Word of the week: soft loan

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).

Ex-banker: Taliban funded by sharia finance

Muhammad Aamir, a retired Pakistani banker, admits that, “It is true that Taliban militants receive financial support through the Islamic banking system, but there is no proof because these illegal transactions are never properly investigated,” according to an article from Central Asia Online last week.

Muhammad Junaid, a banker currently working in Peshawar, says he is familiar with three account holders who work closely with terrorists receive over $50K monthly from Islamic banks.

Some financial sector employees disagree, but the evidence that sharia banks finance jihad has grown to the point where it is impossible to ignore.  Thanks to meankitteh for sending in this article, which frankly understates the scope of the problem:

Islamic banking: A conduit for terror funding?

Opinions differ on whether the financial network is being misused to funnel support to militants, but the system does have loopholes that would allow for it.

By Ashfaq Yusufzai

2013-03-27

PESHAWAR – Some worry that the Islamic banking model is open to potential misuse by those involved in funding terrorist activities, but opinions differ on whether the financial network is directly involved in such schemes.

The dividing line for the opinions seems to come down to how one is involved in the business.

“It is true that Taliban militants receive financial support through the Islamic banking system, but there is no proof because these illegal transactions are never properly investigated,” Muhammad Aamir, a retired banker, told Central Asia Online.

But Adnan Rasool, an Islamabad-based Islamic banking specialist with a state-owned bank, said it is “totally wrong” to say that the system helps terrorism.

“In Pakistan the share of Islamic banking has risen to 10%, which shows the public confidence in the system,” Adnan said. “We have more than 1,000 dedicated Islamic banks as well as more than 700 Islamic banking counters operated in conventional banks.”

Allegations arose in early 2001 that the system aided terrorism, but authorities couldn’t prove any of them, Adnan said, adding that Islamic banking has come of age worldwide and in Pakistan, where it has financed huge projects that benefit the people.

Why Islamic banking is vulnerable to terrorist misuse

Islamic banking, which began in the early 1970s, is a financial system that involves making loans without charging interest, in accordance with Sharia law. It is worth about US $2 trillion (Rs. 197 trillion) worldwide and has posted an annual growth rate of 15%.

Terrorists have long relied on various channels to finance their activities and Islamic banking is one option that terror supporters have used in the past, Aamir said, describing an example of suspected terror funding.

A resident of Hangu District received “a hefty amount through Islamic banks from different sources in the UAE, Saudi Arabia and other Islamic countries” in 2001, he said. “He was a common man who disappeared after the 9/11 incidents in New York and Washington.”

Police briefly investigated the case, he said, but nothing came of it.

Another banker also has suspicions about the system.

Muhammad Junaid, an employee of a private bank in Peshawar, agreed with the notion that Islamic banking is key to financing terror bids in Pakistan and elsewhere but said these illegal acts aren’t easily traceable.

“For instance, I knew three account-holders in our bank who each received about Rs. 5m (US $50,829) every month from some Muslim countries,” said Junaid. “The men – pretending to be getting the money for construction of mosques and religious seminaries – seemed to be hand-in-glove with terrorists.”

That is indicative of something suspicious, he said, because “one cannot believe that simple people have such frequent financial transactions through banks. But … there are no complaints from any quarter.” But again, proof is scant and Adnan stands by his industry.

“Islam strictly forbids terrorism in all its form and therefore Islamic banking seeks to promote Islamic values,” he said. “We have an internal system in Islamic banking that prevents the illegal investments and transactions; therefore, it is impossible to send the money through this network to terrorists.”

Islamic banking system has loopholes

Islamic banking was designed to follow Islamic values, Junaid said. In accordance with Sharia law, it is expected to avoid interest-based transactions and unethical practices while it helps boost the economy.

However, loopholes make it difficult to identify illegal transactions in the system, he said.

Pakistan began implementing the system in 1978, economist Jalal Khan, at the Institute of Management Studies at the University of Peshawar, said. Early measures included doing away with interest from the operations of specialised financial institutions – including the House Building Finance Co. Ltd., Investment Corporation of Pakistan and National Investment Trust Ltd. in July 1979 – a practice that extended to commercial banks in the 1980s.

