Posts Tagged ‘banking’

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Financial mischief: recommended reading

September 26, 2013
  • “We should bleed America economically,” says Zawahiri…  more>>
  • It was a lot of fun laundering $1.4 million for terrorist guerrillas, until he got caughtmore>>
  • The Muslim Brotherhood created international sharia-compliant finance, and still controls it… under Saudi supervision.  More>>
  • If Muhammad Atta II waltzed into SunTrust today, would he qualify for a bank account?  More>>
  • Uzi Shaya could prove to be a crucial witness in the terror finance trial against the Bank of China—if Israel lets him testify… more>>
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Financial data mining yields no gold nuggets

September 19, 2013

Financial privacy is becoming a fading memory of the past due to aggressive regulations by Western governments that require bankers to serve as snitches against their own customers for transactions that may or may not be criminal in nature. These regulations are costly for the banks to comply with (costs which are ultimately passed on to customers), and they carry a price for citizens’ privacy as well.

All that might be forgiven if the invasive policies actually result in stopping terrorists, their financial transactions, or their operations.  But according to new research being conducted in the European Union, the results of such programs are “meager and sometimes debatable.” The government holds the data while you’re left holding the bag.

A tip of the hat to Andrew S. Bowen for sending this over:

Terrorism financing barely traceable using data analysis

28 August 2013

Doctoral research by Mara Wesseling has shown that the data analyses being performed as part of the European fight against terrorism financing are of little use for preventing terrorism. Wesseling will receive her doctorate from the University of Amsterdam (UvA) on 3 September.

Immediately following the terrorist attacks on 11 September 2001, the European Union created the EU Action Plan for Combating Terrorism, which included action against terrorism financing as a ‘core component’. Politicians, policymakers and legal experts stress the importance of combating terrorism financing, as they see money as a crucial element in the propagation of terrorism. Specific programmes have been set up to address the problem.

‘My research shows that it cannot yet be demonstrated whether these programmes have had much success with regard to tracking down suspected terrorists or preventing terrorist attacks. In light of the meagre and sometimes debatable results of both programmes, the question arises whether the social and political changes instituted as part of the data-analysis-driven fight against terrorism are (still) desirable or justified,’ Wesseling says.

Terrorist Finance Tracking Program

In her research, Wesseling analysed the Terrorist Finance Tracking Program (TFTP – better known as the SWIFT programme in the wake of the ‘SWIFT affair’) and the Third European AML/CFT directive. These two programmes constitute the most significant initiatives in the European fight against the financing of terrorism.

It has been shown that risk analyses carried out by banks as part of the Third European AML/CFT directive have revealed virtually no patterns that point to terrorism financing. Wesseling goes on to say that the preventive power of the TFTP to detect terrorist networks at an early stage is also limited…

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Pakistan scrambles to get off FATF’s gray list

September 16, 2013

The world’s leading financial standards body, FATF, alerted the international community earlier this summer that Pakistan and 11 other countries have failed to make sufficient progress in preventing money laundering and terrorist financing.

The newspaper Pakistan Today notes that if Pakistan fails in “coming up with proper and combating the financing of terrorism and anti-money laundering legislations the country may face severe financial sanctions that may affect its financial deals with the World bank, the Asian Development Bank and other top financial institutions” (h/t Zia Ur Rehman).  Pakistan should make reforms prior to FATF’s next meeting in October to avoid such sanctions.

Not so coincidentally, Pakistan’s central bank has rolled out a new requirement for Pakistani financial institutions to adopt nationwide software by Sept. 30 that will facilitate the filing of suspicious activity reports by bank employees.  When a certain customer or transaction is regarded as suspicious, the financial institutions would use this software to report their observations back to the central bank.

Anybody familiar with new software deployments, even under the best circumstances in well-developed high-tech nations, will recognize that this is an overly ambitious timetable to for implementation.  Widespread training and adoption of the software is unlikely to be complete by FATF’s deadline, but the stated goal may be enough to persuade FATF that Pakistan is moving in the right direction.

Pakistan has been cited before by the Financial Action Task Force for its financial regulatory deficiencies.  Despite the history of shortcomings, Western nations have continued to saturate Pakistan with foreign aid.  Without adequate money laundering an CFT controls in place, there is a high risk of any such military and development aid being abused by malicious actors without fear of detection or prosecution.

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Lights out for terror-funding Islamic charity

August 7, 2013

Canadian nonprofit ceases operations after bank closes account

Once again pointing to the power of tax authorities to expose and defang dangerous front charities, a Muslim nonprofit in Canada has stopped accepting donations after its bank closed its account.  The bank’s decision followed an audit and finding by tax officials that IRFAN was no longer eligible for tax-exempt status, largely because of its role in funding Hamas.

