Archive for November, 2012

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Panamanian portal profits Hezbollah

November 30, 2012

Kenneth Rijock has another great piece on Panama—this one is about how Panamanian officials turn a blind eye to one of their banks being used by Hezbollah cocaine traffickers as a financial gateway to Lebanon.

Rijock pointedly asks “Is somebody asleep in Washington?”  Yes sir, and it’s not even 3 a.m.  The sun is up, but our leaders are snoring.

PANAMA IGNORES MASSIVE HEZBOLLAH MONEY LAUNDERING

Hezbollah Venezuela continues to actively launder its narcotics trafficking proceeds through a major Panamanian financial institution, which facilitates the movement of millions of dollars of its cocaine profits. Sadly, the story is well known to many of the country’s government and financial leaders. Though a small unit, numbering less than 100 cadre, Hezbollah Venezuela* regularly and continuously smuggles bulk cash into Panamanian airports, and into the bank. Remember the $25m that was seized upon arrival a while back ? Didn’t you wonder whose money it was ?

Once it has arrived in Panama, the drug cash is deposited in a bank whose ownership is linked through family ties to a senior government leader. Hezbollah has a small, but extremely effective, contingent in Panama, who facilitate the onward movement. Ultimately, most of the illicit profits are transferred to Beirut, and provide financial support for Hezbollah, a Specially Designated Global Terrorist (SDGT) group.

Formed only a few years ago, and seemingly undercapitalised, it has quickly outgrown its original location, and plans to move into a multi-million dollar skyscraper for its new headquarters. It would appear that providing financial support to terrorist organisations pays well; ask the owners.

Why isn’t the Government of Panama closing down this bank ? It would mean a regulatory agency would be shutting down a relative’s business, and obviously, this does not happen in the Republic of Panama.

A final question: why, in the face of overwhelming proof, has the bank not been sanctioned by the Latin American team  at OFAC ? Is somebody asleep in Washington ? The leader of Hezbollah Venezuela is OFAC-sanctioned.
__________________________________________________________________________
*Sometimes known as Hezbollah Latin America.

Hezbollah gets a lot of money from its international criminal network, but we shouldn’t forget when we hear information like this that the terrorist organization also receives a lot of money from khums, the traditional Shia Muslim tax—it just doesn’t get as much attention from law enforcement or coverage by the news media.

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Potential game changer in terror finance law

November 29, 2012

A ruling by the New York Court of Appeals may change the way terror financiers take advantage of correspondent bank relationships in the U.S.  Kudos to Shurat HaDin for pushing this case forward (and for linking to the news too).

This ruling will probably cause a stir among bank compliance circles because it could be difficult and expensive to conduct sufficient screening of correspondent banks.  But the alternative, which is to passively condone terrorist transactions in your bank that originated from a foreign bank, isn’t such a great alternative.

Given the size and centrality of the financial sector in New York, this state-level ruling will have international consequences.

From the Jerusalem Post on Nov. 21:

Lebanon War victims alter game of terror financing

Terror groups may no longer be able to do transactions in US dollars after a groundbreaking ruling by the highest state court in New York, the New York Court of Appeals, announced Shurat Hadin, the Israel Law Center, on Wednesday.

The ruling was issued on Tuesday in favor of victims of Hezbollah rocket attacks from the 2006 Lebanon War and could be a “game changer” in the global financial war on terror financing.

Until now, terror financing could avoid scrutiny in the US by making fund transfers through American correspondent banks.

A correspondent bank essentially serves as a middle bank for fund transfer for banks that do not have local US branches.

As long as the terrorist-affiliated banks had no local branch in the US they were insulated from any legal consequences, and the correspondent bank could plead ignorance regarding the transactions.

However, using a new interpretation of an existing law, the appeals court ruled that correspondent banks will now be held liable for civil damages if it is found that they facilitated transactions that ultimately can be traced back to terror entities.

This places the onus on correspondent banks to do more careful policing of where fund transfers are eventually going even behind sometimes what could be many layers of straw companies to hide that terrorists are receiving the money.

