Backstabbed: How Iraq helps Iran skirt sanctions

Nobody has been as good at tracking the painful truth of Iraqi-facilitated evasion of international sanctions on Iran as financial crime consultant Kenneth Rijock.  Consider:

• The Kurds in northern Iraq have “allowed both rampant money laundering, and widespread facilitation of global Iran sanctions evasion” though their banks. In central Iraq, U.S. dollars are flowing in bulk from Baghdad to Iran… more>>
• Lebanese banks and Bank Melli, a sanctioned Iranian bank, are operating in northern Iraq.  EU and North American businesses that use Lebanese banks may not be taking sufficient steps to prevent their transactions from benefiting Iranian end-users… more>>
• “Iraq blatantly disregards UN sanctions on Iran” in accepting an Iranian-flagged vessel‘s shipment at its Um Qasr port, for example… more>>
• Five Turkish banks in Iraq may be facilitating Iran’s sanction dodging behavior… more>>
• Iran will reap $16 billion annually from a new natural gas deal with Iraq… more>>

Reading about the dangerous anti-money laundering (AML) and combating the financing of terrorism (CFT) policies of Iraq may be upsetting to those who have made personal sacrifices fighting for Iraqi freedom, but we have to face the current facts.  How does Rijock describe the Iraq invasion?  “Military success, yes; but AML/CFT utter failure.”

Turkish national convicted of funding jihad

Cartoon from the Orange County Weekly

Oytun Ayse Mihalik made three separate money transfers to Pakistan to finance terrorism.  The former CVS pharmacy employee could have been prosecuted on three separate counts of material support for terrorism on that basis.

However, the transfers were lumped into one charge for which Mihalik pleaded guilty, and rather than receiving the maximum 15-year sentence, or the 12-year sentence sought by prosecutors, she was only sentenced to five years in prison.

She’ll be back on the streets before we know it.  From the Los Angeles Times (with a tip of the hat to Dr. Hayat Alvi for tweeting out a separate news link on the sentencing)

O.C. woman sentenced to five years for sending funds to terrorists

By Victoria Kim

March 29, 2013

An Orange County pharmacist who admitted to wiring $2,050 to Pakistan to be used to fund terrorist activities was sentenced Friday to five years in federal prison.

Oytun Ayse Mihalik, 40, a Turkish national and permanent U.S. resident, pleaded guilty in August to one count of providing material support to terrorists after sending three money orders over a month in late 2010 and early 2011.

Mihalik used a false name, “Cindy Palmer,” to send the funds, according to authorities.

Federal prosecutors had asked for a 12-year sentence for the woman, alleging she provided the money to a man she met through a website, believing it was going to be used to harm U.S. troops.

She was motivated by a “desire to participate in jihad” and knew the sum was “more than enough to finance an entire operation against the United States military forces,” they wrote, citing her email communications with the man.

They also noted that she had created a “favorite” tab for “The Al Qaeda Manual” on her laptop and had searched the terms “true jihad” and “Jihad in Afghanistan” on her Web browser in “privacy” mode.

Her defense attorneys argued she had been manipulated in a time of vulnerability when her marriage was falling apart after a miscarriage. She accessed the website out of worry for her brother, who was going on a pilgrimage to Pakistan, they contended in court filings. They asked for a 24-month sentence.

The woman appears to have come to authorities’ attention after her husband called Immigration and Customs Enforcement, alleging she had married him under “false pretenses” after she moved out of their home for a trial separation. She became radicalized after a monthlong trip to Turkey two years into their marriage, he alleged.

“I go, ‘Listen, did you marry just me for my citizenship and do you want to harm someone here?’ And she looked at me blank and she said, ‘If I have to kill people for Allah, I will,’” the husband said in his initial report, according to a transcript filed with court papers.

See previous Money Jihad coverage of Oytun Ayse Mihalik and her use of Western Union here.

