Jihadists pass zakat through Nigerian banks and charities for Boko Haram

The Nigerian newspaper Punch reports that financial regulators say Islamic charities are being used to fund Boko Haram.

Terrorist sympathizers are also structuring their bank transactions—a classic money laundering technique—in small enough increments to avoid triggering the filing of suspicious transaction reports by the banks they use.

This is the classic money jihad.  Fundamentalist Muslim leaders are obtaining zakat donations from extremist parishioners who believe, as the Koran and Hadith instruct them, that they should wage jihad with their lives and their wealth, and that the mujahideen are an eligible category of zakat recipients.

Read it all:

NFIU probes banks, charities over Boko Haram funds

March 23, 2013

Anti-terrorism experts in the Nigerian Financial Intelligence Unit have placed some banks and charities in the country under watch for allegedly aiding the transfer of funds by Boko Haram.

This is just as there are indications that the extremist group has been involved in recruiting suicide bombers from refugee camps run by the Polisario Front in Algeria.

NFIU sources told Saturday PUNCH that sympathisers of the group had been exploiting monetary practices embedded in Islamic culture, such as Zakat, donation to charities and alms-giving to channel funds to it.

It was learnt that the ease with which terror sponsors had been moving money for terror operations through the banks had also made the job more difficult.

“Being persuasive preachers, the terror commanders often persuade some Muslim Ummah to give Zakat to their jihadist cause. This brings in a lot of money used in terror operations. Security agencies are finding difficult to track this because it leaves no paper trail or bank details,” a source stated.

Saturday PUNCH also learnt that some financial institutions were also being unwittingly used to transfer funds meant for terrorist activities by sponsors and sympathisers of these groups, who move such money in bits to avoid detection.

These banks are said to have ignored the provisions of the law to help customers to transfer money in and out of the country without filing the compulsory suspicious transaction reports where necessary.

Under the Money Laundering (Prohibition) Act, 2011, the Terrorism (Prevention) Act, 2011, Central Bank of Nigeria Anti-Money Laundering/ Combating the Financing of Terrorism Regulation, 2009 (as amended) and other AML/CFT Guidelines, banks and other financial institutions must render suspicious transaction reports to the NFIU, properly identify persons conducting transactions and maintain a paper trail by keeping appropriate records of their financial transactions.

The records will enable law enforcement and regulatory agencies to pursue investigations of criminal, tax and regulatory violations and provide useful evidence in prosecuting money laundering and other financial crimes. The legal provisions were designed to help identify the source, volume and movement of currency and other monetary instruments transported or transmitted into or out of Nigeria, or deposited in financial institutions in the country.

The laws impose criminal liability on a person or financial institution that knowingly assists in the laundering of money or fails to report suspicious transactions conducted through it.

Saturday PUNCH learnt that many financial institutions had neglected to file reports of suspicious transactions with the NFIU, in order not to lose the accounts of high profile clients who move huge funds.

Some of these funds are believed to be proceeds of crime or money laundering, one of the sources said.

“Sometimes, the banks assist their clients to transfer huge amounts in small lodgements to avoid filing a suspicious transaction report as mandated by law; we know all these tricks and we are working to deal with them,” the security official said.

Findings indicated that the terror cells also rely on foreign donations from jihadist organisations in Iran, Lebanon, Libya, Yemen and Saudi Arabia camouflaging as charity groups.

NFIU had also expressed concern over the reluctance of banks to file STR, noting that the insurance industry was more compliant with regard to money laundering and financing of terrorism…

Somali conspirators found guilty as charged

San Diego imam and three cohorts laundered money, financed terror

Two of the four financiers: Imam Mohamed Mohamud (left) and Issa Doreh (right)

Many readers are probably already aware of the conviction as it has received fairly extensive print news coverage.  The best report on the Feb. 22 verdicts comes from the FBI itself:

San Diego Jury Convicts Four Somali Immigrants of Providing Support to Foreign Terrorists

Defendants Sent Money to al Shabaab in Somalia

SAN DIEGO, CA—A federal jury today convicted four Somali immigrants, including a popular imam at a City Heights mosque, of conspiring to provide material support to the terrorist group al Shabaab.