The premise of interest-free loans, even though it goes along with Islamic ideals, has not protected the system from suspicion of links to terror funding, Shah Jehan, a banker at a private financial institution, told Central Asia Online.

Hawala, an informal system that allows fund transfers without much regulatory control, also was allegedly linked to terror financing, he said.

“Despite a hue and cry by global leaders spearheading the war against jihadist groups, new legal modes of transactions [including wire transfers] that have now replaced the hawala system are part of the Islamic banking system and have been lifelines for terrorists,” Jehan said…

News on the money jihad: recommended reading

• The Muslim Brotherhood played midwife to the birth of contemporary Islamic banking.  All it took was $100 million, an open door policy in Luxembourg, and the blessings of a Saudi king… more>>

• Al Qaeda insurgents in Iraq were paid about $40 a month.  Hezbollah agents in Cyprus?  $600… more>>

• Their tunnels flooded, Gaza’s bulk cash smugglers search for a workaround.  Bank compliance officers, be forewarned… more>>

• Israel’s civil defense minister exposes the “real base” of Hezbollah’s revenues—Europe… more>>

• No longer content to tax coca farmers and drug traffickers, Peru’s Shining Path may target tourists for kidnapping.  Time to reconsider that trip to Machu Picchu… more>> (h/t Jose Maria Blanco)

Sharia banks that fund terrorism

The relationship is simple.  Jihadists know they can trust sharia-compliant banks to maintain their anonymity, not ask too many questions, and facilitate high-dollar transactions on behalf of their terrorist groups.  Some Islamic financial institutions, such as National Commercial Bank and Islami Bank Bangladesh, have taken the relationship a step farther by donating a portion of their bank profits in the form of zakat as an act of corporate “charity” to terrorist organizations, or in the case of Al Rajhi, through private zakat donations of leading bankers.  Saudi Arabia and Iran are key bases for these activities, but this is a global phenomenon.  Here’s Money Jihad’s short list of the worst offenders:

Al Rajhi Bank:  The Saudi financial institution has served as the sharia bank of choice for the world’s jihadists, including East Africa embassy bomber Mamduh Mahmud Salim, Al Qaeda leader Ayman al-Zawahiri, and organizations like Indonesian Kompak and Al-Haramain.  Bank co-founder Sulaiman Al-Rajhi appeared on the infamous Golden Chain document of Al Qaeda financiers.  These allegations were reinforced by the recent U.S. Senate investigation into HSBC’s correspondent relationships.

Al Shamal Islamic Bank:  Osama Bin Laden co-founded the Al Shamal in Sudan and invested $50 million there.  During the 1990s and early 2000s, Al Qaeda distributed money to its cells through Al Shamal.  Funds passed through Al Shamal were used in preparation for terrorist attacks.

National Commercial Bank:  Offering conventional and sharia banking services, Saudi Arabia’s self-described first, largest, and most prominent bank is NCB.  Among other misdeeds, a Saudi audit revealed that NCB transferred $74 million in the 1990s as zakat through its charitable front organizations to Al Qaeda (see here, here, and here).  Khalid bin Mahfouz, the head of the bank, exploited libel laws to sue author Rachel Ehrenfeld in an effort to silence accusations about his role in financing terrorism.

Arab Bank:  This conventional bank in Jordan maintains a wholly-owned subsidiary (Islamic International Arab Bank PLC) that offers full-range sharia services.  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.  The Jordanian bank has paid out insurance benefits to families of suicide bombers for the Saudi Committee—another charity that funds Hamas.  Arab Bank has handled transactions for the Holy Land Foundation, whose leaders now sit behind bars for financing terrorism.  It has been the subject of American investigations, but the bank has consistently refused to turn over related documents to the U.S.

Islami Bank Bangladesh Limited:  IBBL, Bangladesh’s biggest sharia bank, has handled Wahhabi accounts to propagate radical Islam since its inception.  In 2011, the Bangladeshi home ministry intelligence revealed that 8 percent of the bank’s profits were diverted as corporate zakat to support jihad in Bangladesh.  One of the men on IBBL’s board of sharia advisors was arrested in connection with a terrorist attack against Bangladeshi police officers.  The U.S. Senate slammed British bank giant HSBC for maintaining relationships with IBBL despite evidence that it served terrorists like Shaikh Abdur Rahman of Jamatul Mujahideen Bangladesh and terror-funding Islamic charities like IIRO.  The Senate’s report also implicated HSBC for disregarding evidence of terror financing at another Bangladeshi sharia bank with whom it worked:  Social Islami Bank.

