Archive for the ‘Research’ Category

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Seven habits of highly effective kingpins

May 27, 2014

Criminal and terrorist groups are highly interconnected according to new analysis of data by West Point’s Combating Terrorism Center. The conventional wisdom was that criminals worry that working with terrorists may draw unwanted scrutiny from their governments, and they are only inclined to cooperate only in resource-poor environments where it is necessary to survive. But the CTC finds that transnational traffickers and criminals appear to be more than willing to partner with terrorists, and that they benefit from these relationships in a wide variety of environments.

The full report can be read here. It is very thorough (89 pages) and includes academic language and models. Here are a just a few of the salient points from the study about members of the global underworld that may be of interest to practitioners and analysts outside of academia:

  1. Interconnected: 98 percent of the individuals in the global illicit marketplace are within two degrees of separation of each other.
  2. International: One in three individuals in the network have international relationships.
  3. Distributed power: Unlike typical hub-and-spoke networks where 80 percent of the connections rely on 20 percent of the actors involved, the global illicit network is somewhat less dependent on a small number of powerful actors/kingpins. Twenty percent of participants are responsible for only 65 percent of underworld connections. This diffuse hub-and-spoke model makes the network tougher for law enforcement to disrupt.
  4. Willingness to work with terrorists: “Individuals involved in other illicit activities link to terrorists 35 percent of the time” (p. 43). Terrorists often serve as “boundary spanners,” that link and form introductions between disparate groups such as drug traffickers, arms dealers, and organized crime.
  5. Frequent bilateral links with the United Arab Emirates: The top two bilateral connections in the criminal underworld–the U.S. and Colombia and the U.S. and Mexico–are probably unsurprising to Americans. The third most prevalent bilateral connections are between India and the U.A.E., and the sixth most common are between Pakistan and the U.A.E.
  6. Organized crime, not just terrorism, benefits from state sponsorship. We know that state sponsorship of terrorism exists, but for some reason we erroneously assume that state sponsorship of crime does not. The evidence from North Korea, Russia, the Balkans, and Pakistan indicates that criminals can carry out national interests—a phenomenon deserving further study.
  7. Convergence is not driven by poverty. Terrorists and criminals are drawn together in a variety of environments, not just in countries where there are little money or resources. The evidence indicates that the opposite is often true—that criminal masterminds prefer climates where there is some level of predictability and economic development, such as Monzer al-Kassar operating in Spain and Dawood Ibrahim in Dubai. Focusing only on failed states could be a red herring.

Acknowledgment: Thanks to Twitter user @El_Grillo1 for sending in a link to the CTC study.

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Philippine jihad relies on Saudi zakat

April 18, 2014

The terrorist organization Abu Sayyaf Group relies mostly on kidnapping for ransom for its revenues. ASG also collects money from extortion and from the collection of zakat according to a March 2014 report from Thomson Reuters. The key point of origin of the zakat for the jihadist group is Saudi Arabia. An excerpt from the report follows:

…The ASG has also maintained the collection of Zakat, one of its traditional sources of funding, though not as profitable as its criminal activities. Zakat, which prescribes Muslims to donate 2.5% of their net revenue to charity, is legitimate under Shariah law. The ASG which claims to struggle for the establishment of an independent Islamic state in Mindanao, benefits from Zakat collected locally and abroad. Locals and those abroad who believe that militant groups are in pursuit of jihad donate substantially to support their operations and upkeep. Some donors however, are not aware that their donations end up in the treasury of militant groups.

Crucial to the collection of Zakat in the Middle East are a small number of sympathetic Filipino workers who help source donors and channel funds to the militant groups through the Overseas Filipino Workers (OFW) remittance system. The Philippines is one of the major exporters of labor to Saudi Arabia with more than a million Filipino workers in that country. Annual remittances amounting to more than a billion pesos have literally kept the Philippine economy afloat. Lack of regulations or monitoring of these remittances allows the flow of funds from supporters abroad to militant groups like the ASG. The ASG has not established a stable support group in any other country except for Saudi Arabia. They depend only on a few core supporters, mostly relatives and friends, both locally and abroad. In the past they collected donations during Friday congregational prayers and used the proceeds for the procurement of ammunition, medicines, and military supplies. It is estimated that from 1992 to 2007, the ASG collected almost ₱20 million from Zakat.