The jury found that the four men—Basaaly Saeed Moalin, a cabdriver in San Diego; Issa Doreh, a worker at a money transmitting business that was the conduit for moving the funds; Mohamed Mohamed Mohamud, the imam at a mosque frequented by the city’s immigrant Somali community; and Ahmed Nasiri Taalil Mohamud, a cabdriver from Anaheim—conspired to raise money for the foreign terrorist organization and send it back to Somalia.

During the three-week trial, the United States presented evidence that Moalin, Mohamud, Doreh, and Nasir conspired to provide money to al Shabaab, a violent and brutal militia group in Somalia that engages in suicide bombings, targets civilians for assassination, and uses improvised explosive devices. In February 2008, the U.S. Department of State formally designated al Shabaab as a foreign terrorist organization.

At trial, the jury listened to dozens of the defendants’ intercepted telephone conversations, including many conversations between defendant Moalin and Aden Hashi Ayrow, one of al Shabaab’s most prominent leaders who was subsequently killed in a missile strike on May 1, 2008. In those calls, Ayrow implored Moalin to send money to al Shabaab, telling Moalin that it was “time to finance the Jihad.” Ayrow told Moalin, “You are running late with the stuff. Send some and something will happen.” In the calls played for the jury, Ayrow repeatedly asked Moalin to reach out to defendant Mohamud—the imam—to obtain funds for al Shabaab.

According to the evidence presented at trial, the defendants conspired to transfer the funds from San Diego to Somalia through the Shidaal Express, a now-defunct money transmitting business in San Diego.

The United States also presented a recorded telephone conversation in which defendant Moalin gave the terrorists in Somalia permission to use his house in Mogadishu, Somalia, telling Ayrow that “after you bury your stuff deep in the ground, you would, then, plant the trees on top.” Prosecutors argued at trial that Moalin was offering a place to hide weapons…

Basaaly Moalin, the most malicious and vocal of member of the conspiracy, could be sentenced to a maximum of 80 years in prison, with his co-defendants facing shorter terms.

The disturbing (but frankly unsurprising) involvement of an imam in the conspiracy is not the only important takeaway from this trial.

The critical lesson illustrated by this case is that remittances to Somalia are fraught with risk; ordinary Somali customers undoubtedly used the services of Shidaal Express prior to its closure.  Even customers who had no intention of funding terrorism supplemented Shidaal’s business and indirectly aided al-Shabaab.

Shidaal Express in San Diego

This is why banks have to make very careful decisions about money services businesses (MSBs) that they may take on as commercial clients.  Banks must evaluate whether the risk of supporting terrorism is too high to continue doing business with a particular individual or MSB.

Why on earth would anybody still criticize banks in Minnesota for ceasing to providing money transfer services to Somalia?  The evidence has become far too clear that Somali remittances bear an unacceptable risk of being siphoned off for terrorist purposes.

IPT has previously reported on the details of the money transfers in the San Diego conspiracy, which further illustrate the fundamental riskiness of the Somali remittance business:

The men used hawalas—both registered and unregistered—to move money from the United States to African countries. Two of the hawalas identified—Shidaal Express, Inc.,and North American Money Transfer, Inc.—have a history of money laundering and terror-financing violations, public records show.

Take, for example, North American Money Transfer (NAMT) which is incorporated in Georgia, but has branches in Missouri and elsewhere throughout the United States. In August 2009, the Justice Department charged the company with a series of financial crimes, including operating as an unlicensed money transmitting business in the State of Michigan. According to the indictment, between Jan. 3, 2008 and April 15, 2009, “NAMT wire transferred approximately $12,820,000 from the United States to Africa Horn in the United Arab Emirates, for distribution to the intended recipients in Somalia and other countries located in the Horn of Africa.”

Over a period of 10 months, the defendants in the cases announced Wednesday raised and transferred approximately $26,000 from various locations within the United States to Somalia. Separating the payments into 20 separate transactions, each of them were structured to evade the $3,000 limit that would have required the hawala to verify a name and address of the sender through a photo identification.