Most importantly, many correspondent banks simply may cease involvement in any transactions where they have doubts about a possible terror connection to avoid even the possibility of heavy civil liability and bad press.

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U.S. names multi-million dollar Taliban hawaladar

November 28, 2012

In RadicalIslam.org’s interview with Money Jihad, we discussed how poorly the U.S. has handled the scourge of hawala, the traditional Islamic method of transferring money.

The Bush administration talked about hawala, but wasn’t able to accomplish much to stop the opaque money swapping method that is often used to fund terrorism.  The Obama administration has been worse, passing up a golden opportunity to seek a maximum penalty against the hawala dealer who funded the failed Times Square bomber.

The latest news that the Treasury Department has sanctioned a hawala business with branches in Afghanistan, Pakistan, and Iran that has transferred millions of dollars for the Taliban is somewhat encouraging.  We’ve always known that these cases exist, but normally we don’t even hear about them because of diplomatic sensitivities with Pakistan.  The fact that the feds would go public with this information is a step in the right direction.

But in practical terms, the sanctions are largely symbolic.  As Treasury’s press release said, “As a result of today’s action, all property in the United States or in the possession or control of U.S. persons in which Rahat Ltd, Mohammed Qasim, and Musa Kalim have an interest is blocked, and U.S. persons are prohibited from engaging in transactions with them.”

That is, unless Rahat maintains an account a U.S. bank, it is unlikely that any funds will be frozen as a result of this action.

As long as we have troops on the ground in Afghanistan, it would be somewhat more effective to treat the Afghan branch of Rahat Ltd as a military target:  raid the branch, detain and interrogate its employees, and confiscate its records.  There’s more intelligence to be gathered about the Taliban’s financials.

Here are the basics we know from Treasury:

Treasury Imposes Sanctions on a Hawala and Two Individuals Linked to the Taliban

11/20/2012
WASHINGTON – The U.S. Department of the Treasury today announced the designation of Rahat Ltd, a hawala, and two individuals pursuant to Executive Order (E.O.) 13224. Rahat Ltd has branches in Afghanistan, Pakistan, and Iran which have been used by the Taliban to facilitate their illicit financial activities. The Treasury Department is also designating the owner of Rahat Ltd, Mohammed Qasim, and the owner and manager of its Quetta, Pakistan branch, Musa Kalim.

Rahat Ltd has been used extensively by senior Taliban leadership to finance their violent activities. This includes facilitating millions of dollars of transactions to support the Taliban shadow governor for Helmand Province, United Nations Security Council 1988-Listed Naim Barich, who was also designated November 15, 2012 pursuant to the Foreign Narcotics Kingpin Designation Act for his extensive narcotics production and distribution activities.

“Today’s action demonstrates our continued efforts to target and disrupt financial activity linked to the Taliban’s use of hawalas,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. “We will continue exposing these illicit networks and deprive the Taliban of their sources of funding no matter where they turn.”

As a result of today’s action, all property in the United States or in the possession or control of U.S. persons in which Rahat Ltd, Mohammed Qasim, and Musa Kalim have an interest is blocked, and U.S. persons are prohibited from engaging in transactions with them.

Rahat Ltd

Rahat Ltd is a hawala that facilitates financial activities for the Taliban.  Taliban shadow governor for Helmand Province Barich provides funds through Rahat Ltd to subordinate Taliban commanders to plan and conduct operations in southern Afghanistan.  As of mid-2012, Barich had transferred money using the Quetta branch of Rahat Ltd.  As of early 2012, Barich had received millions of dollars through the Quetta branch of Rahat Ltd and had provided a senior Taliban commander with over $250,000 via Rahat Ltd.

Other senior Taliban figures regularly used Rahat Ltd to store and transfer hundreds of thousands of dollars.  As of early 2012, approximately $500,000 of Taliban funds had been placed in the Quetta branch of Rahat Ltd and, as of late 2011, a senior Taliban member arranged the transfer of over $100,000 through the same Rahat Ltd hawala.