Propaganda is critical for the continuity of Zakat. There is no recent evidence that the ASG is publicly engaged in propaganda which suggests less reliance in Zakat. Previously, the ASG organized lectures and seminars to encourage people to take part in jihad by sharing their wealth through Zakat. The ASG is also known to compile video footages of militant training and actual combat operations. In October 2007, the ASG had appealed for funds and recruits on You Tube by featuring a video of two slain ASG leaders…

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$100,000 sent from Gulf to fund 25 assassins

September 18, 2013

Amniyat, the elite intelligence unit of the Somali terrorist organization al-Shabaab, received 100,000 USD from Somali businessmen based in Qatar, Saudi Arabia, and the U.A.E. to carry out a wave of assassinations in Mogadishu, according to a UN report.

The money was remitted between October to December 2012 with bombings and suicide attacks conducted from January to April of 2013.  At least 22 people were assassinated in Mogadishu as a result of the operation.

The following findings come from the July report of the UN Monitoring Group on Somalia and Eritrea, with internal citations omitted:

26.  The Monitoring Group was also provided with confidential information regarding the preparation at the end of 2012 and the partial execution of a large-scale assassination operation by an Amniyat cell in Mogadishu. The objective was to mobilize a team of 25 Amniyat operatives to conduct a wave of assassinations of national intelligence officers and members of the Federal parliament. To that end, money was collected amongst supporters of Al-Shabaab within the Somali business community in Qatar and sent via Dahabshil, a money remittance company, to Mogadishu, where it was received by the Amniyat Finance Officer in Mogadishu, Ali Mohammed Ali ‘Abdullahi’, and delivered to the Amniyat commander in charge of the operation.

27. The Monitoring Group had further access to three additional cases in which cash U.S. dollars were collected from the Somali business communities in Saudi Arabia and the United Arab Emirates, and transferred by remittance companies to Mogadishu, with the knowledge and aim of financing terrorist activity in Somalia, and specifically to support Amniyat operations in Mogadishu. In the period October to December 2012, the aggregate amount transferred for the four operations was approximately 100,000 USD.  In addition to spreading fear amongst the population and government officials, Somali businessmen in the diaspora supporting Amniyat assassinations may serve to achieve ulterior goals, whether clan revenge or elimination of business competitors or political opponents.

28.  In a press communiqué dated 18 April 2013, the so-called Press Office of Harakat Al-Shabaab Al-Mujahideen claimed responsibility for the killing of “127 Somali intelligence agents, officials and spies in Mogadishu”, and for the subsequent resignation of the head of the National Intelligence and Security Agency (NISA) of Somalia, Ahmad Mo’alim Fiqi. It further stated that the assassination campaign was conducted by the “Mujahideen counter-intelligence teams” in Mogadishu, and led by the “Muhammad Ibn Maslamah Brigade”.  The phrase “counter-intelligence teams” is in reference to Amniyat. However, the high casualty figure appears to be propaganda, since, according to UN statistics, only 22 individuals were assassinated by Al-Shabaab in Mogadishu between January and March 2013.

Amniyat answers directly to the chief of al-Shabaab.  Amniyat’s clandestine cell structure is designed to avoid detection and survive even if al-Shabaab itself were destroyed.

Amniyat financing from Persian Gulf countries suggests independence from conventional al-Shabaab revenue sources of local taxation and money laundered through Al Hijra (Muslim Youth Center) by the Pumwani Riyadha Mosque Committee in Kenya.

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Al-Shabaab’s charcoal business booms despite loss of Kismayo

September 17, 2013

UN says terror group’s annual revenues likely exceed 25 million USD

In what seemed like a major military and financial setback for al-Shabaab, the capture of the important port of Kismayo by Kenya Defence Forces (KDF), African Union Mission in Somalia (AMISOM) troops, and the Ras Kamboni clan militia in September 2012 has turned out to be mere window dressing for a profit sharing arrangement between militiamen, the Kismayo business establishment, and al-Shabaab itself.