The bank account closure and operational suspension is also a victory for Canada’s taxpayers, who will no longer see their money being channeled through a network of smaller Islamic charities and mosques for distribution by IRFAN.

From the National Post; thanks to Gisele for sending this in:

Relief organization that allegedly supported Hamas suspends operations after CIBC closes bank accounts

Stewart Bell | 13/07/15

A humanitarian relief organization that lost its charity status two years ago over its alleged support for Hamas said Monday it was suspending operations after the Canadian Imperial Bank of Commerce won court approval to close its accounts.

The CIBC gave notice in May that it intended to stop providing banking services to the International Relief Fund for the Afflicted and Needy — Canada. The Ontario Superior Court of Justice upheld that decision, which went into effect on Monday.

Without a bank, the Toronto-based relief group, which spent $9-million on charitable activities in 2009, said it could no longer transfer money abroad for programs that include the support of orphans in the Palestinian Territories, Lebanon and Sudan.

“IRFAN-Canada is choosing not to accept donations at this time because they are unable to transmit funds to the intended destinations,” the group’s lawyer, Naseer Syed, told the National Post. “Therefore, without donations, they will be forced to suspend their humanitarian relief programs”…

Formed in 1998, IRFAN-Canada was mostly active in the Muslim world but it ran afoul of federal regulators, who revoked its charity status in 2011. The Canada Revenue Agency said an audit had determined the group was an “integral part” of an international fundraising effort that supported Hamas, a Palestinian terrorist group…

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Hezbollah bank fined

July 11, 2013

The fine of $102 million against Lebanese Canadian Bank is far less than the $1.9 billion settlement with HSBC or the $600+ million settlements with ING and Standard Chartered last year.  It also appears that nobody from the bank will ever face prosecution for aiding Hezbollah, and the extradition of one of their big-time money laundering clients, Ayman Joumaa, appears to have stalled.

From Agence France Presse (h/t El Grillo):

US fines ‘Hezbollah’ bank $102 mn for laundering

(AFP) – Jun 25, 2013

WASHINGTON — A Lebanese bank accused of laundering money from drugs and other operations for clients tied to Hezbollah militants agreed Tuesday to pay US authorities $102 million to settle the charges.

Beirut-based Lebanese Canadian Bank was singled out in February 2011 for allegedly moving hundreds of millions of dollars for criminal groups and traffickers operating in Latin America, West Africa and the Middle East.

Some of the customers it served were closely linked to Hezbollah, which Washington has blacklisted as a “terrorist organization.”

US authorities had already taken control of $150 million the bank set aside for a possible penalty as it was being bought in 2011 by another Beirut bank, Societe Generale de Banque au Liban…

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Barclays severs ties with Somali wire service over terror finance, money laundering concerns

July 4, 2013

Of course, the Somali company in question is Dahabshiil—the same money transfer service that reportedly pays the terrorist group al-Shabaab $1 million a year in protection money.  It’s the same money services business that East African musicians say promotes “tribalism and extremism.”  And it’s the same company with whom, for some reason, Minnesota-based U.S. Bancorp still intends to do business.

Thank goodness Barclays has acknowledged the warning signs.  Thanks to El Grillo for sending over this Jun. 25 article from the AP:

Terror financing fears stop transfers to Somalia

By ABDI GULED and JASON STRAZIUSO

Associated Press

MOGADISHU, Somalia (AP) — When a bank transfers money to Somalia, can it be sure it’s not sending money to terrorists? That question is forcing one of Britain’s largest banks to cut ties with the largest cash transfer bank in Somalia, a company that brings in the majority of the country’s $1.2 billion in yearly remittances.

Many in Somalia are in desperate need of money. Payments from family and friends overseas are how many get by, and that’s why more than 100 aid workers and Somalia experts signed a letter this week pleading with the British government to find a solution.

Barclays bank will no longer allow customers to send money to Somalia via the Somali bank Dahabshil. A financial power-house in Somalia, Dahabshil describes itself as “the most trusted money transfer company for many immigrants willing to support their families and friends.” But anti-terror laws hold banks – like Barclays – responsible if they transfer money to criminal or terror elements. As a result, fewer are willing to send money into Somalia.

Such transactions for Somalis in the United States became more difficult in late 2011, when a bank in Minnesota closed accounts that facilitated such transfers. Sunrise Community Banks decided to halt the transactions after two women were convicted of sending money to the terrorist group al-Shabab.