Islamist rebels using charity for jihad

Daveed Gartenstein-Ross and Aaron Y. Zelin have compiled some very important research in a new Foreign Policy article entitled “Uncharitable Organizations” about the growing sponsorship of jihadist activities overseas by non-governmental organizations.  They write that Islamic charities are using humanitarian aid in countries with Islamist movements including Tunisia, Syria, and Mali in order to 1) strengthen the dependence of the populations on their services, and 2) to provide a cover for their militant activities.

Specifically, Ansar al-Sharia Tunisia (AST) and Syrian Islamic Front (SIF) rebels are accepting aid from Middle Eastern charities that have all been previously linked to terror financing including the Turkish charity IHH, Kuwaiti charity RIHS, and Qatar Charity.  Qatar Charity itself is also active in Mali working in an apparently parallel fashion with rebel fighters.

Money Jihad has taken the liberty of boiling down their article into a few brief slides about three of the groups Gartenstein-Ross and Zelin discuss:

Readers are encouraged to read the original article at Foreign Policy online.

PKK terror financier taken into custody

A Kurdish-Swede has been arrested by Spaniards along with 21 other PKK terrorists in Spain and France.  The operatives reportedly imposed a common Marxist guerrilla fundraising technique—a revolutionary tax—on their fellow Kurds to buy weapons for terrorism against Turkey.  From Sweden’s The Local on Feb. 16:

Madrid court remands Swede on terror charges

A 65-year-old Swedish man was on Friday remanded into custody by a Madrid court on suspicion of terror crimes connected to the Kurdistan Workers’ Party (PPK).

“According to information from the Spanish police, he is suspected of extortion for terrorist purposes,” said Catarina Axelsson at the Foreign Ministry’s press service.

The Swede and five others were arrested in Spain on Tuesday in a series of coordinated raids which also saw 16 arrested in France.

Those detained are all suspected of belonging to the terrorist-classified Kurdish separatist movement PKK. They are suspected of having coerced other Kurds into paying a so-called “revolution tax”.

According to the charges, the collections are intended to have been used to finance the purchase of explosives and weapons for terrorist activities in Turkey.

In the course of the raids, police seized weapons and cash.

According to news agency Europa Press the Madrid court released three of the six arrested in Spain, although they remain under suspicion and are not permitted to leave the country.

The 65-year-old Swede, who is reported to be resident in the south of Sweden, is receiving assistance from the embassy and the Swedish Ministry of Foreign Affairs.

The PPK is a Kurdish organization founded in 1984 that fights against the Turkish state for an autonomous Kurdistan, as well as for the rights of Kurds in Turkey.

Illicit finance news: suggested reading

• Shariah Finance Watch writes that the latest sanctions by Treasury against the leader of Al Qaeda in North Africa are “purely political theater”… more>>

• World traveler Richard Chichakli, the Syrian-American who helped Viktor Bout run guns to Hezbollah, seeks bail. Australian judge: “Bit of a flight risk, aren’t you?” more>>

• Need to get a supply shipment to Afghanistan?  On your way, be sure to dock in Bandar Abbas, Iran, just like the Americans.  Starr asks, “Why is the United States Subsidizing Iran?”  more (or here)>>

• If Mazaheri thought he could smuggle a 70 million dollar check, what else has Iran’s former central bank chief gotten away with?  Ken Rijock investigates… more>>

• One man’s search for Noah’s ark could help bankrupt terrorism… more>>

Export violation: business evades sanctions by creating a Turkish shell company to sell machines to Iran for nuclear program

Spanish tax authorities raid Basque company, seize documents

A Durango manufacturer, Ona Electroerosión, has violated Spanish customs laws by smuggling dual-use technology to Iran, according to official reports.

Ona has denied the charges, saying that it sought two permits for sales of machinery to Iran in 2009.  One permit was approved; one, denied.  Ona says it cancelled the sale to Iran for the permit that was denied, and maintains that the machinery it sold to another client in Turkey was among the simplest pieces of equipment in their catalog.

