Flash crash and the Obama hoax

When a fake news bulletin was distributed after the Associated Press’s Twitter feed was hacked on April 23, the stock market instantly dropped a full 1 percent. 

On his Global Economic Warfare website, Kevin Freeman tackles the implications of the fake tweet on the market, and how market manipulation can be used as a financial warfare tactic.  Read his important posts here and here.  An excerpt follows:

A Single, Man-Made Stock Market Crash is a New-Concept Weapon

When the two PLA Colonels wrote Unrestricted Warfare in 1999, they listed “a single man-made stock market crash” as one of three specific new-concept weapons for the 21st Century. They called it financial warfare.

We have been warning about market manipulation for several years, first in our report for the Department of Defense and then in the New York Times Best-Seller, Secret Weapon. Yet, most in the intelligence and defense community know little about the financial markets. And, those who understand the markets generally know little about defense. Unfortunately, our enemies have studied both.

This week, we saw a hacked Twitter account used as a weapon resulting in a mini flash crash for stocks. Even as the market recovered in minutes, estimates are that there was something like $150 or $200 billion lost even if only briefly. We mentioned this in an earlier post.

While any human could clearly see that the White House was not bombed as the hacked tweets claimed, computer algorithms that monitor social media sites could not tell the difference. As a result, massive sell programs began and other high-frequency algorithms picked up on it.

The Syrian Electronic Army claims that they were the source of the false tweet…

Mr. Freeman also included this graphic which showed the plunge in trading.  The person or entity responsible for the planned Twitter forgery could have anticipated the miniature flash crash and hedged against it in order to profit from the hack:

Wildlife smugglers can’t deceive these dogs

The illicit trade in endangered species has been a growing source of terrorist revenues.  A new dog training program will help detect items illegally trafficked through the U.S.  Take a look at this video from the Fish & Wildlife Service and a related article by Russell McClendon of the Mother Nature Network (h/t CITES):

U.S. trains dogs to sniff out wildlife traffickers

The first graduating class of ‘wildlife detector dogs’ will soon be stationed at ports around the U.S., part of a growing effort to stem the illegal trade of flora and fauna.

If you’re a poacher hoping to smuggle rhino horns through a U.S. port, Uncle Sam wants you to know you’re barking up the wrong tree. And he has a new team of elite, hard-nosed cops to help him deliver that message: Butter, Viper, Lancer and Locket.

The first class of “wildlife inspector dogs” graduated this week from the U.S. Department of Agriculture’s National Detector Dog Training Center (NDDTC) in Newnan, Ga., where they spent 13 weeks learning to identify the scent of endangered species — whether it’s South American rosewood or African elephant ivory. The four graduates, along with their human handlers, will soon be stationed at key ports around the country, where they’ll join a nationwide effort to stem the illegal trade in plant and animal parts.

“The recent rapid growth in the global trade in protected wildlife is pushing some species perilously close to extinction,” says Ed Grace, deputy chief of the U.S. Fish and Wildlife Service’s Office of Law Enforcement, in a press release. “Elephant and rhino populations in particular are declining at alarming rates. The battle to stop wildlife smuggling is one we simply cannot afford to lose, and using dogs and their phenomenal sense of smell to catch smugglers will give us a real leg up in this effort.”

Dogs already have a long history in law enforcement, from hunting fugitives to helping police detect bombs and drugs. But while they’ve been man’s best friend for millennia, their high-powered noses are increasingly ingratiating them to Mother Nature, too. Florida wildlife officials train dogs to sniff out invasive pythons in the Everglades, for example, while conservationists at the University of Washington train them to track endangered native animals by smelling their scat. On a small island in Australia, sheepdogs have even been entrusted to protect a population of endangered penguins.

But the task facing Bullet, Viper, Lancer and Locket — as well as future NDDTC cadets — is much broader than patrolling a single ecosystem. They will soon accompany agents with the U.S. Fish and Wildlife Service on the front lines of an expanding battle, one that pits international crime syndicates against a wide array of rare wildlife.

