Posts Tagged ‘money laundering’

h1

Terror finance & AML news: suggested reading

June 13, 2014
  • The Washington Post cites the “well versed” Money Jihad blog and its analysis of the world’s richest terrorist groups when sizing up ISIS’s new found wealth after its multi-million dollar seizure of the Mosul central bank… more>>
  • Given the Palestinian Authority’s new unity government with Hamas, Israel wants U.S. foreign aid to the Palestinian Authority to cease. Congress is one step ahead… more>>
  • A U.S. court decision leaves the door open to testimony from a key Israeli terror finance witness in the Bank of China case… more>>
  • Hers was a love for laundering drug money from Florida to Mexico, yet a judge saw fit to dismiss her indictment after she pleaded guilty to a misdemeanor. Some deterrent… more>>
  • Saudi Arabia is imposing financial sanctions against Hezbollah, its supporters, and its front businesses operating in the Kingdom… more>>

 

h1

Passport fraud poses terror finance threat

April 1, 2014

The presence of two Iranians with stolen passports on the ill-fated Malaysian Airlines flight 370 highlighted the ease with which foreign nationals from state sponsors of terrorism can fly with a false identity and gain entry to a NATO country.

Although the men may not have been responsible for the plane crash, the situation raises the question of how often passports are stolen or forged and what threats this presents to the criminals’ purported country of origin.

Interpol says that only three countries in the world screen air passengers against Interpol’s database of stolen passports.  Phony passports are a big problem too.  Earlier this month, customs officials in Dubai seized 52 fake passports on the way into the U.A.E.

In 2010, ABC News reported, “A decade after the Sept. 11, 2001, terror attacks brought to light the dangers of fake IDs, federal undercover agents are still able to easily obtain genuine U.S. e-Passports using clearly fraudulent information that should have raised red flags at the State Department.”  The Government Accountability Office had confirmed previously that obtaining a real passport using fake identification could be done “easily.”  More recently, the Daily Mail reported that fake passports can be purchased through the online Silk Road black market.

Benefits of a fraudulent passport

Individuals can carry out many activities with a fraudulent passport other than boarding a plane.  They can set up bank accounts and apply for credit cards, like one eastern European mob boss did in Canterbury—accounts which he used “to rip off casinos, high street stores, petrol stations and banks.”  Hackers can also set up bank accounts in the U.S. from overseas using false passports, and use those accounts as repositories for money obtained as the result of malware attacks, as a case from a few years ago demonstrated.

Basically, obtaining a fraudulent passport allows malicious actors to “buy citizenship” in a target country.  The Telegraph reported this month that a Bulgarian passport can be purchased underground for £150,000, which enables the buyer to pose as a European Union citizen, even if he or she has a criminal record, and become eligible for government services and public benefits.

PBS’s Frontline has reported that Al Qaeda uses counterfeit passports and has conducted passport forgery workshops “to travel internationally in order to raise funds, recruit operatives, train the operatives in Afghanistan and send them out to plan and conduct terrorist attacks.”

False identities also complicate law enforcement’s efforts to investigate crime.  The CBC recently highlighted the threat of “synthetic ID fraud,” saying that “Fraudsters have been able to obtain driver’s licences, passports, phone numbers and credit cards, as well as open bank accounts, take out bank loans and create companies, all under fake names. By the time police move in, many of the fraudsters have vanished, leaving investigators trying to locate people who never existed.”

Diplomatic passports

Possession of diplomatic passports by ambassadors, consuls, and other diplomatic officials immunize travelers but from bag searches at airports.  This “diplomatic pouch” carve-out presents a significant smuggling risk.

Financial crimes analyst Kenneth Rijock revealed that Hezbollah agents based in South America were granted diplomatic passports by Venezuela, meaning:

Hezbollah agents could transport cocaine in international commerce, without fear of arrest. They also can carry bulk cash, or financial instruments into offshore financial centres, this moving Hezbollah drug profits along on their journey to controlled entities inside Lebanon.  One wonders whether how many Hezbollah agents are running around Europe with Lebanese diplomatic passports, moving cash or cashier’s cheques through EU banks, in support of the organisation’s terrorist goals…

The Venezuela connection was followed by an uproar in Canada over an Iranian national who entered the country with a diplomatic passport issued by St. Kitts & Nevis after the Iranian paid a $1 million bribe to Caribbean officials.