The pre-existing agreements for taxes and royalties to be paid to al-Shabaab at each stage of the lucrative Somali charcoal production and supply chain appear to be intact despite the change in management of the port.  Add that to checkpoint taxes imposed on truckloads of Somali coal and expanded charcoal export operations at the beach port of al-Shabaab controlled Barawe, and you have a recipe al-Shabaab success.

In its exhaustive 400+ page report in July, the UN Monitoring Group on Somalia and Eritrea lays out al-Shabaab’s unexpected ability to snatch victory from the jaws of seeming defeat:

…Overall, despite the fact that the KDF/AMISOM and Ras Kamboni forces replaced Al-Shabaab’s control of Kismayo, the charcoal business architecture remained intact. While the production and trade in charcoal has always existed in Somalia on a smaller scale, during Al-Shabaab’s control of Kismayo it became a large-scale international enterprise combining local clan and Al-Shabaab financial interests, as previously documented by the Monitoring Group (S/2011/433 and S/2012/544). The nature of the business enterprise forged by Al-Shabaab continues with Al-Shabaab, its commercial partners and networks still central to the trade. Essentially, with the changeover of power in Kismayo, the shareholding of the charcoal trade at the port was divided into three between Al-Shabaab, Ras Kamboni and Somali Kenyan businessmen cooperating with the KDF.

In addition to Al-Shabaab’s shareholding at Kismayo represented by individual charcoal traders in the local business community, there is seamless movement of charcoal trucks between Kismayo and Barawe and regular coordination between the two ports, not least because of the personal and commercial relations between charcoal traders, individuals in Ras Kamboni and members of Al-Shabaab.

This dramatic increase in scale of the charcoal trade since the time when Al-Shabaab exclusively controlled it, actually benefits Al-Shabaab as it draws considerable revenue from its partial shareholding in the expanded business. In fact, its shareholding in Kismayo charcoal, in combination with its export revenues at Barawe and its taxation of trucks transporting charcoal from production areas under its control are likely exceeding the revenue it generated when it controlled Kismayo, previously estimated by the Monitoring Group to be 25 million USD per year (see annex 9.2). As such, Al-Shabaab has managed to exploit and profit from the diversification of interests in the charcoal trade (see annex 9.2)…

Meanwhile, Persian Gulf countries flagrantly violate the UN’s ban on the Somali charcoal trade by continued importation.  If there is any saving grace to the charcoal fiasco, it is that the Monitoring Group believes al-Shabaab cells outside of southern Somalia may not be receiving increased revenue.

See prior Money Jihad coverage of how the Somali charcoal trade benefits al-Shabaab here, here, and here.

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Helping Hand honored despite close ties to a Hamas-funding Pakistani charity

September 12, 2013

Charity Navigator, a leading evaluator of nonprofit groups in the U.S., has published 15 different “top 10” lists to help donors assess charities.  Among those lists is a list of 10 charities with low overhead costs that rely on private donations.  Helping Hand for Relief and Development, a Michigan-based Islamic charity, ranks seventh on that list.

Charity Navigator does not appear to have factored in Helping Hand’s ongoing cooperation (see here and here) with the Al-Khidmat Foundation, a Pakistani charity which gave a 6 million rupee check to Hamas leader Khaled Meshaal in 2006.

The Pakistani tie-in is even more alarming considering that the auditing firm that prepared Helping Hand’s financial statement for 2011, the most recent year available, divulged that “We did not audit the financial statements of the Organization’s operations in Pakistan which reflect total assets and revenues constituting 55 percent and 60 percent, respectively, of the related consolidated totals.”

It is also worth noting that Helping Hand reported having $7 million in medical supply and drug assets in their last tax return.  The fair market valuation of drugs donated to and distributed by charities, especially deworming medication, has been an area of increased scrutiny.  Helping Hand states that it uses current accounting standards to comply with IRS mandates in this area, but some analysts still believe that in-kind donations to charities are being overstated.  This has the effect of exaggerating the net worth of some charities, and it makes administrative costs appear to be a small share relative to their size.  Charity Navigator is well aware of this ongoing controversy, but how closely it examined drug valuations by charities on their top 10 lists is unclear.