This version of events described by Ona not seem plausible.  Why continue trying to sell the same equipment that Spanish officials prohibited for Iran to to a firm in Turkey—-Iran’s next door neighbor and one of Iran’s closest trade partners?

European companies have long been active in Iran, but we’re not talking about selling a Peugeot.  This is machinery used to make fans that Spanish authorities believe will be used in Iran’s nuclear operations.

The results of the raid have not been made public yet.  Presumably, the company will face a multi-million dollar fine at a minimum.  If the allegation is true that Ona Electroerosión was determined to deliver the goods to Iran to the point of using a front company to facilitate the sale, then it is not just guilty of gross negligence in its export compliance program.  Under that circumstance, arrests and criminal prosecution of Ona’s senior management is justified.

Here’s one of the more precise news reports on the scandal.  From Reuters via CNBC on Nov. 26:

Spanish company embroiled in nuclear smuggling scheme with Iran

BILBAO (Reuters) – A company from Spain’s Basque country smuggled machinery to Iran for likely use in the country’s nuclear program through an elaborate scheme involving a shell company in Turkey, Spanish tax authorities said on Monday.

Spain’s tax agency said the company had managed to send over seven machines designed to make parts for turbines used in energy plants, in a scheme that violated United Nations security council sanctions against Iran.

A source close to the operation named the company involved as ONA Electroerosion.

The machines, sold for nearly 1 million euros ($1.30 million), were destined for use in Iran’s nuclear development program, according to the agency’s investigations to date.

The U.N., the United States and the European Union have imposed sanctions on Iran for refusing to halt nuclear enrichment, which Western powers fear is part of a plan to amass the capability to produce nuclear weapons.

Iran argues its atomic work is for use in medicine and generating electricity.

The company, based in the Basque municipality of Durango, had been denied a license to export seven fan-manufacturing machines to Iran in September 2009, precisely because of fears they could be used in the nuclear program.

But it later duped Spanish customs by using an intermediary company set up in Turkey by its Iranian business partner, and shipped the machinery to Istanbul before dispatching it to Tehran.

Spain’s tax agency said it had raided the company’s premises on November 13, removing documents and other information it was still analyzing.

Its operation, dubbed “Kakum”, began earlier this year, when it became suspicious of the company’s activities.

No one has yet been arrested or charged in relation to the scheme, the agency said, though added those responsible could face prison sentences and a fine of close to 6 million euros.

Turkey failing to stop terror finance

The Financial Action Task Force has threatened to suspend Turkey if it doesn’t fix its laws on terror financing within the next four months.  The financial and money laundering watchdog organization says that Turkey doesn’t yet have a legal means for freezing terrorist assets.  How can Turkey be a good NATO ally if it can’t even identify and freeze the assets of terrorists in their banking system?

Turkey probably should have been suspended long ago for its sponsorship of IHH, the radical charity that manned the Gaza flotilla and has since been designated by Germany as a donor of Hamas, but FATF is more focused on financial regulatory frameworks.

From Bloomberg (h/t news link from TTFB) on  Oct. 19:

Turkey Given Four Months to Fix Terror Finance Law

By Selcan Hacaoglu

Turkey was given a February deadline by the OECD’s Financial Action Task Force to tighten laws blocking the financing of terrorist groups or face suspension from the organization.

Turkey needs to adopt legislation “to remedy deficiencies in its terrorist financing offense” and set up “a legal framework for identifying and freezing terrorist assets,” the Task Force, sponsored by the Organization for Economic Cooperation and Development, said on its website today at the end of a three-day meeting in Paris.

Failure to do so by Feb. 22 will result in Turkey’s suspension, it said. The Task Force said it is “deeply concerned by Turkey’s continued failure to take action.”