Author of the book Dirty Dealing Peter Lilley once observed that possession of a diplomatic passport from “an obscure country” could be red flag for money laundering.

What can be done

There can always be tighter controls and better physical standards for passports to prevent counterfeiting, the same way that officials do with currency.  More countries could use Interpol’s database of lost and stolen passports, although there are costs associated with that.  The Heritage Foundation has argued that the biographical questionnaire in the U.S. passport application should be modified.  Individuals should also take steps to safeguard their own passports from being stolen or copied.

Another measure to consider would be for some countries to increase the penalties for counterfeit passports.  Hollywood actor Wesley Snipes got off with simply being able to return to his country without even paying a fine after allegedly being caught abroad with a fake South African passport.

This piece has also been published at Terror Finance Blog.

h1

Illicit transfer news: recommended reading

March 13, 2014
  • Eight have been arrested in raids over zakat raised in Britain to fund terrorism in Syria… more>>
  • Is a millionaire bitcoin trader copping a plea over money laundering allegations?  More>>
  • By sea, land, and air—Iran’s history of busted arms smuggling operations is exposed… more>>
  • Speaking of Iranian weapons trafficking, Iraq has been a helpful facilitator to their neighbor lately… more>>
h1

This Valentine’s Day, give her diamonds. (Money is easier to launder that way.)

February 14, 2014

International financial watchdog FATF has issued a report that raises concerns about the use of diamonds to launder money in five countries that voluntarily disclosed information for the report.

India cited cases of overvaluation of diamonds sold abroad as a means of transferring illicit money back to India.  Trade-based money laundering is one of, if not the largest mechanism worldwide for transferring value without being detected.

As John Cassara and Avi Jorisch have noted in their book, On the Trail of Terror Finance, “diamonds are the most condensed form of physical wealth in the world. As a result, they are widely used in global laundering and value transfer schemes.”

Cassara and Jorisch also noted that Dubai, which maintains significant business relationships with diamond dealers in Mumbai, India, “are adept at invoice manipulation,” which Dubai traders can use to transfer significant amounts of value without transferring physical money.

Thanks to Sal Imburgia for first notifying Money Jihad about the report.

h1

Drug money bust reveals Hezbollah’s control

February 3, 2014

The Australian Crime Commission has foiled an international narco-trafficking and money laundering scheme involving 18 organized groups and 40 separate money laundering operations.  “Project Eligo” has resulted in 105 arrests, 190 criminal charges, and over $500 million in assets seized so far.

Agence France Presse (hat tips to Willauer Prosky and El Grillo) has the highlights of the story:

Australian police crack global money-laundering racket

Sydney — Australian police revealed Thursday they had cracked a major global money-laundering ring with operatives in more than 20 countries and funds syphoned off to groups reported to include Hezbollah.

The Australian Crime Commission said more than Aus$580 million (US$512 million) of drugs and assets had been seized, including Aus$26 million in cash, in a year-long sting codenamed Eligo targeting the offshore laundering of funds generated by outlaw motorcycle gangs, people-smugglers and others.

According to the ACC, the operation had disrupted 18 serious and organised crime groups and singled out 128 individuals of interest in more than 20 countries, tapping information from agencies including the United States Drug Enforcement Administration.

The full details of which countries had been involved were not revealed but acting ACC chief Paul Jevtovic said “the reality is that the Middle East and Southeast Asia have featured prominently”…

The Sydney Morning Herald noted that, “It is believed at least one of the ‘exchange houses’ used in the Australian laundering operation delivers a cut from every dollar it launders to Lebanese militant group Hezbollah, whose military wing has been proscribed in Australia as a terrorist group.”