Mohammed Qasim

Mohammed Qasim owns Rahat Ltd and, as of mid-2012, was a hawaladar for Taliban senior leadership.  As of mid-2011, Qasim used his hawalas in Afghanistan, Pakistan, and Iran to facilitate Taliban financial transfers.  As of early 2011, Qasim was a financial assistant to Taliban shadow governor for Helmand Province Barich.  Additionally, in early 2012, Qasim helped to transport weapons and ammunition for the Taliban and, as of mid-2011, frequently smuggled weapons into Helmand Province for the Taliban.

Musa Kalim

Musa Kalim owns and runs the Quetta, Pakistan branch of Rahat Ltd, also known as the New Chagai Trading Company and the Musa Kalim Hawala.

As of late 2012, Taliban shadow governor for Helmand Province Barich had used Kalim to move and hold his finances.  As of late 2011, the bulk of Kalim’s hawala business consisted of transferring Taliban and smugglers’ funds.  Kalim also managed the transfer of funds from donors in the Gulf to support Taliban fighters in 2011…

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Arab Bank escapes justice in terror finance case

November 27, 2012

The judge’s ruling can be paraphrased as:  Well, Arab Bank may have funded terrorism, but you can’t prove it (because they won’t turn over their documents).  And even if you could prove it, that doesn’t mean the money that the bank gave terrorists directly led to your injuries.

The gentleman who was injured, God bless him, will appeal the decision.  As a refresher, here is Arab Bank’s history:

  • Arab Bank has transferred money on behalf of Comité de Bienfaisance et de Secours aux Palestiniens (CBSP), a notorious French charity, to a known financial subunit of Hamas.
  • Arab Bank paid out insurance benefits to families of suicide bombers for the Saudi Committee—another charity that funds Hamas.
  • Arab Bank handled transactions by the Holy Land Foundation, whose leaders now sit behind bars for financing terrorism.
  • Arab Bank used its New York branch to facilitate these payments.
  • Arab Bank refused to turn over bank documents to the court.

See here and here for prior coverage.

From American Banker magazine on Nov. 15:

Arab Bank Wins Bid to Dismiss Terrorist Financing Suit

A lawsuit by an American man who sought to hold Arab Bank responsible for injuries he sustained in a sniper attack in Israel cannot go forward, a federal judge in Brooklyn has ruled.

U.S. District Judge Jack Weinstein of the eastern district of New York ruled on Nov. 6 that Matt Gill, a citizen of both the U.S. and Israel, cannot hold the bank liable for Gill’s being shot in 2008 while standing inside Israel’s borders in an area overlooking the Gaza Strip…

…Though Gill charged Arab Bank with providing material support to Hamas in violation of U.S. law, the court ruled he failed to establish the bank bore legal responsibility for causing his injuries, either by its own actions or in a conspiracy with Hamas.

“Hamas is not the defendant; the bank is,” Weinstein wrote in a Nov. 6 ruling that dismissed the case. “And the evidence does not prove that the bank acted with an improper state of mind or proximately caused plaintiff’s injury.

The ruling comes amid a series of lawsuits filed in Brooklyn federal court that charge Arab Bank with aiding Hamas, which has governed the Gaza Strip since 2007. Taken together, the cases test how far banks must go to vet customers for ties to terror groups.

“This is the first Arab Bank case where the court has evaluated the entire record, and it dismissed the case concluding that the Bank was not responsible for the plaintiff’s injuries,” bank spokesman Bob Chlopak said in an email.

In his suit, Gill charged the bank with providing financial services to Hamas through a series of groups, charities and people affiliated with the organization.

The court, however, found the alleged connections among the entities and individuals to whom Gil pointed and Hamas either without basis or sufficiently attenuated to warrant a finding the bank funneled money to Hamas that could have helped to finance the 2008 attack.

Though Gill alleged the bank processed roughly 157 transactions on behalf of people allegedly affiliated with Hamas over a roughly four-year period beginning in December 2000, the court concluded he failed to show the transactions accounted for a sufficient enough share of the hundreds of thousands of transactions Arab Bank cleared through its New York office annually or that the bank knew the transactions could result in harm to an American four years later.