“It is recognized that some money service businesses don’t have the proper checks in place to spot criminal activity and could therefore unwittingly be facilitating money laundering and terrorist financing,” Barclays said in a statement. “We want to be confident that our customers can filter out those transactions, because abuse of their services can have significant negative consequences for society and for us as their bank.”

Abdirashid Duale, chief executive of Dahabshiil, noted that his company is one of a number of transfer businesses affected by of Barclays’ decision.

“Naturally, Dahabshiil is appealing this decision and would like to emphasize that to date Barclays’ has acknowledged that our Anti-Money Laundering and Anti-Terrorist Financing policies are fully compliant with industry regulations,” he said.

Dahabshiil, he said, remains operational while it explores alternative banking arrangements.

The group of aid workers and researchers said the decision at stake here “is a lifeline that provides essential support to an estimated 40 percent of the population of Somalia.” The group said it has seen firsthand the impact remittances have on families in the Horn of Africa.

“My son is in the U.K. He sent us money every month for our sustenance and school fees for the children. Where are we going to get the money to pay our bills?” said Dahabo Afrah, a longtime customer of Dahabshil in Mogadishu. “This is unfair to us and will affect hundreds of thousands of Somali people.”

Many big banks in the U.S. have already stopped handling transfers to Somalia, saying the federal requirements designed to crack down on terrorism financing were too complex and not worth the risk. Last April, U.S. Bank confirmed it is working with Dahabshil to allow Somalis in Minnesota to send money back home. U.S. Bank spokeswoman Teri Charest said Monday that the bank is working closely with Dahabshil but the transactions have not yet started.

Barclays said it remains happy to maintain a relationship with businesses that have anti-financial crime controls…

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Chase assesses risk, closes suspected accounts

June 21, 2013

Banks have a responsibility under federal law to deny account services to customers who are at risk for funding terrorism, money laundering, or evading economic sanctions.  Banks can’t allow customers to send money to countries that lack safeguards against such activities either.

Accordingly, JPMorgan Chase has closed an unspecified number of accounts that are at risk for abuse or criminal behavior by customers who are, according to the Michigan chapter of the Council on American-Islamic Relations, Muslims or Arabs.

The Arab-American Civil Rights League also alleges 50 “improper” account closures by banks such as Flagstar, Charter One, and Comerica.

Opponents of such bank closures would be better served by proposing changes to federal law rather than threatening lawsuits against banks that are simply carrying out their duties under the existing rules.

From the Detroit News:

Muslim, Arab-American groups say banks closing accounts without explanation

  • Mark Hicks, June 13, 2013

Two groups are seeking answers to what they say is a growing practice of Muslim and Arab-American groups having their bank accounts closed without cause or explanation.

The Council on American-Islamic Relations–Michigan is asking the Office of the Comptroller of the Currency, part of the U.S. Department of the Treasury, to investigate the complaints and the Arab-American Civil Rights League in Dearborn is pursuing a lawsuit against major banks.

“We see a type of pattern taking place in the Muslim/Arab community,” Dawud Walid, executive director of CAIR–MI, said Wednesday. “Bank accounts are being closed with no real justification … so it appears on the surface that there could be some sort of bias involved.”

One of the latest reported incidents, according to CAIR–MI, involved Alif Arabic, a business described as teaching Arabic to American citizens online. Officials there were notified May 30 by JPMorgan Chase their bank account would be terminated within 10 days. JPMorgan Chase officials did not detail why, according to the letter.

When an Alif Arabic employee asked the bank for clarification, they were told an analytical tool “alerted them that Alif’s account could pose a possible risk,” the letter read.

Walid said such a move could suggest discrimination based on religion and ethnicity. “We need answers and the bank is not giving answers,” he said.

Emily Smith, a JPMorgan Chase spokeswoman, said privacy reasons prevent the company from discussing details of its customer relationships. However, “on occasion, Chase determines it can no longer maintain a customer’s account but those decisions are not based on the customer’s religion, ethnicity or any other similar basis.”

Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency, said: “We have just become aware of the letter and have not had a chance to review. We will look into these allegations.”

Meanwhile, the Arab-American Civil Rights League plans to file a lawsuit after nearly 50 incidents of individual and business accounts being closed.

The group earlier this year asked the U.S. Department of Justice to investigate and launched a hotline for complaints after some area residents were notified by Huntington National Bank and other institutions their accounts were terminated without explanation.

That affected professionals and others who believed they acted lawfully, said Nabih Ayad, the league’s board chairman.

“It’s just a shame this continues to happen. It’s not fair to the community,” he said. “These sort of circumstances, they’re basically telling Arab Americans: ‘You’re not at the same level or beneath the average American”…

H/t to Creeping Sharia for sending this over.