This comes on the heels of an unusually fruitful wildlife-trade summit held in Bangkok last month, one that highlighted both the gravity of the problem and the emerging possibilities for containing it. Conservationists pulled off several victories during the 2013 Convention on International Trade in Endangered Species (CITES), including new trade protections for sharks, turtles, elephants and great apes. But as critical as such regulations are, they’re only as effective as their enforcers. The U.S. is a major market for illegally traded wildlife, and human officers can only inspect so many packages.

“On an average day, I as a human being can physically inspect, if I’m pushing myself hard, anywhere from 70 to 100 packages,” FWS wildlife inspector Denise Larison says in a video about the new dog program. “And as you can see, the dogs can do 70 to 100 packages in a matter of minutes”…

Related:  Stella the dog finds €3m in illicit cash

Smuggling cash with foreign prepaid cards

ACAMS MoneyLaundering.com is reporting that while know-your-customer requirements and other safeguards are in place to prevent abuse of prepaid, reloadable cards obtained from American financial institutions, the freedom of foreign banks to issue such cards remains a potential area of terror finance vulnerability.

Here is an excerpt from MoneyLaundering.com’s featured article by Colby Adams on Apr. 9:

…Final rules issued by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) in July 2011 imposed anti-money laundering (AML) program duties on American providers and sellers of certain prepaid products, including customer identification, suspicious activity reporting and transactional recordkeeping requirements.

But reloadable cards that can be acquired in person or over the Internet from foreign financial institutions remain an immediate threat to the United States, according to a senior compliance officer at a major U.S. financial institution linked to the prepaid industry.

“The rules are way too focused on what’s leaving the United States—on bulk cash smuggling on a card,” said the person, who spoke on condition of anonymity. “The giant elephant in the room is that the regulators aren’t checking what’s coming here, and that could mean trouble sooner rather than later.”

In such a scenario, a member of a terrorist organization living in a high-risk jurisdiction could purchase a network branded prepaid card from a non-U.S. bank with little trouble. Should the person travel to the United States, he or she could use the card to withdrawal money from any one of thousands of ATMs, or receive additional funds from another foreign-issued prepaid card holder…

Why would Muhammad Atta need a SunTrust account if he could have just brought a preloaded payment card with him from Hamburg?  Especially when that card is branded with the familiar logo of Visa or Mastercard, such as this product being offered on the website of Cyprus-based Hellenic Bank:

Screenshot of foreign p-card promising anonymity and a Visa logo

So much for know-your-customer provisions when a bank in the EU is encouraging customer anonymity.  Moreover, Mr. Adams notes that “the Visa logo means that it can be used anywhere Visa is accepted – including ATMs.”

Attacks on banks resume

Despite the track record of the 60-year Arab League economic embargo of Israel, and despite the Arab oil embargo of the 1970s, some Islamic scholars have said that Islam does not permit economic warfare against infidels.

Yet when it comes to infidel banks that charge interest—a concept forbidden in Islam—many Islamists agree that banks are legitimate targets for robbery or attack, especially if the result of the action will ultimately benefit Islam.  Islamists also rationalize their assaults on Western financial institutions because they believe the banks are “controlled” by Jews.

Is it any wonder then that we’re now seeing a third wave of attacks by Islamist hackers against American financial institutions that began last fall.  From the Global Post on Mar. 7:

Muslim hackers target US banks in third round of cyberattacks

In the third round of what they’re calling Operation Ababil, Muslim hackers belonging to the Izz ad-Din al-Qassam Cyber Fighters are attacking US bank websites and demanding that more copies of the “Innocence of Muslims” YouTube video be removed.

Muslim hackers in the Izz ad-Din al-Qassam Cyber Fighters launched the third phase of their Operation Ababil campaign against US-based banks on Wednesday, making further demands that the YouTube video “Innocence of Muslims” be removed from the web.

Known to many as the Muslim world’s Anonymous, Izz ad-Din issued an ultimatum on Tuesday that their distributed denial of service (DDoS) attacks against American banking institutions would continue unless insults against the Prophet Mohammed were removed from YouTube.

“During runnnig [sic] Operation Ababil Phase 3, like previous phases, a number of american [sic] banks will be hit by denial of service attacks three days a week, on Tuesday, Wednesday and Thursday during working hours,” read the group’s latest statement.

Outages have been reported by customers of Bank of America, Capital One, Citibank, PNC Bank, Union Bank and Wells Fargo, according to Site Down, a website that tracks reported online outages. However, no banks have reported experiencing any issues with their online services.