“No single or total transfer highlighted by plaintiff establishes the requisite magnitude and temporal connection to the attack required to find that the bank’s actions proximately caused plaintiff’s injuries,” Weinstein ruled.

According to the ruling, the bank’s New York office, without admitting wrongdoing, agreed to pay $24 million in 2004 to settle charges by the U.S. government the bank had failed to monitor suspicious fund transfers.

For his part, Gill says the court erred by not ordering the bank to turn over records of transactions in the three years that preceded the attack. The bank had contended that laws in Jordan, Lebanon and the Palestinian territories that govern the confidentiality of transactions prevented it from producing the material.

Gill, who plans to appeal the ruling, asserts “the court erred in refusing to attach probative weight to the defendant’s complete withholding of those records,” Gary Osen, a lawyer for Gill, said in an email.

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Bangladesh overwhelmed by the financial jihad

November 26, 2012

Bangladesh continues to teach the world more and more about the collusion between Islamic sharia financial institutions and terrorist organizations.

First there was the revelation that IBBL uses zakat to fund terrorists.  Then there was the U.S. Senate’s damaging report about HSBC last summer which highlighted the British bank’s relationships with IBBL and another sinister sharia bank in Bangladesh, the Social Islami Bank Limited.

The revelations probably had something to do with FATF issuing a warning to Bangladesh to clean up its act and tighten the screws on terror financing.  The government of Bangladesh is indeed trying to, but the jihadi swamp there is so foul, and sharia banking is so dominant over conventional banking, that one wonders if the swamp can ever be drained.

This informative November article from the Eurasia Review provides some excellent background on the last 20 years of terrorist financing in Bangladesh and how the country wound up in its current stew with FATF:

Bangladesh: Banking For Terror – Analysis

By: SATP
November 12, 2012

By Sanchita Bhattacharya

In what seems a logical culmination of events, Bangladesh has been given time until February 2013 to address deficiencies in its fight against money-laundering and terror-financing to avert black-listing by the Financial Action Task Force (FATF)…

…[T]he U.S. Senate Permanent Subcommittee on Investigation, in its July 17, 2012, report titled U.S. Vulnerabilities to Money Laundering, Drugs and Terrorist Financing: HSBC Case History, disclosed that two Bangladesh-based banks, Islami Bank Bangladesh Limited (IBBL) and Social Islami Bank Limited (SIBL) were involved in terror financing. Regarding the functioning of HSBC, it was mentioned that the bank acted as a financier to clients seeking to route funds from countries like Mexico, Iran, Saudi Arabia, Syria, North Korea, Cuba, Sudan, Myanmar, Japan and Russia. The report also stated that the HSBC supplied dollars to IBBL and SIBL, ignoring evidence of their links to terror financing. HSBC did not submit these two banks to enhanced monitoring for suspicious transactions, despite recommendation by HSBC’s own Financial Intelligence Group (FIG).

According to the document, SIBL’s ownership stakes were held by two Saudi Arabia based non-governmental organizations (NGOs): the International Islamic Relief Organization (IIRO) – implicated in terrorist financing by the U.S. administration and included on the list of those prohibited to do business in the country; and Lajnat-al-Birr-al-Islam (Benevolence International Foundation, BIF), one of al Qaeda’s financers.

It was noted, further, that Saudi Arabia’s Al Rajhi Bank, also engaged in suspicious transaction, had a 37 per cent ownership in IBBL. HSBC also had maintained an association with Al Rajhi, a member of al Qaeda’s “Golden Chain” – a list including at least 20 top Saudi and Gulf States’ financial sponsors of al Qaeda, including bankers, businessmen, and former ministers.

The U.S. report on terror financing was not a recent finding. Since 9/11, the U.S. has taken strong steps to halt the flow of funds to terrorist organizations under Executive Order 13224 and related elements of the USA Patriotic Act.