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Word of the week: third party

May 22, 2013

The person making financial transactions for illicit purposes isn’t necessarily the person pulling the strings.  If you work for a money services business, you should try to ascertain if your customer is operating under instructions from a third party.  This guidance comes from Canada’s FinTRAC, but it’s useful information for anybody with know-your-customer responsibilities:

Find out if there is a third party

As a money services business (MSB), you have to find out if your client is acting on behalf of a third party when you:

  • conduct a large cash transaction and you have to keep a record of it
  • have to keep a record about a service agreement

Who is a third party?

A third party is anyone else who gave instructions to your client to request MSB services from you. It is not about who “owns” the money, but rather about who gives the instructions to deal with the money.

How to find out if there is a third party

Ask the individual in front of you if they are acting on someone else’s instructions. If the answer is yes, that someone else is a third party.

Examples of a third party:

  1. Tarek wants to send money to his son Roger in Lebanon. He gives his daughter Tara $13,000 in cash and asks her to go to the MSB to send the money. Tara gives the money to the MSB and requests that a money transfer be made to Roger in Lebanon. Tarek is the third party as he is the one who gave the instructions to Tara to request that a money transfer be made.
  2. Jacques, a financial officer and employee of Voyages Inc. in Canada, goes to the MSB every month to transfer money to their head office in France. Jacques’ employer, Voyages Inc., is the third party as Jacques is acting on his employer’s instructions.

Records to keep on a third party

You have to keep a record for five years after the day you created it, if you:

  • find out that there is a third party
  • suspect that there is a third party

You find out that there is a third party

If you find out that there is a third party involved, you have to keep a record with the following information about the third party:

  • name, address and job or main business
  • if it is an individual, their date of birth
  • if it is a corporation, their corporation number and place of incorporation
  • the nature of the relationship between the third party and:
    • the individual who gave you the cash if you are doing this because of a large cash transaction or
    • the organization entering into a service agreement.

Examples of how to describe the nature of the relationship include that the third party is your client’s accountant, agent, customer, employee, friend, legal counsel or relative.

You suspect that there is a third party

If you are not able to find out that there is a third party, but you suspect that there are instructions from a third party involved, you have to keep a record to indicate the following:

  • why you suspect the individual is acting on a third party’s instructions and in the case of a:
    • large cash transaction, whether or not the individual giving the cash indicated that the transaction was being conducted on behalf of a third party
    • service agreement, whether or not the client indicated that the agreement was being done on behalf of a third party
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One Algerian’s financial cyber-crime spree

May 7, 2013

Bank robbery cartoon:

Hacker Hamza Bendelladj’s malware infected personal computers in order to steal the financial credentials of unsuspecting users and sell the data to third parties.  If one man with a computer and an Internet connection can operate a scheme like this, just think of what an enemy state actor could accomplish.

This press release comes to us from the U.S. Attorney’s Office and the Atlanta Division of the FBI on May 3 (h/t Douglas McNabb):

Algerian National Extradited from Thailand to Face Federal Cyber Crime Charges in Atlanta for SpyEye Virus

ATLANTA—Hamza Bendelladj, an Algerian national also known as Bx1, will be arraigned on federal cyber crime charges for his role in developing, marketing, distributing, and operating the malicious computer virus SpyEye.

“No violence or coercion was used to accomplish this scheme, just a computer and an Internet connection,” said United States Attorney Sally Quillian Yates. “Bendelladj’s alleged criminal reach extended across international borders, directly into victims’ homes. In a cyber netherworld, he allegedly commercialized the wholesale theft of financial and personal information through this virus which he sold to other cyber criminals. Cyber criminals, take note—we will find you. This arrest and extradition demonstrates our determination to bring you to justice.”

“Hamza Bendelladj has been extradited to the United States to face charges of controlling and selling a nefarious computer virus designed to pry into computers and extract personal financial information,” said Acting Assistant Attorney General Mythili Raman. “The indictment charges Bendelladj and his co-conspirators with operating servers designed to control the personal computers of unsuspecting individuals and aggressively marketing their virus to other international cybercriminals intent on stealing sensitive information. The extradition of Bendelladj to face charges in the United States demonstrates our steadfast determination to bring cyber criminals to justice, no matter where they operate.”

“The FBI has expanded its international partnerships to allow for such extraditions of criminals who know no borders,” stated Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office. “The federal indictment and extradition of Bendelladj should send a very clear message to those international cyber criminals who feel safe behind their computers in foreign lands that they are, in fact, within reach.”