The Charity Navigator rating is already being exploited by Helping Hand, which is running a banner across its homepage in large font and all capital letters with misleading phrases “TOP 10 HIGHLY RATED CHARITY” and “DONATE WITH CONFIDENCE” along with Helping Hand and Charity Navigator logos.  Muslim news websites such as ABNA (hat tip to Creeping Sharia and Islamist Watch) have touted the rating as well.

The Muslim advocacy group ICNA has also congratulated Helping Hand for the rating in a press release.  But the ICNA statement should be taken with a grain of salt because 1) ICNA is a partner organization with Helping Hand, and 2) ICNA has received a loan from Helping Hand with favorable financing terms.  ICNA’s indebtedness to Helping Hand was not disclosed in the press release.

Institutional donors who may be considering donations to Helping Hand and private donors who intend to give zakat to Helping Hand should consider the serious questions about Helping Hand’s operations in Pakistan and donate elsewhere.  Banks with relationships with Helping Hand should also review the risk of maintaining those accounts.

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The ratlines of Hamas

July 15, 2013

Hamas and tunnel owners are making millions of dollars a year from Gaza Strip smuggling.  A nice little summary of the long-known situation comes to us from a new, scholarly article entitled “Terrorist Use of Smuggling Tunnels” in the latest edition of the International Journal of Criminology and Sociology:

…The amount of money made by Hamas off taxing contraband smuggled through Gaza Strip tunnels, as well as the political advantage of Hamas controlling both absolute and conditional contraband tunnel smuggling, has been addressed in the business management popular press. For example, one source reported that “the tunnels generate $188 million in tax revenues on things like cigarettes, gas and building materials” (Topol, 2013, para. 13).

Palestinians estimate that 25% of the Hamas government’s budget comes from taxes imposed on the owners of the underground tunnels. For example, Hamas has imposed a 25% tax and a $2,000 fee on every car that is smuggled into the Gaza Strip. Hamas also charges $15 for each ton of cement, eight cents for a pack of cigarettes, and 50 cents for each liter of fuel smuggled through the tunnels (Toameh, 2012).

The political advantage the smuggling tunnels provided to Hamas included that while the tunnels are essential for transporting absolute contraband and materials into Gaza, they are also critical for maintaining the goodwill of Gazans by providing them with cut-price commodities even with surcharges added by Hamas officials (Alster, 2013). The financial rewards of engaging in criminal smuggling of contraband between Egypt and the Gaza Strip are an important part of transnational tunnel analysis because the Gaza Strip is a site of an estimated 600 millionaires (Toameh, 2012)…

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Banker supports taxes for jihad

June 30, 2013

The former chairman of Islami Bank Bangladesh, Limited (IBBL), Shah Abdul Hannan, explained his support for collecting taxes beyond zakat for the purposes of waging jihad in an article posted online around 2003 (available here and here).  Hannan based this argument on the writings of Yusuf al-Qaradawi, the notorious Muslim Brotherhood leader, Hamas charity front financier, and sharia finance proponent.

Referring to Qaradawi’s Fiqh al Zakah, Hannan wrote:

…Allah has made it obligatory to carry out Jihad (defence of Islam and Islamic territory and to put an end to oppression anywhere in this world) through employing one’s life and wealth. This is a duty beyond Zakat. To carry out a major Jihad in this age, if needed, there is no other way but to raise resources through taxes…

Hannan has also condemned peaceful Shahbag dissidents who are calling for justice against war criminals in Bangladesh.  Hannan calls the student demonstrators fascists.  Well, Mr. Hannan—it takes one to know one.

Money Jihad has been documenting the terrorist financing activities of IBBL, one of the biggest banks in Bangladesh and its largest sharia financial institution, ever since Bangladeshi authorities revealed in 2011 that Islami Bank has been diverting eight percent of its corporate zakat to jihadi militants.  A member of IBBL’s sharia advisory board was also detained and questioned for possible involvement in an attack against police.

IBBL fell under international scrutiny in 2012 after the U.S. Senate reported that HSBC continued to maintain a business relationship with IBBL despite evidence of its role in funding terrorism.

More recently, U.S. garment importers including Wal-mart and J.C. Penny have severed ties with IBBL due to the Islamic bank’s role in supporting militants.  Nonetheless, Western Union continues to do business with IBBL.

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