Bank Melli:  The Iranian Islamic bank sent “at least $100 million to an Iranian Revolutionary Guard branch that supports Hamas, Palestinian Islamic Jihad, and other terrorist groups, the Quds Force” between 2002-06.

Bank Saderat:  Another major Iranian sharia finance house, the U.S. Treasury Department sanctioned the rocket-funding Bank Saderat, stating that “The bank is used by the Government of Iran to transfer money to terrorist organizations, including Hizballah, Hamas, the Popular Front for the Liberation of Palestine-General Command and Palestinian Islamic Jihad. A notable example of this is a Hizballah-controlled organization that has received $50 million directly from Iran through Bank Saderat since 2001.”

Other culprits include Dubai Islamic Bank, which is active in both the U.A.E. and Pakistan, and Tadamon Islamic Bank.

So much for “ethical finance.”  For further developments, please continue reading Money Jihad, Shariah Finance Watch, and @moneyjihad on Twitter.

Another global giveaway to subsidize sharia

The Asian Development Bank will promote sharia finance with a $750,000 handout to Indonesia, Pakistan, Bangladesh and Afghanistan—countries with Islamic bank structures that are already well-entrenched.

Keep in mind that the World Bank also has a program to promote sharia-compliant finance in concert with the Islamic Development Bank, a sponsor of the Muslim Brotherhood.  From Reuters on Dec. 11:

Islamic banking expansion aided by ADB grant

KUALA LUMPUR, Dec 11 (Reuters) – The Asian Development Bank (ADB) has provided a $750,000 grant to promote Islamic banking in Indonesia, Pakistan, Bangladesh and Afghanistan.

The money will be shared between those countries’ governments to help their banking systems to meet regulatory standards set by the Islamic Financial Services Board, the ADB said.

Islamic finance follows religious guidelines such as a ban on the payment of interest and on pure monetary speculation.

Its core markets are in the Middle East and Southeast Asia, with about 57 percent of total global Islamic banking assets held by the 20 largest Islamic banks, concentrated in Malaysia, Saudia Arabia, Kuwait, UAE, Bahrain, Qatar and Turkey.

The ADB, which promotes economic and social progress in the Asia-Pacific region, said that the expansion of Islamic finance in other countries in the region will provide large numbers of people with banking services for the first time.

A report by Ernst & Young on Monday said that up to 150 new financial institutions could be established to cater for growing demand from the Muslim-majority populations of countries such as Indonesia, Egypt and Pakistan.

The sharia finance sector in Bangladesh has been documented to fund terrorism.  Giving even more money to their Islamic banking system makes no sense unless the purpose is to bankroll terrorism even further.

ADB is funded by its member countries and international bond sales.  Credit Suisse, Deutsche Bank, HSBC, Nomura, Bank of America, Merrill Lynch, BNP Paribas, Citigroup, Daiwa, Goldman Sachs, JP Morgan, Morgan Stanley, RBC Capital Markets and UBS were involved with an ADB bond issuance earlier this year.

Sharia bank conducts fraud, predatory lending

“Ethical finance” swindles 300 herdsmen and farmers

A sharia lender and his associates are under investigation for defrauding 300 Nigerian farmers and ranchers.  As Shariah Finance Watch wisely notes, countries with growing sharia finance sectors are often the same countries experiencing an increase in violent jihad.  SFW continues:

And as has also often been the case, that push has been associated with fraudulent activity.

The Nigerian Economic and Financial Crimes Commission (EFCC) is investigating the whole affair as detailed below, but what it looks like is a classic Shariah finance scam in which people are fooled into taking out “interest free” loans and are charged hefty fees for those loans.