The group had warned in June it would “call upon its members to apply countermeasures” against Turkey if rules weren’t tightened by October. A terror financing bill drafted to address them is still held up in Turkey’s parliament. Exclusion by the Task Force could impede transactions with Western banks.

A suspension would hurt Turkey’s reputation and “alert the international financial world, possibly causing some problems in transactions,” Nihat Ali Ozcan, a terrorism analyst at the Economic Policy Research Foundation in Ankara, said by telephone today. “However, since nearly half of the Turkish economy is not registered, tightening rules might also put the government under domestic pressure from some circles, even including its grassroots supporters.”

Busy Schedule

Turkish officials say the measure has been delayed by a busy legislative schedule…

Turkish Bank fined £294,000 for violation

Turkish Bank has settled with Britain’s financial regulator for breaking rules written to prevent money laundering.  What’s surprising about this story is that the U.K. had already warned Turkish Bank about its practices, but the bank continued the same behavior anyway.  One wonders who exactly, such as corrupt politicians in the Middle East, may have been depositing funds into Turkish accounts without adequate screening procedures.

From this month’s edition of Anti-Money Laundering Magazine:

Turkish Bank loses its sweetness

The Financial Services Authority (FSA) has fined Turkish Bank (UK) Ltd (TBUK) £294,000 for breaching the Money Laundering Regulations 2007 (MLR).

These breaches – which related to TBUK’s correspondent banking arrangements – were widespread and took place over two-and-a-half years. They led to an unacceptable risk that TBUK could have been used to launder money. This is the first occasion in which the FSA has taken enforcement action against a firm in relation to money laundering weaknesses in its correspondent banking arrangements.

TBUK is a wholly owned subsidiary of Turkish Bank Limited which is incorporated in Northern Cyprus. TBUK’s customer base is mainly retail. TBUK offers a range of financial services, including correspondent banking. Correspondent banking involves a bank (correspondent) providing banking services to an overseas bank (respondent) to enable the respondent to provide its own customers with cross-border products and services, such as payment and clearing that it cannot provide them with itself. TBUK acted as a correspondent bank for nine respondent banks in Turkey and six respondent banks in Northern Cyprus between 15 December 2007 and 3 July 2010.

Under the MLR, providing correspondent banking services to banks based in non-European Economic Areas states is recognised as creating a high risk of money laundering that requires enhanced due diligence and ongoing monitoring of the relationship. During this period, Turkey and Northern Cyprus did not have anti-money laundering (AML) requirements that were equivalent to those in the UK.

The FSA visited TBUK in July 2010 as part of a thematic review of how banks operating in the UK were managing money laundering risks. This thematic review resulted in the eye-popping report released in July 2011. It contained alarming findings. The FSA’s visit to TBUK gave serious cause for concern in relation to TBUK’s AML controls over correspondent banking leading to this enforcement action.

TBUK’s breaches of the MLR included failing to:

• establish and maintain appropriate and risk-sensitive AML policies and procedures for its correspondent banking relationships
• carry out adequate due diligence on, and ongoing monitoring of, the respondent banks it dealt with and failing to reconsider these relationships when this was not possible
• maintain adequate records relating to the above.

While not deliberate or reckless, these failings were more serious because the FSA had previously warned TBUK of deficiencies in its approach to AML controls over correspondent banking.

Tracey McDermott, Acting Director of the Enforcement and Financial Crime Division, said: “Turkish Bank fell far short of the standards we expect of firms in managing their money laundering risks. This was despite clear warnings from the FSA that it needed to improve”…

In other news, Turkey faces expulsion from the Organization for Economic Cooperation and Development for its insufficient efforts in “blocking the financing of terrorist groups” if it doesn’t tighten its laws within four months.

IHH on Mavi Marmara: the voyage continues

Turkey’s dangerous Islamic charity IHH has commemorated as “martyrs” the armed flotilla goons who resisted Israeli forces during the Mavi Marmara blockade-running attempt in 2010.