“At this point, we’ve had no issues on our end,” Bank of America spokesman Mark T. Pipitone told Information Week Wednesday.

Unlike Anonymous, the Izz ad-Din Cyber Fighters seem to abide by strict, self-imposed regulations. During phase two of Operation Ababil, YouTube removed the original version of “Innocence of Muslims” from the site — as promised, the hacker collective ceased attacks once their demands were met.

But new copies of the video have reappeared on YouTube, and the Izz ad-Din Cyber Fighters say they will not tolerate more insults levied against Prophet Mohammed.

“Now at the end of one month time it is seen that other copies of the film yet exist in YouTube so we announce the Phase 3 of Operation Ababil will start this week,” read the group’s statement.

For phase three, Izz ad-Din is using a complex calculation to issue banks an exact dollar amount each will lose in the attacks. Using a combination of the video’s traffic statistics, Izz ad-Din determined that US Banks should pay $874.7 million in compensation.

A loss at that levels requires about 11 weeks of DDoS attacks.

Taking their name from a Syrian preacher that fought against French, British and Zionist elements in the Levant in the 1920s and 1930s, the collective has wrapped itself in the rhetoric of anti-imperialism.

However, the goals of the organization are now limited to removing “Innocence of Muslims” from YouTube. The insults made against Prophet Mohammed served as a catalyst for uniting the collective.

The Izz ad-Din al-Qassam Cyber Fighters collective is the first hacker group that acts in defense of Islam.

Since the founding of the Izz ad-Din al-Qassam collective, several other Muslim hacker groups rose to prominence in attacks carried out against Israeli domains during the Israeli Defense Forces’ assault on Gaza late last year. Muslim hackers from Algeria, Morocco and Pakistan, among others, carried out DDoS attacks and defacement of Israeli domains during the cyberattack campaign.

Under attack from Iran, banks seek federal help

Having spent millions of dollars to defend themselves from a hostile foreign power, American banks are now asking the federal government for assistance.  U.S. officials say that all options are being weighed including retaliation.  Here’s a two-minute interview on the subject with reporter Siobhan Gorman on the radio program The Wall Street Journal This Morning last month:

Hopefully they won’t have to use it, but the Pentagon would have good reasons for keeping a cyber-counteroffensive plan on its shelf.

View previous Money Jihad coverage of the allegedly Iranian-based technological assaults here, here, and here.

Money laundering expert accuses Venezuela of massive uranium exports to Iran

One of Money Jihad‘s favorites, the Financial Crimes Blog by Kenneth Rijock, is making a disturbing allegation:  that Venezuela is illegally exporting massive amounts of uranium for Iran’s nuclear program, and that U.S. officials have rejected the evidence.  The “reliable sources” aren’t named and the “irrefutable, documentary evidence” isn’t specified, so take it with a grain of salt, but Mr. Rijock has proved to be very insightful and prescient before.

From Jan. 10:

US POINTEDLY IGNORES VENEZUELAN URANIUM EXPORTS

The United States, for reasons not known to this writer, appears to be deliberately ignoring the mounting indications of massive exports of Uranium, from Venezuela, to its end user, the Government of Iran. Reliable sources have confirmed that irrefutable, documentary evidence of same, from unimpeachable sources, has been politely declined when offered. America opposes Iran’s WMD programme, somebody has chosen to ignore the truth, when  it comes from Venezuela.

Given that close monitoring of Iran’s developing illegal Weapons of Mass Destruction programme has become an American obsession, I am baffled as to why actionable intelligence, regarding these outbound shipments is of no interest to America’s intelligence community. Vessels laden with Uranium  are leaving Venezuela’s Caribbean ports, steaming direct to Iran with their illicit cargo…

There’s a little more to the full post including Rijock’s speculation on the reason for the U.S.’s hear-no-evil, see-no-evil attitude here.

New front in economic warfare: business data held for ransom

The cyber-attacks originate “overseas,” often from Russia, but can Iranian-backed hackers or groups like “Izz ad-Din al-Qassam” be far behind?  Surely they can get a mullah to declare fatwa saying that holding data for ransom is permissible under Islamic law, yes?  As long as the purpose is to destroy the “infidel” Western financial system, and especially if the ransom money is used to advance jihad.  From CNN Money:

The article accompanying this video in December also said that “Security firm McAfee on Thursday released a report warning that a massive cyberattack on 30 U.S. banks has been planned, with the goal of stealing millions of dollars from consumers’ bank accounts.”