In other words, these Shariah-compliant loans may not charge interest, but they are anything but “free.” In fact the charges customarily exceed what interest charges would be, but, because they are not interest, they get around Shariah usury laws. This is a scam that has not been limited to Nigeria. Many financial institutions across the world identify their Shariah loans as “interest free,” which amounts to fraud…

OPERATIVES from the North-East zonal office of the Economic and Financial Crimes Commission (EFCC) in Gombe have commenced investigations into allegation of fraud levelled against a branch manager of a first generation bank, a traditional ruler and Sharia court judge over agricultural loans and illegal detention of about 300 herdsmen and farmers in Shira and Giade Local Government areas of Bauchi State.

The commission moved to investigate the allegation following a petition written to it by communities in the two local government areas, which it received on October 24, 2012, on agricultural loans amounting to millions of naira, which was allegedly disbursed to the herdsmen and farmers in the two council areas by the Shira branch of the bank.

Read it all at Shariah Finance Watch.

For newer readers, this case should serve as an example of the unintended consequences of the Islamic prohibition on interest.  Money has a “time value;” in other words, money now is worth more than money later.  But this basic economic fact is denied by the religious edict of Islam.

Western economists refer to that difference between money now and money later as interest.  Islamists refer to it as riba, which means the same thing in Arabic as scum, asthma, or other types of unnatural growth or swelling.

But it is Islamic economics itself that is unnatural.  The result is all kinds of exotic loan structures and predatory policies designed to eliminate the appearance of charging interest.  But without charging interest, there is little incentive for bankers to provide capital to borrowers.  The sharia bankers create their own incentive by adding complicated fees and repayment schedules to loans.

The result here?  Confused farmers and goatherds.  So much for “ethical” finance.

Bangladesh overwhelmed by the financial jihad

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.

World Bank spends your money to promote sharia

The World Bank has agreed to collaborate with the Islamic Development Bank (IDB) “in the development of Islamic Finance,” according to the Arab News.

The Jeddah-based IDB, which Shariah Finance Watch describes as “the financial jihad wing of the Organization for Islamic Cooperation (the world’s foremost Islamic imperialist organization),” has a disturbing history and role in international finance that you can read about here.

The Global Muslim Brotherhood Daily Report has previously described the IDB’s role “in funding a project of a Ukrainian Brotherhood organization, in financing the projects related to the Islamic Society of North America (ISNA), and sponsoring a philanthropic conference held by an organization with Brotherhood ties. Another post noted that IDB representatives were in attendance at a Saudi charity seminar attended by Wael Julaidan, possibly the known founder and financier of Al Qaeda.”

Sounds like a great partner for peace and global economic prosperity, doesn’t it?  From the Arab News last month:

World Bank and IDB sign Islamic finance deal

The World Bank and Islamic Development Bank have signed a Memorandum of Understanding (MoU) to set out a framework for collaboration between the two parties and lend support to global, regional and country efforts in the development of Islamic Finance.

World Bank Managing Director Dr. Mahmoud Mohieldin and Islamic Development Bank Group President Dr. Ahmad Mohamed Ali signed the memorandum on behalf of their institutions with the common objectives of fostering, encouraging, and studying the expansion of Islamic finance globally.

The MoU adopts the following principles:

• Knowledge sharing to identify and disseminate sound practices in the Islamic financial services industry.
• Cross fertilization of ideas that would foster the development of Islamic finance that is critical for growth, efficiency and financial inclusion.
• Encourage research and promote awareness of appropriate risk management framework for Islamic financial institutions in particular and the Islamic finance industry in general; and
• Capacity building in the Islamic financial services industry with a view to fostering financial stability and promoting increased access to Islamic financial services in markets around the world.

World Bank Managing Director Dr. Mahmoud Mohieldin stressed the importance of the memorandum for increased capacity-building and knowledge-sharing between the two organizations.

“The MoU signed today between the IDB and WB will help us deepen our understanding of Islamic finance and build capacities to develop institutions and instruments to support sustainable inclusive growth and help societies to achieve their development goals with emphasis on poverty alleviation and shared prosperity,” he said.

“The signing of MoU between the World Bank and IDB aims to forge a strategic partnership between our two institutions in the area of Islamic finance to support inclusive growth, including greater access to finance for the poor, and financial stability in our mutual member countries,” said IDB President Dr. Ahmad Mohamed Ali.