Terror financing reliant on hawala, NPOs

The use of unlicensed money services businesses leads a new list published in the Journal of Money Laundering Control about the financing of terrorist operations.  The use of hawala for terrorism is followed by the use of nonprofit organizations (NPOs) such as charities, and the use of front companies comes in third place.  Their figures are in Australian dollars:

Researchers Angela Samantha Maitland Irwin, Kim-Kwang Raymond Choo, and Lin Liu also find that terrorists are unlikely to use classic money laundering techniques such as placement, layering, or integration (which is consistent with prior Money Jihad analysis).  Their paper, “An Analysis of Money Laundering and Terrorism Tinancing Typologies” is based on an examination of 184 typologies published by financial compliance bodies.

This is very valuable research, and the authors have done very well to quantify the categories of terror financing.  It is somewhat unfortunate that data is not yet available from the various financial bodies on trafficking, insurance fraud, and the other types of financing mentioned in the chart.

Previously, Money Jihad has endorsed a 1 percent tax on hawala remittances to 1) provide for better tracking of hawala by putting hawala dealers under the jurisdiction of tax authorities rather than financial regulators who are focused on larger banks, and 2) to recoup some of the regulatory costs associated with monitoring hawala transactions.

Jihadists exploit Latin America to finance terror

Latin America has experienced a possible increase in terror financing activities by radical Islamists throughout 2012.  Consider the developments that have been revealed this year:

• In September, published reports indicated that a Hezbollah camp in Nicaragua is training 30 operatives and is laundering money.
• The Venezuela chapter of Hezbollah is using Panama for bulk cash smuggling for follow-on transfer to Beirut.
• Some goods, possibly even missile components, are being exported via Panama directly to Iran.
• The use of the Venezuelan air carrier Conviasa to smuggle contraband through Africa to Europe earned it an “operational ban” from the EU in April.  Hezbollah profited from the Conviasa flights.  It is unclear whether the ban interferes with Conviasa’s African flights.
• Cuba was listed again by the U.S. in 2012 as a state sponsor of terrorism partly for the continued safe haven Cuba provides to terrorist groups FARC and ETA.  Havana is now also letting IHH, the radical Islamist Turkish charity that has been banned by Germany for its financing of Hamas, build a mosque in Cuba.
• A trio of Hezbollah agents in Mexico was exposed during an arrest of one operative who had previously been convicted in the U.S. for credit card fraud that funded terrorism.
• Ecuador was blacklisted in June by FATF, the international financial watchdog, for failing to make progress against money laundering and terrorist financing.
• In its annual report in July, the U.S. State Department said, “Brazil has not criminalized terrorist financing in a manner that is consistent with the FATF Special Recommendation II.”

Given its Western heritage and deep Catholic faith, Latin America can and should be a natural ally in the war against Islamic terror.  Its energy resources make it a natural counterweight to the oil powerhouse of the Middle East.

But this wonderful opportunity to present a united trans-American front against jihad is being jeopardized by attitudes of permissiveness, ignorance, and political correctness.  American politicians like Michelle Bachman and Connie Mack who recognize the threat are written off as know-nothing xenophobes.  But the news this year indicates that they are correct.

Pakistan falters on terrorism funding

Much like the recent ultimatum given to Turkey for its insufficient laws against the financing of terrorism, FATF may blacklist Pakistan if it doesn’t update its laws against money laundering and the financing of militants.

In an editorial from the Express Tribune (h/t El Grillo), even the journalists of Pakistan realize that the government should stop pointing fingers, and comply with FATF’s guidance to do more to address the actual problem of terrorism, which has led to 40,000 deaths in Pakistan:

Blocking terrorist funding

The United Nations can slap Iran and North Korea-like sanctions on Pakistan next year if the Financial Action Task Force (FATF) standards on curbing money laundering and terror financing are not met. In an attempt to ward off this threat, Pakistan is now lobbying to seek international support and feels that the reason it is being targeted is because the FATF is heavily dominated by Western countries and India. Instead of being worried about the FATF’s member countries’ “political motives”, Pakistan should focus on meeting the requirements set by the international anti-money laundering watchdog, as curbing terrorism is something that should be our top priority in any case. Pakistan has suffered the most from home-grown terror; we have lost more than 40,000 lives in terror attacks. The fact that non-state actors have managed to launch cross-border terror attacks and planned attacks in other countries has put Pakistan in further trouble.