Terror deaths and Pakistan aid correlated

The number of civilian fatalities from terrorist attacks in Pakistan is rising on a similar trend line with U.S. foreign aid to Pakistan over the past 10 years.

The foreign aid isn’t working. It actually appears to be backfiring. More aid = more terror.

Although American financial aid to Pakistan has begun declining, there is no appetite in Washington, D.C., to stop spending taxpayer dollars to fund the de facto terrorist state of Pakistan.  Sen. Rand Paul was right to push for at least making aid to Pakistan conditional.  Although Sen. Paul’s latest effort was defeated, these findings should give some reason for reconsideration:

Sources: Congressional Research Service and SATP.org, graph by MoneyJihad

The possible correlation resembles the relationship between aid to the Palestinian territories and the number of Palestinian terrorist attacks.

Data for this graph were compiled from CRS and SATP reports.

Ten biggest terror finance news stories of 2012

1. Taliban funding remains intact despite international sanctions
   Reports in 2012 revealed that the Taliban’s funding remains intact, that none of the Taliban’s assets have been blocked by U.S. sanctions, that the Taliban retains its taxing authority over Afghans, and that the UN sanctions only 18 percent of the Taliban’s provincial shadow governors in Afghanistan.
2. Islamic charities remain top terror financiers
   It’s questionable to even call this “news,” but understanding the role of Muslim charities in funding jihad, of which we saw multiple examples throughout 2012, is the Rosetta stone to bankrupting terrorism.  Instances of Muslim charities behaving badly cropped up, and in some cases have worsened, in both in the Middle East and in the West this year.In the Islamic world, the Saudi charitable foundation IIRO, whose branches in Indonesia and the Philippines were previously blacklisted by the U.S. for funding terrorism, is opening seven new branch offices.  In Bangladesh, the chief of the terrorist organization Jamatul Mujahideen Bangladesh (JMB) revealed that Muslim Aid, WAMY, the Muslim World League, the Qatari Charitable Society, and the Revival of Islamic Heritage Society, are among the primary donors to his jihad. 

Al-Nusra jihadists in Syria sanctioned by U.S.

The U.S. State Department listed al-Nusra Front as a foreign terrorist organization yesterday (h/t Twitter user Sal Imburgia ‏@salimb94).  A parallel designation by the Treasury Department will include a prohibition against business deals between Americans and al-Nusra and a freeze of al-Nusra assets in U.S. banks.

A BBC profile of the al-Nusra Front calls the group’s ideology “clearly jihadist,” and says that al-Nusra has claimed responsibility for “many of the bombings that have rocked Syria since the uprising began in March 2011.”

Additional reports have indicated a warm relationship between al-Nusra and Al Qaeda.

Given U.S. support for many groups fighting in the Syrian rebellion, the designation may present a schizophrenic approach to American foreign policy in Syria wherein certain Syrian rebels receive financial support and rebels that they work alongside with receive financial penalties.  McClatchy lays out several other complicating factors in the al-Nusra designation in a good report here.

Kenneth Rijock also weighed in prior to the the designation on what it would mean for U.S. banks with commercial relationships in Syria and the Palestinian territories:

Multiple reports of the imminent OFAC  designation of the Al-Nusra Front, a radical Sunni organisation fighting the Assad regime in Syria, should alert compliance officers whose clients are sending relief funds, and supplies, to Syrian Opposition groups. Its Arabic name is Jabhat Al-Nusra, and the approximate English translation is Front for the Protection of the People of the Levant.

One important detail: Al-Nusra, which has spewed forth anti-American and Anti-Israeli hatred, reportedly contains a fair number of Palestinians. Don’t get caught in an OFAC violation if your clients are in the midst of what you thought were contributions to Palestinian causes, but go straight to Al-Nusra. It has been reported that the OFAC action will take place around 12 December.