The IHH website has posted an article including comments made by the IHH’s Gaza representative at an event praising the Mavi Marmara thugs earlier this month, in which the representative promised to continue the voyage that the fateful ship began:

Mavi Marmara martyrs commemorated in Gaza

The victims of an Israeli attack on Freedom Flotilla which claimed the lives of nine peace activists in 2010 have been commemorated with a ceremony in Gaza.

Victims of the Freedom Flotilla and Mavi Marmara, which was part of the flotilla, are being commemorated with prayers across Turkey and the world.

While the IHH Humanitarian Relief Foundation last week organized a commemoration ceremony on board the Mavi Marmara ship and a march in Taksim Square in İstanbul to commemorate Mavi Marmara martyrs, our brothers and sisters in Gaza also commemorated the victims and sent their greetings to Turkey.

The commemoration ceremony which took place in front of the Mavi Marmara Martyrs’ Monument at Gaza Sea port attracted huge interest from the world media.

“We respectfully commemorate our brothers who sacrificed their lives for the cause of Palestine and voice our gratitude to Turkey,” said the participants of the ceremony.

Public authorities from Gaza and Palestine who delivered speeches at the event said they will never forget the martyrs, Turkey’s support and sufferings for Gaza.

Many Palestinian families, particularly children also attended the ceremony. Holding Turkish flags in their hands, Gazans said: “Thank you Turkey.”

IHH Gaza representative Mehmet Kaya who attended the ceremony, gave some information about the IHH’s relief activities in Gaza and talked about the Mavi Marmara attack and the ensuing developments.

“We met at this square in order not to forget the attack on Mavi Marmara. The aid ships of the flotilla set sail in order to alleviate the pains of Gazans but they were attacked by Israel on their way to Gaza. Thanks to the sacrifices of our martyrs, we won, Mavi Marmara won, Gaza won, the resistance and Palestinian cause won. There are a lot of things to do. Our goal is to ensure the freedom of Palestine and al-Quds. We will do our best to this effect. Mavi Marmara continues its voyage. Mavi Marmara continues its voyage having the support of Tunisia, Libya and Egypt [which toppled their despotic leaders]. This process will continue with Syria. The despotic administration in Syria will also be overthrown and the people will win. Arab Spring is the Spring of Islam and we will see more beautiful days. We will continue our struggle until Masjid-i Aqsa is free. Allah willing, we will pray at Masjid-i Aqsa. The world will hear the voice of Muslims. Israel was isolated after its attack on Mavi Marmara. It lost the support of Egypt, its relations with Turkey hit a deadlock. Our nine brothers were martyred but we did not give up from our struggle. Thanks to the sacrifices of our martyrs, thousands of Furkans, Ali Haydars, Cevdets and Fahrettins [names of the some of the Mavi Marmara victims] will be raised. Before the launch of a case in Turkey against perpetrators of the Mavi Marmara attack, some people were saying that it is impossible for such a case to be filed in Turkey but it did take place. There are courageous people in our country. Every Israeli soldier who took part in the Mavi Marmara attack will give an accounting of their actions.”

What’s disturbing isn’t just the Islamic charity’s involvement in the anti-Israel attack, or the charity’s support for Hamas, or Turkey’s approval of the action, but how widespread and prominent the IHH has become.

IHH purports to have operatives in 95 countries.  Few, if any, Islamic charities claim that level of reach and influence.  In many ways, IHH appears to be Turkey’s answer to Saudi Arabia’s Muslim World League, or an answer to Iran’s Hezbollah.  It is a nationally sponsored vehicle used to gain radical, international, Jew-hating, pro-sharia influence.

Leipzig court confirms IHH funded Hamas

A federal court has upheld Germany’s ban on the Turkey’s IHH, a major international Islamic charity, on the grounds that it funds Hamas.  It’s just further evidence that IHH complies with Islamic law by taking a portion of the zakat it receives from its donors and funnels it into jihad.

