Terrorists use stolen credit cards, passports and Social Security numbers to pay for their operations and create false identities to hide behind, Dennis Lormel, chief of the FBI's financial crimes unit, told a Senate subcommittee.
Lormel said 14 pending FBI terrorism investigations involve some form of identity theft.
"The methods used to finance terrorism range from the highly sophisticated to the most basic," Lormel said. "There is virtually no financing method that has not at some level been exploited by these groups. Identity theft is a key catalyst fueling many of these methods."
Lormel said an al-Qaida terrorist cell that was broken up in Madrid, Spain, used stolen credit cards in sales scams and for small purchases that did not require other identification. The group also used fake passports to open bank accounts, which were used to send money to and from countries such as Pakistan and Afghanistan.
He said a large number of blank passports are being stolen in Brussels, Belgium, and are "finding their way into terrorist circles."
Lormel testified before a Senate Judiciary subcommittee headed by Sen. Dianne Feinstein, D-Calif., who is sponsoring legislation that would create a new crime of "aggravated identity theft," for which judges would have to add two years in prison to any sentence for a crime involving identity theft.
The additional penalty grows to five years for those convicted of using identity theft in plots of domestic terrorism.
Lormel said the FBI is targeting fraud schemes by criminal groups whose profits may be used to fund terrorism.
"Targeting this type of activity and pursuing the links to terrorist financing will likely result in the identification and dismantlement of previously unknown terrorist cells," he said.
The FBI is also working with the Social Security Administration to examine various public and government records to see if Social Security numbers linked to terrorism investigations are still being misused, Lormel said.
In May, Attorney General John Ashcroft ordered federal prosecutors nationwide to speed up investigations and trials of people accused of stealing identities.
Stolen credit card numbers and identity theft affect up to 700,000 Americans each year, the Justice Department says. In 2000, credit card companies Visa and MasterCard reported that fraud losses topped $1 billion.
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