I would piggyback on Rijock by making the following suggestion to non-profits, NGOs, charities and their donors:  if you are involved with relief work in either Syria or the Palestinian territories, you should factor the risk of funding this Al Qaeda offshoot into your aid distribution plans.  Are making such donations so important to you that you would risk supporting an Al Qaeda takeover of Syria?

Energy independence from Arab oil

A recent column by Tom Keane points out the tremendous growth in U.S. energy production thanks in large part to American innovation in hydraulic fracturing.  As he indicates, freedom from Middle East oil presents several benefits:

• Reduced influence of OPEC
• The risk of supply interruptions decreases
• Military spending could decrease without jeopardizing security
• Domestic economic/job growth

The purpose of independence isn’t necessarily about the price at the gas pump—that is a straw man set up by fans of foreign oil dependence and environmental extremism as a reason to halt progress toward energy freedom.

But let Keane tell it:

A new world of American energy independence

The United States is soon to be awash in oil and natural gas, positively brimming with the stuff whose scarcity and unreliability of supply has plagued us since the end of World War II. It is a remarkable, stunning turn of events — largely unforeseen just a few years ago yet now an imminent although still hard-to-believe reality. And the implications of this new reality will be dramatic too — almost all of them positive although not without some risks. Remember when the United States once trembled at the power of OPEC? In a short while, we may be running the thing.

Last month the well-respected International Energy Agency declared, “A new global energy landscape is emerging . . . redrawn by the resurgence in oil and gas production in the United States.” Within eight years, the America is expected to be the planet’s largest producer of oil. By 2030, we’ll be producing more than we need — exporting, not importing. The reason is technology. Techniques such as hydraulic fracturing have been invented and improved so that they can now economically unlock the vast stores of oil and natural gas across the middle of the country. The flyover states may finally start getting some respect.

It’s uncomfortable to admit this, but Sarah Palin had a point: The key to American energy independence is “drill, baby, drill” — or perhaps more correctly, “frack, baby, frack.”

Don’t count on this abundance making for cheaper gasoline, however. Oil is a global commodity, and, unless the United States decided to subsidize its price, it will still sell to the highest bidder. Nevertheless, the fears of supply disruptions and embargoes — remember the gas lines of 1973? — will largely disappear. Should some country decide to block the Strait of Hormuz, it’ll be other nations, not the United States, feeling the pain. (US law currently prohibits us from exporting oil. Even though it likely will be changed, we’ll still make sure our domestic needs are met first before shipping overseas.)

On the other hand, these newfound supplies may get us a cheaper military budget. Why is the United States so deeply involved in the Middle East but not in, say, Africa? Oil. For at least the last 60 years, its constant supply has been a paramount worry: without energy, the economy collapses. But that policy, while necessary, cost us blood, treasure, and integrity. Too often, we sacrificed our ideals to support a local strongman who could keep pipelines safe. And the wars, both far afield as well as attacks on our soil, have been a burden.

What happens when we no longer need Middle East oil? Foreign policy changes. Conflict is reduced, and our goals can, one hopes, become principled — less tarnished by economic exigencies, more focused on human rights.

There will be dramatic changes at home too. The states with oil reserves will see a huge bump in their economies (already shale-rich North Dakota has the lowest unemployment rate in the country). The entire nation’s economy will benefit too. With energy supplies and prices abundant and stable, business will thrive.

There are risks, two of which are obvious. Fracking can contaminate underground water supplies (and uses lots of water to boot). That’s an issue of smart regulation, however. We already take huge risks with offshore drilling — BP oil, for example. Fracking’s potential impact is arguably less risky and also more manageable.

The other has to do with global climate change. The scarcity of oil (“peak oil” — the theory that supplies are about to diminish — is now, at least for this century, largely kaput) had the beneficial effect of driving us toward conservation and cleaner energy. With a glut of petrochemicals, will that push stop, causing greenhouse gas emissions to worsen? Possibly but not necessarily. The natural gas being extracted by fracking is actually cleaner than oil. Then too, every barrel of oil saved by conservation or alternative energy is a barrel sold overseas — meaning there’s an economic incentive for using renewables.

Those risks notwithstanding, our new world of energy should be a cause of great optimism. Many fear our time is over; the Great American Century finished. The renaissance of domestic oil and gas are of such magnitude, though, it may be another Great American Century is about to begin.