From the Jerusalem Post, h/t Tundra Tabloids:

German court affirms Turkish IHH ban because of Hamas ties

Leipzig’s Federal Administrative Court finds that Frankfurt-based Foundation for Human Rights and Freedoms and Humanitarian Relief donated money to terror group

BERLIN – A federal court in Germany upheld the Interior Ministry’s ban on the Frankfurt-based Foundation for Human Rights and Freedoms and Humanitarian Relief (IHH) because the Turkish NGO contributed funds to Hamas.

Hamas is recognized by the European Union, Israel and the United States as a “terrorist organization” and Leipzig’s Federal Administrative Court found that the IHH donated money to the group.

The NGO challenged the decision of Germany’s former interior minister Thomas de Maizieres, who outlawed the IHH in July 2010. He said at the time that the IHH “fights against Israel’s right to exist.” Maizieres added that “organizations that operate from German soil, directly or indirectly, with the aim of fighting Israel’s right to exist, have forfeited their right to freedom of association.”

The IHH helped sponsor the 2010 flotilla, a convey that sought to break Israel’s naval blockade on the Hamas-controlled Gaza Strip. The Turkish vessel Mavi Marmara was intercepted by Israeli naval commandos, which resulted in the deaths of eight Turkish and one Turkish-American activists, and injuries to Israeli sailors.

According to the Federal Administrative Court ruling, “the IHH sent a significant amount of collected money over a long period of time to the Islamic Society and the Salam Society for Relief and Development. These social organizations, which are active in the Gaza Strip, are, according to the Federal Interior Ministry, part of the overall structure of Hamas.”  The court concluded that Hamas engages in “terroristic actions and violence” against both Israelis and Palestinians.

Reinhard Marx, the attorney representing IHH, told the daily Tagesspiegel on Thursday that the “decision sends a catastrophic decision signal to the Muslim community” because it denounces charity as support for terrorism. Marx, a Frankfurt- based attorney who specializes in international law affecting foreigners, claimed that the IHH has provided support for 3,200 Palestinian orphans in 2009 since Israel’s Cast Lead offensive in Gaza sought to stop Hamas rocket attacks.

The German court viewed IHH’s “social engagement” as a way to enable Hamas to recruit activists, who would function as terrorists, and strengthen its organizational and political legitimacy in Gaza.

While the ruling focused on IHH’s ties to Hamas, IHH has also begun working with al-Shabaab in East Africa, and IHH claims to have spread its operations throughout 95 countries.  The court decision should serve as a wake-up call to civilized nations that IHH is not an organization to be partnered with.

Islamic charities in the U.S. and Europe should immediately cease any cooperation or joint projects that they may have ongoing with IHH.  The Illinois-based Zakat Foundation has reportedly passed funds through another foundation to IHH in the past.  If the Zakat Foundation or any other Western charity continues working with IHH despite the evidence presented in the German case, that means they are knowingly working with an entity that funds Hamas—-a terrorist group dedicated to the destruction of Israel.

Turkish brides wear cash sewn on veils

Can anybody explain this photograph recently taken by Daniele Pellegrini?

The caption reads, “A bride wears bank notes on her veil as part of an Islamic wedding in central Turkey,” but I suspect a creative reader could come up with a better caption than that.

A separate website offers some background that sheds some light on Turkish weddings:

…Weddings in Turkey are a lavish affair with celebrations that may last for several days before and after the actual marriage ceremony. The traditional gifts for the bride and groom are money and gold. There are no European or American style wedding lists. Prior to the wedding, the respective families buy furniture and household goods for the young couple. Guests do not give the newlyweds towels, toasters or pots. Instead, they shower the bride, literally, with banknotes and coins. Every jeweler in Turkey sells coins for the occasion. Red is the color of good luck and fortune; therefore, the gold coins, which serve as wedding gifts, come with a tiny red silk bow and a pin attached. On the evening of the marriage ceremony, bride and groom make their formal entrance…