The exposure of the unholy nexus between banking establishments and terrorist activities in Bangladesh can be traced back to the watershed country-wide serial bomb blasts on August 17, 2005. 459 explosions had been orchestrated in 63 of the country’s 64 Districts (excluding Munshiganj), killing three persons and injuring 100 others, on that date. After the serial blasts, which were orchestrated by the Jamaat ul-Mujahideen Bangladesh (JMB), the role of IBBL in promoting religious terror was brought under scrutiny, when Bangladesh Home Ministry constituted a committee to investigate terror financing. Subsequent to the arrest of the JMB ‘chief’ Shaikh Abdur Rahman and his second in command Siddiqui Islam alias Bangla Bhai, and the subsequent seizure of some banking documents, the investigation team documented suspicious transactions with IBBL branches in Sylhet, Gazipur and Savar, where violations of the Anti-Money Laundering Act were noticed. The Act which came into existence in 2002 was last amended on June 20, 2011. Rahman and Bangla Bhai were also found to have accounts with IBBL. The two were eventually hanged on March 30, 2007 – Rahman in Comilla Jail and Bangla Bhai in Mymensingh Prison.

Read the rest of this entry ?

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African refugees kidnapped to fund militants

November 25, 2012

Sudanese and Eritrean refugees are being abducted by Bedouin gangsters for exorbitant ransoms.  Human rights activists refer to the ongoing terror campaign as “the world’s forgotten hostage crisis.”  Surely, the Muslim Brotherhood government of Egypt will do something to put a stop to this racket within their own borders, right?  Don’t hold your breath.

The Atlantic (h/t @ChallaHuAkbar) has the latest this overlooked crime spree:

CAIRO — Memories of torture still haunt 17 year-old Ksamet five weeks after she was released from a small, underground room where Bedouins held her captive for two months in Egypt’s Sinai Peninsula. She was repeatedly raped, beaten, and burned as family and friends abroad raised money for her $25,000 ransom. “They tortured us almost every day,” Ksamet, from Eritrea, said through an interpreter. “And every week, if we didn’t pay, they’d torture us even more.”

The young woman is one of hundreds of Africans who have been held against their will in the lawless region that borders Israel, often severely abused and largely ignored by the international community. Bedouin are holding over 1,000 people, and Egyptian police are detaining 500 more, according to Meron Estefanos, a Sweden-based Eritrean activist and radio presenter who has spoken to hundreds of Eritreans held hostage in the Sinai.

The steady flow of people north through the Sinai has taken place since 2006 and initially consisted mainly of Sudanese migrants paying to be smuggled to economic opportunities in Israel. In 2008, many Eritreans seeking asylum in Israel started to come, too. The vast majority were trying to escape poverty and conscription under an oppressive dictatorship where indefinite national service is mandatory for most — frequently into their 40s and 50s. Legally leaving the country is nearly impossible…

While many Eritreans taken hostage in the Sinai had paid smugglers to take them to Israel, more and more of those held hostage over the past three years never even had a desire to go there. Many have been kidnapped in or around refugee camps in Sudan and Ethiopia or on Sudan’s borders — or sold by rogue smugglers or corrupt Sudanese border guards — and brought to Sinai where Bedouin extort them for cash. “I had no intention of going to Israel,” said Ksamet, who left behind two sick parents after the military drafted her. “I wanted to go to Khartoum.”

Instead, her and her fiancé, who was also fleeing military service, made it just across the border to Kassala, a city in eastern Sudan only a dozen miles from Eritrea. But after four days there, her smugglers — whom she had paid about $3,300 — sold her to members of the Rashaida tribe of Eritrea and Sudan, notorious for trafficking people and weapons up the Red Sea coast. Ksamet’s fiancé ran free before they could get ahold of him. “I still don’t know where he is,” she said.

Hostages report being subjected to electrocution, burned with molten plastic, beaten with chains and rods, hung by their hair, and threatened with organ harvesting, among other torture methods, according to refugee-aid groups and activists. Sexual abuse ranges from rape and the burning of genitalia to sodomy with heated objects — even to children.

Eritrean villages sometimes sell off homes, livestock, and jewelry to free relatives from the kidnappers; ransoms can reach $50,000. The Bedouin put their captives on the phone with family in the diaspora, beating them so their relatives hear them scream as they plead for help.