Bendelladj, 24, was indicted by a federal grand jury in Atlanta, Georgia on December 20, 2011. The 23-count indictment charges him with one count of conspiring to commit wire and bank fraud, 10 counts of wire fraud, one count of conspiracy to commit computer fraud, and 11 counts of computer fraud. Bendelladj was apprehended at Suvarnabhumi Airport in Bangkok, Thailand, on January 5, 2013, while he was in transit from Malaysia to Egypt. The indictment was unsealed on May 1, 2013. Bendelladj was extradited from Thailand to the United States on May 2, 2013, and was arraigned in United States District Court before United States Magistrate Judge Janet F. King.

According to court documents, the SpyEye virus is malicious computer code, or malware, which is designed to automate the theft of confidential personal and financial information, such as online banking credentials, credit card information, usernames, passwords, PINs, and other personally identifying information. The SpyEye virus facilitates this theft of information by secretly infecting victims’ computers, enabling cyber criminals to remotely control the computers through command and control (C&C) servers. Once a computer is infected and under the cyber criminals’ control, a victim’s personal and financial information can be surreptitiously collected using techniques such as “web injects,” which allow cyber criminals to alter the display of webpages in the victim’s browser in order to trick them into divulging personal information related to their financial accounts. The financial data is then transmitted to the cyber criminals’ C&C servers, where criminals use it to steal money from the victims’ financial accounts.

The indictment alleges that from 2009 to 2011, Bendelladj and others developed, marketed, and sold various versions of the SpyEye virus and component parts on the Internet and allowed cyber criminals to customize their purchases to include tailor-made methods of obtaining victims’ personal and financial information. Bendelladj allegedly advertised the SpyEye virus on Internet forums devoted to cyber crime and other criminal activities. In addition, Bendelladj allegedly operated C&C servers, including a server located in the Northern District of Georgia, which controlled computers infected with the SpyEye virus. One of the files on Bendelladj’s C&C server in the Northern District of Georgia allegedly contained information from approximately 253 unique financial institutions.

If convicted, Bendelladj faces a maximum sentence of up to 30 years in prison for conspiracy to commit wire and bank fraud; up to 20 years for each wire fraud count; up to five years for conspiracy to commit computer fraud; up to five or 10 years for each count of computer fraud; and fines of up to $14 million…

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Money jihad news: recommended reading

April 26, 2013
  • “We know that the financial markets are one of the battlefields on which future wars will be fought.”  So what are we doing about it?  More>>
  • It’s not just the big boys. Increasing cyber-attacks even have your community bank looking over its shouldermore>>
  • As a thief, it doesn’t get any better than pulling off a $97 million heist. Until you realize you’re stuck with a million pieces of paper weighing half a ton stacked 40 stories high… more>>
  • “Lawfare” is used to stifle, intimidate, and discredit those speaking and writing about Islamism, terrorism, and its financing—a fancy way of trying to cut out our tongues… more>>
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Word of the week: soft loan

April 17, 2013

Among the hundreds of requests for zakat or other financial assistance that Money Jihad has received from overseas spammers, a couple have involved requests for a “soft loan.”

In June 2011 through our “Contact us” page, Wisnu Wibowo wrote, “Asalamualaikum… I hope someone can help with soft loan” purportedly to keep him out of jail for a $2,000 debt.  Borrowing from Peter to pay Paul, it would seem.

In January of this year, somebody named Krisna Busana Karya also contacted Money Jihad demanding “grants or soft loan” with a five year term to help with an oyster cultivation business with an eye toward a growing market in Jakarta.  Tempting offer, Krisna, but no thanks.

What is a “soft loan”?

A soft loan is defined as “A loan made on terms lower than or more favourable to the borrower than regular commercial terms”.*

Soft loans are repaid with interest, but it may be at a smaller interest rate or payable over a longer term than conventional loans.  Since interest is involved, soft loans are not sharia-compliant.

Nevertheless, extending a soft loan to a borrower who cannot meet conventional terms suggests that the lender is taking on risk in excess of what the capital markets normally bear.  Therefore, soft loans are somewhat similar to sharia finance in that both deviate from fair market interest rates.  Soft loans, like sharia loans, come with strings attached, such as concessions made by the borrower.

People do not lend for free.  Reduce or eliminate interest rates, and lenders will come up with ways of recouping the costs through fees or other methods.  Is “ethical finance” truly ethical when the actual cost of borrowing is obscured by fees and special conditions, rather than a transparent, market-based interest rate that is known to both parties?

* Food and Agricultural Organization of the United Nations, Glossary of Terms for Agricultural Insurance and Rural Finance (Rome:  FAO, 1992).

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