Read the rest of this entry ?

h1

Recommended reading: front charities, ATM bombings, and sanctions violations

January 30, 2014
  • Members of a terror cell that bombed ATM machines across Bahrain have been convicted for detonating explosives and laundering money… more>>
  • Money for training of Islamic militants around the world was routed through Vienna by the Turkish charity IHH, reports a Bosnian newspaper… more>>
  • An Iranian-U.S. dual citizen packed 44 boxes of blueprints and technical specs about the F-35 fighter jet and shipped them off to Iran.  Customs agents weren’t fooled by his shipping label: “House Hold Goods”… more>>
  • Four years after it was revealed that IFCO helped funnel money for George Galloway to Hamas, the IRS might strip IFCO of its tax-exempt status… more>>
h1

Hawala used to launder £20 million in England

January 26, 2014

A British trial has revealed that criminal gangs have been laundering drug money by sending it through hawala and conventional banking channels from England to a hawala dealer overseas to send back to the gangsters in the U.K.

Despite the seriousness of the underlying crime, four of the men involved in the scheme have received light sentences ranging from three years in prison to supervised release with no prison time.  The sentencing is reminiscent of that of New York hawala dealer Faisal Shahzad, who funded the failed Times Square bomber and got off with probation.

Meanwhile, law enforcement and financial regulators continue to make marginal or piecemeal recommendations for how to protect financial markets and the public from the inherent risk of hawala transactions.  One simple idea would be to impose tougher penalties and longer sentences for hawala crimes.

From the Liverpool Echo on Jan. 17 (h/t Arun):

Gang who laundered more than £20m using ancient Islamic system jailed

Two Liverpool men part of four man gang

Two Liverpool men who helped launder more than £20m of drugs money through banks were spared prison.

The money is believed to have been laundered using legitimate bank accounts and an ancient  Islamic money lending system.

Kamran Butt and Instar Ahmed, from Greater Manchester and Liverpool men Steven McKenna and Sean Moore were put under surveillance by police in two undercover operations.

But officers found they were linked when Butt and Ahmed were seen depositing money into  the same bank accounts.

The money was transferred to the defendants, who were recruited by operatives in the Middle East, using the ‘Hawala’ system – an informal Islamic way of lending money based on honour agreements and third-party lenders.

A fifth man, named in court as ‘Akhtar’, was also heavily involved – but was deported to  Pakistan in 2012 and has not been traced since.

Watched by undercover police, Akhtar and Ahmed were seen depositing huge sums of money  at banks in Chorlton, Longsight and Manchester city centre.

The two men would travel to branches of Lloyds, HSBC and Halifax together but then pretend  not to know each other once inside.

Ahmed also worked in partnership with others in the gang.

Manchester Crown Court heard how on Monday, August 22, 2011, police intercepted Ahmed and McKenna and seized three rucksacks stuffed with more than £200,000 in cash.

On another occasion, Moore was seen with Butt in his Mercedes car.

Butt was stopped and a bag was seized, which was found to contain about £120,000 in cash.

His Stretford home was then searched and a further £10,000 was seized.Cash receipts in vehicles traced to the four men showed they were paying in anywhere from £500 to £10,000 a time.All the money is believed to have come from criminal gangs, mainly through drug sales.

The criminal cash was given to a Hawala money lender abroad who then transferred the  money to a Hawala lender in the UK and gave them a password.

This password was then passed onto one of the defendants allowing them to collect the cash.

They then paid the money into bank accounts in Manchester which the criminals had access to.

The court heard the four defendants were the bottom of the chain – below controllers and then  co-ordinators, working as collectors to receive the money, deliver it and pay it into various bank accounts in the UK.

After being caught, all four defendants pleaded guilty – Moore to two charges of money  laundering and Butt, McKenna and Ahmed to one charge of money laundering each.

Butt, of Great Stone Road, Stretford, was believed to be behind £12m in laundered cash, and  was sentenced to three years and six months.

Ahmed, of Kelstern Square, Rusholme, who is believed to have laundered £10m also received  a sentence of three years, six months.

Moore, of Kingfisher Grove, Liverpool, and McKenna, of Maley Street, Liverpool, both received  14 month sentences suspended for 12 months and 12 month supervision orders.

Moore was ordered to carry out 108 hours unpaid work and McKenna 150 hours…

Follow

Get every new post delivered to your Inbox.

Join 5,246 other followers