“We expect to do this by expanding our knowledge base as well as our ability to support our member countries’ efforts to build resilient institutions and develop instruments to achieve greater financial inclusion and sustainable development,” he added.

The core tenant of Islamic finance is a system which promotes risk-sharing and the avoidance of interest and leverage.

Global Islamic Financial assets have increased significantly over the past three decades, crossing $ 1 trillion in 2010 and estimated to have exceeded $ 1.2 trillion in 2011, up from about $ 5 billion in the late 1980s.

Islamic finance could accounts for a substantial share of financial services in many countries in the coming years.

Through the MoU, the World Bank and Islamic Development Bank will explore Islamic Finance as a potential tool supporting the efforts of countries to reach their development goals.

The World Bank previously dallied with at least one sukuk (Islamic bonds) issuance in 2009, and declared Islamic finance to be a “priority area” last year.  The World Bank also co-hosts an annual conference with AAOIFI, a Bahrain-based standards setting board for sharia finance that is chaired by the notorious sharia law advocate, Taqi Usmani.

The World Bank is funded by member country contributions from taxpayers like you, and international investors and institutions that buy their bonds.

Tadamon deal marked by gold lust

Tadamon Islamic Bank, Yemen’s largest sharia financial institution, has struck a deal with Gold Arab Emirate DMCC, a web-based precious metal broker, according to the Saudi Gazette.  The agreement will allow Tadamon depositors to keep their savings in gold rather than cash.

Keep in mind as you read this that Osama Bin Laden used Tadamon Bank to distribute funds to Al Qaeda operatives in the 1990s.  This is a bank that caters to the deepest fears and suspicions of its customers.

GOLD AE signs landmark deal with Tadhamon Bank

GOLD Arab Emirate (GOLD AE) DMCC, the premier online trader in deliverable gold and silver, has recently signed a landmark gold allocated account partnership with Tadhamon International Islamic Bank, the biggest bank in Yemen, through its sister company SABAYEK24, in Sana’a.

The customers of Tadhamon International Islamic Bank will have the option of gold instead of cash in their saving accounts.

The deal underlines the growing awareness among investors in Yemen of the value of gold as a hedge against global inflation, hyperinflation and prolonged financial downturn.

Commenting on the partnership, Mohammad Abu-Alhaj, Charman of GOLD AE DMCC & SABAYEK24, said: “TIIB is a perfect partner for us. We remain committed to serving as a key player in the international bullion trading market and this deal is yet another exciting chapter the GOLD AE success story.”

He added: “Currency wars among different countries as well as uncontrolled printing of money by Central Banks around the world are putting the cash savings and purchasing power of millions of families at risk, considering the impact of the real possibility of their savings being completely wiped out with the unavoidable potential financial depression.”

He further said: “Gold is a stable investment that can also be used as a form of payment anywhere in the world. It is protected to the usual risk and limitations of other currencies. In fact, gold has been a preferred investment and a more stable form of currency for thousands of years…

Note how the article drips with animosity toward paper currencies, Western central banks, and harkens back to an alleged era of prosperity that lasted “for thousands of years.”  Must have missed that particular phantom golden age!

Although sharia law has never provided a sustainable recipe for economic prosperity, Islamists disdain the Western financial system for our concept of interest on savings and loans, for Jewish involvement in the international financial system, and for our system of “infidel” paper currency rather than using the gold dinar and silver dirham from the “good old days” of Muhammad.

Seven ways to stop funding terror

Money Jihad has previously proposed methods to limit zakat and hawala—two major mechanisms for funding terror.  Here’s a more comprehensive set of our recommendations that would reduce terrorist financing overall:

1. Drill, baby, drill.  The U.S. should expand offshore oil drilling, open federal lands for drilling, ease its permitting process for new refineries, encourage hydraulic fracturing methods that tap previously inaccessible energy sources underground, and approve the Keystone XL pipeline.  Increasing domestic U.S. and Western Hemisphere energy production will reduce reliance on Persian Gulf oil supplies and thereby minimize the profits reaped by hostile, foreign regimes that sponsor terror.
2. Eliminate foreign aid to Pakistan.  Pakistan uses its ISI spy service to fund the Taliban, the Haqqani network, and Lashkar-e-Taiba.  Continuing to waste money on Pakistan is not only wasteful when we can least afford it, but it is suicidal.
3. Study the true enemy and threat.  Among the most important concepts for the Western public to understand are:
   • The Koran calls upon Muslims to strive with their lives and wealth for the cause of jihad (Chapter 9, Verse 41).
   • Zakat, one of the five pillars of Islam, shall be allocated to several categories in accordance with the Koran 9:60, one of which is for those waging jihad for Allah.
   • Islam imposes the jizya tax on “infidels” living in Muslims territory (Koran 9:29), even today.
   • Islam calls for taxes on Muslims apart from zakat such as khums and ushr which finance terrorist organizations throughout the Islamic world.
   • Sharia finance is a destructive, opaque financial system that has kept Islamic economies in tatters for centuries.
   • Sharia banks and halal businesses are involved in financing terrorism.
   • Radical Muslims believe, as Anwar al-Awlaki instructed them, that there is a basis in Islamic law for stealing (through robbery, welfare fraud, tax cheating, etc.), especially if the theft takes place to finance jihad.

   If we fail to acknowledge Islam as the animating force behind terror finance, we’ll get confused and aim at the wrong targets.  For example, we’ve spent billions of dollars complying with extensive bureaucratic requirements such as currency reports that have yielded minimal results.

4. Launch a new offensive against Muslim American charities and entities that fund terrorism.  Pick a few of the highest profile ones and make an example of them by prosecuting their leaders and dressing them in orange jumpsuits.  Prosecute Islamic Relief USA under the laws against providing material support for terrorism.  Prosecute the Council on American-Islamic Relations under the Foreign Agents Registration Act.  Strip the halal food certifier IFANCA and the mosque deed financier North American Islamic Trust of their tax-exempt status.

Waist deep with Al Rajhi Bank: HSBC

Among other correspondent relationships that HSBC maintained with prominent sharia banks that fund terror, HSBC did business with Al Rajhi Bank as late as 2010, according to a report from the U.S. Senate.

Al Rajhi Bank, a Saudi-based sharia bank created by Sulaiman Al-Rajhi, has been implicated by several Western intelligence services for funding terrorist activities from Bosnia to Indonesia.  The bank has also resisted attempts by the 9/11 victims’ families to investigate the funding of the Sept. 11, 2001, terror attacks.

From Jihad Watch and Business Insider:

HSBC maintained ties with one of bin Laden’s chief jihad bankrollers

Global finance completely compromised. “Report Shows How HSBC Maintained Its Ties With One Of Osama Bin Laden’s Key Benefactors,” by Linette Lopez for Business Insider, July 17 (thanks to Twostellas):

Yesterday, the Senate released a report on HSBC’s ties to the darkest actors in global finance. Today, the details of the 335 page investigation are trickling out and shocking everyone.The laundry list of offenses includes everything money laundering for Mexican drug cartels to ignoring U.S. regulations meant to prevent dollars from reaching our country’s known enemies.

Enemies like Al Qaeda.

One of the most damning parts of the report details HSBC’s relationship with Saudi based Al Rajhi Bank, a member of Osama bin Ladin’s ‘Golden Chain’ of important Al Qaeda financiers. The relationship has spanned decades, perhaps that is why even when HSBC’s own internal compliance offices asked that it be terminated in 2005, even when the US government discovered hard evidence of Al Rajhi’s relationship with terrorism, HSBC continued to business with the bank until 2010.

Al Rajhi bank is owned by the billionaire Al Rajhi family and holds $59 billion in assets. It is Saudi Arabia’s largest private bank.

Al Rajhi’s links to terrorism were confirmed in 2002 when U.S. agents searched the offices of a Saudi non-profit and U.S. designated terrorist organization, Benevolence International Foundation (page 193). In that raid, agents uncovered a CD-ROM listing the names of financiers in Osama bin Ladin’s elite ‘Golden Chain.’ One of those names was Sulaiman bin Abdul Aziz Al Rajhi, a founder of Al Rajhi bank….