The government has reportedly improved the current legislation on counterterrorism financing, which will soon be presented before parliament for approval. The anti-terror legislation must be brought forward as soon as possible. It is an open secret how some terrorist organisations use to have links to elements within the establishment. Since the government was unable to stop these elements from pursuing a deeply flawed policy, the least it can do is put a firm stop to terrorist-funding by bringing in a strong anti-terror legislation. Money laundering is one of the primary sources of finance through which terrorist groups are able to fund their activities. If this source of financing can be cut off, we would be able to somewhat control our terror problems.

Pakistanis live in constant fear of terror attacks on both military and civilian targets. Ridding our soil of terrorists is a win-win for both Pakistan and the international community. It is about time we took this important step and brought forward the anti-terror legislation.

In a sane world, Pakistan would have already been recognized globally for its state sponsorship of terrorism years ago.  But to the degree that international pressure will bring about some marginal legal and financial reform, FATF’s standards are probably a helpful incentive.

U.S. banks should review Nicaraguan accounts

While the report that Hezbollah operates a training camp in Nicaragua has garnered a lot of attention, the terrorist financing implications have barely been discussed.  Fortunately, Kenneth Rijock has taken up the issue, and offers some astute analysis on how the news should affect compliance officers at U.S. and Canadian financial institutions in their evaluation of correspondent relationships in Nicaragua and Honduras.  From Rijock’s financial crime blog last week:

HEZBOLLAH MONEY LAUNDERING OPERATIONS IN THE WESTERN HEMISPHERE

The international media today discussed the reports of a Hezbollah terrorist training camp, located in Northern Nicaragua, near the frontier with Honduras, where 30 cadre are reportedly preparing trainees for attacks upon the United States, in the event that America, or Israel, attempts to destroy Iran’s illegal nuclear programme. This is extremely disturbing; Hezbollah Venezuela has existed for several years, but an organised Hezbollah presence in Central America presents a clear & present danger to the Continental United States.

There is an even more ominous aspect to this camp: buried in the reports about the camp is the information that it is also being utilised for money laundering activities. We know that one of Hezbollah’s principal methods of financing its operation is the sale of cocaine, but are they also laundering the criminal proceeds of others?

Regular readers of the blog will recall the seizure of millions of dollars, in the general area recently, in the possession of a well-prepared group of Mexican bulk cash smugglers, posing as media employees arriving to cover a criminal trial. If Hezbollah is laundering Mexican cartel, or Colombian trafficker profits, it will probably be using commercial banks in Central America to accept the dollars, which means they will later transit US banking centres.

If you are a compliance officer at a North American bank that has correspondent relationships with Nicaraguan commercial banks, casas de cambio, or non-bank financial institutions (NBFIs), you may want to determine whether volume from those correspondents has increased of late, and whether your correspondent’s clients have legitimate lines of business to justify the additional funds.

Ayatollah to the Revolutionary Guard: Charge it!

Money laundering expert Kenneth Rijock has been on fire lately about the alleged banking violations by HSBC, ING, and Standard Chartered.  Now he takes on MasterCard in a post entitled “Why are there 3 million MasterCard holders in Iran?”  Good question.  Rijock says he has reviewed a list of cardholders, and that the lists include senior Iranian leaders, which would indicate a significant loophole in the sanctions regime against Iran in addition to representing a major compliance failure on the part of the credit card company.

From Rijock’s blog on Aug. 2:

WHY ARE THERE 3m MASTERCARD HOLDERS IN IRAN ?

Whilst we are on the subject of banks like HSBC banking Iranians, in violation of international sanctions, we should also examine the role of American credit card issuers. I will cover the financial obscenity of vanilla [plain, unmarked] cards in a later article, but today it is time to expose the fact that major American credit card issuers, like MasterCard, are happy to do business with more than three million Iranian nationals.

Even the newest bank compliance officer knows that Politically Exposed Persons, or PEPs, from sanctioned countries like Iran, are off limits. So why are senior Iranian PEPs issued MasterCards ? I have seen some of the cardholder lists, and anyone with half a brain can determine, from both their occupations or professions, and email address categories, that a large number of the card-members appear to be PEPs, and in a country where many corporations are on the OFAC, EU, or UN sanctions lists, issuing them credit cards is compliance malpractise, plain and simple.

