marseille and Spain, the supply chain favored by Islamist extremists, according to Salima Tlemcani, author of “Arms Trafficking in Europe.”

Their activities center around four major areas—operational, logistical, ideological, and financial—as organized crime gangs are sharing more information and intelligence and diversifying like multinational companies.

Further afield in Africa, the link between counterfeit goods and terrorism has been understood since the 1980s as the illicit trade has taken advantage of the transportation revolution and globalization.

“For a number of years, it has been possible to identify different terrorist networks attracted by counterfeiting. Recently, the attraction has increased by strengthening the financial power of terrorist networks such as Islamic State,” according to evidence presented to the African Summit in 2014.

In 1993, following the first attack on the World Trade Center, there was strong evidence to link the car bomb and its funding to the selling of fake clothes in a Broadway store. Three years later, over 100,000 fake Nike T-shirts were sold at the Atlanta Olympic Games to finance terrorism.

This resulted in the arrest and conviction of Omar Abdul Rahman, the so-called “blind terrorist” who lost his sight at the age ten. Rahman was sentenced to 240 years for participating in a terrorist plot to destroy American landmarks including the UN headquarters, the Lincoln and Holland Tunnels, the George Washington Bridge, and the federal building housing the FBI, according to the prosecution case. He died of natural causes in February 2017 in prison in Butner, North Carolina, aged 78.

Counterfeiting has also been linked to a number of terror groups including the Irish Republican Army (IRA), ETA in Spain, The Farc in Columbia, Hamas in the Middle East, according to Israeli intelligence, Hezbollah, and Al Qaida and affiliated groups in Afghanistan.

The latter, according to Interpol, received between $300 and $500 million from “supporters” trading in counterfeit goods. Seized Al Qaida documents revealed that fake goods were the recommended route to generate campaign funds.

Following the Madrid bombing in 2004 orchestrated by Al Qaida, the Spanish Minister for the Interior said that one of the key suspects was a well-known counterfeiter.

There are many more examples of evidence that link organized crime and counterfeiting to the funding of terror groups all over the globe. But the common theme appears to be that it is nothing new, as is the situation with the reluctance of law enforcement to strangle the supply chains that feed the fakers’ activity, choosing instead to continually treat it as a misdemeanor or an issue for trading standards and civil law.

With millions channeled into the fight against terror, it would seem that tackling the scourge of fake goods would be a cost-effective and intelligence-led starting point.

Perhaps the fight needs to start closer to home, with tougher sanctions on those who buy fake goods as well as an education program aimed at proving that although counterfeit fashion may make buyers feel dressed to kill, it is those prepared to carry out the threat who are the real beneficiaries.

This article was originally published in full in the Spring 2018 issue of LPM Europe. This excerpt was updated October 31, 2018.

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