The Bedouin hold them for months on average, and many people do not survive. Dumped corpses litter the desert, with 4,000 dead over past five years, according to a September report Estefanos co-authored through Tilburg University, in the Netherlands, and Europe External Policy Advisors, a research center in Brussels. “The treatment has gotten to a level where they would rather die than live,” said an employee at a refugee-aid organization in Cairo.

Those raising money often pool funds to free women and children first. Ksamet was one of three women in a group of 14 that also included children. “I was the only woman left” after the other two paid their ransom, Ksamet said. “So they prioritized me.” Often even when the ransom is met, activists say, the Bedouin merely collect the money and sell their human haul on to the next group of kidnappers, ensuring more rounds of beatings and begging…

What the article doesn’t detail, like many other news reports on the subject, is what exactly the Bedouin do with the money they receive.  But according to a Guardian article earlier this year, the beneficiaries of the human trafficking and weapons trafficking program are “Palestinian militants in the Gaza Strip.”  A separate AP report suggested that Sinai militants may use the money for cross-border attacks against Israel.

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The Panama backdoor to Iran

November 23, 2012

The role of Lebanon’s banking system in funneling money to Iran is well documented.  The U.A.E.’s role as a transit point for illegal trade throughout the Middle East is also well known to readers of this blog and the @MoneyJihad feed on Twitter.

But one country historically associated with money laundering in the Americas rather than the Middle East deserves scrutiny as well:  Panama.

Panama’s system allows for some pretty loose business deals and transactions, and the country has long been known for its role in circumventing the embargo against Cuba.

The risk now is that Panama is also being used as a gateway to Iran.  This is particularly vexing if exporters are sending products via Panama to Iran that could be used in their pursuit of a nuclear weapon.

Kenneth Rijock’s valuable perspective makes his piece about this a must read, not just for compliance officers at banks, but for anybody interested in stopping Iran’s nuclear progress.

IS THE PANAMANIAN COMPANY YOUR BANK CUSTOMER SELLS TO TRADING WITH IRAN?

Remember well that a number of Panamanian corporations buy goods from North American suppliers, and turn around and transship these products to Iran, exposing your bank customer, and possibly your bank, to serious sanctions violations. How are they accomplishing this, without your customer’s knowledge? The answer may surprise you.

One the dirty little secrets that the Government of the United States prefers to ignore is the bustling trade between Latin America and the Republic of Cuba. That is how the fifty year old US embargo is evaded. US-made Goods are shipped to Panama’s Free Trade Zone, and then conveniently transshipped to Cuban end users. America is powerless to stop this arrangement, and frankly it does result in increased sales of US products. Most observers consider the US embargo a failure, maintained only to placate the large US corporations whose assets were seized by Castro in 1960, and to get votes from hard-line right-wing Cuban expats living in the United States. We trade with Vietnam, who was an enemy in battle, but not with Cuba ? Politics, obviously.

There is a more disturbing aspect to this scenario; some of the goods purportedly destined for Cuba, are themselves transferred to other vessels, and sent directly to Iran. A number of Panamanian companies have been sanctioned by OFAC, after evidence of their illicit activity became known to US law enforcement agencies.

So, are your clients’ US-manufactured products being used in Iran ? Are any of them classified as dual-purpose goods, that could be used to advance iran’s WMD or ballistic missile programmes ? If so, is your bank potentially exposed to Draconian fines & penalties ?

Let me suggest the following:

  1. Ask these clients to deliver to you a certificate affirming that all their sales in Panama are not being resold to sanctioned Iranian customers. The document should state that the client has procedures in place to ensure that no transshipments to Iranian end users, directly or indirectly, have occurred, or shall occur in the future.
  2. This may stimulate the client to create a compliance programme designed to protect itself, and therefore, your bank, from being unwitting participants in supplying Iran with American goods. Frankly, they should have a compliance programme already in place, if they ship goods in international commerce. We have seen many US companies punished, for violating sanctions, who had no compliance department in place, to protect them.

If they decline your request, you may want to terminate your relationship with the client.

A footnote:  Panama was used by Lebanese drug trafficker Ayman Joumaa as one of his channels for funding Hezbollah.

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