I am sure that MasterCard’s management (and lawyers) will respond that some obscure tax haven subsidiary, and not the USA parent, is involved, and that banks that process the cards are conveniently not from countries that subscribe to sanctions against Iran, are actually involved in the transactions, but know this: MasterCard’s American entities use proprietary software that shows each and every global transaction. They know damn well that their subsidiaries are dancing with the devil.

So, whilst the letter of the law is assuredly being followed, and there is no obvious OFAC violation under federal law, Iranian nationals apparently are free to use their MasterCards overseas. Who is charging the purchases of dual-purpose goods, that are thereafter used in Iran to advance the Weapons of Mass Destruction and Ballistic Missile programmes, I wonder.

It gets worse; If America attacks Iran, to destroy its illegal nuclear weapons programme, will some of the defensive systems employed by Iran to shoot down US warplanes have been obtained by Iranian purchasing officers, using their MasterCards ? This is where the pursuit of profit trumps patriotism; Some will call it Trading with the Enemy.

HSBC could face billion dollar fine

HSBC officials will appear before a U.S. Senate committee hearing today.  Analysts expect “a withering review of problems at HSBC and transactions tied to Iran, terrorist financing and drug cartels, according to people familiar with a report the panel has drafted on its investigation.”  ING was recently fined $600 million for similar misbehavior, and IBTimes is predicting the fine for HSBC could be as high as $1 billion:

Still searching for needles in haystacks

This video illustrates the problem of trying to detect terror finance transactions when the amounts involved are unremarkable compared to the millions of large volume transactions conducted every day throughout the international financial system.  It’s not the most exciting video, but you may want to pay special attention to the middle of the video which shows how the 9/11 hijackers were able to use Western banks (along with hawala transfers to their U.S. bank accounts from the UAE) without raising suspicions.  With apologies for the giant red bar across the bottom of the video:

It’s also worth noting that as much as regulations on the finance sector have increased to help detect terrorist financial transactions, the formula for detection has not.  We still assume that we can discern criminal intent through the size, structure, or frequency of financial transactions, as opposed to using a more common sense profile about the religion, national origin, gender, and age of the financial customer.

Cocaine profits made Beirut banks boom

You’ll hear a lot more in the coming months about how U.S. law enforcement exposed Hezbollah’s international narco-trafficking money laundering scheme.  But lost in the back slapping, attaboys, and high fives among prosecutors and politicians is just how much the scheme enriched the banking system of Lebanon and its Iranian partners.

New American Security senior fellow and money laundering expert David Asher discusses the details during an interesting presentation at the Washington Institute last month.  We’ll start the tape as Mr. Asher explains how used cars sold from the Americas  made their way to West Africa where the profits were mingled with illegal drug proceeds:

Imam bilks $2 million from gullible U.S.

SWAT team members outside Five Pillars Market

Perhaps the imam took a page from fellow imam Anwar al-Awlaki’s Inspire Magazine article about the necessity for Muslims to help wage the money jihad by exploiting the welfare systems of Western governments.  It’s not really stealing if you’re living in the dar al Harb.

Notice that there is perhaps an unstated halal meat connection in the imam’s business dealings, since one of the businesses that was raided was his meat factory.  The halal meat industry seems to be a growing sector for money laundering.  From the Dayton Daily News on May 12 (h/t Rantburg):

$2M laundered in food stamp fraud, authories say

DAYTON — Authorities seized a bank account that at one time contained $2 million and was controlled by Al-Idu Al-Gaheem, the owner of some Dayton View neighborhood businesses and imam of a local mosque, according to search warrant affidavits filed in a series of food stamp fraud raids Tuesday.

The account contained less than $100,000 in it at the time of the seizure, but authorities believe Al-Gaheem illegally laundered $2 million through the account.

Officials said most of the money came through food stamp trafficking. In the affidavits, federal and state agents said their informants bought drugs and firearms and sold food stamp cards for cash, generally 50 cents on the dollar of benefits during an investigation that began in 2009.

Warrants were served at Riverview Cell & Cup of Dreams, 512 N. Broadway St.; Five Pillars Market, 1263 W. Riverview Ave.

In addition, agents searched the Masjid-At-Taqwa mosque, 701 N. Broadway St., and the nearby house of the mosque’s imam, Al-Gaheen. Five Pillars, and Riverview Cell & Cup of Dreams are owned by Al-Gaheem, who declined to comment Wednesday.

No charges have been filed and no one was arrested.