Authorities move against terrorists. Judges say, “not so fast”

Recent news stories about government actions against terrorists being hampered by their court systems have caught my attention:

• In Britain, the Supreme Court has ruled that Treasury’s efforts to freeze the assets of five terrorists without parliamentary approval were unlawful.
• In Bahrain, their Constitutional Court has banned “authorities from freezing or seizing assets belonging to families of suspects in money-laundering cases or criminals.”  Yes, you read that right.  Bahrain’s government can no longer freeze terrorist assets.
• According to a Kuwaiti economic expert, Kuwait lacks serious judicial enforcement mechanisms against money laundering cases.

Am I missing any other stories in the same vein?

Bin Laden and a truck full of dope?

Despite overwhelming evidence that terrorism is funded by zakat payments and other traditional revenue streams of Islam (see here, here, here, here), the U.S. attorney for Manhattan Preet Bharara perceives a world of symbiosis between terror and…drugs.

Mr. Bharara sees the connection as being so intense that he has disbanded his office’s old terrorism unit—which had successfully prosecuted culprits of the first World Trade Center bombing and the East Africa embassy bombings in the 1990s—and is replacing it with a new, merged, “Terrorism and International Narcotics” unit.

See excerpts below, or the whole story here, from the New York Times:

The United States attorney in Manhattan is merging the two units in his office that prosecute terrorism and international narcotics cases, saying that he wants to focus more on extremist Islamic groups whose members he believes are increasingly turning to the drug trade to finance their activities.

United States Attorney Preet Bharara is merging two divisions in his Manhattan office.

Some Western law enforcement and intelligence agencies have long pointed to what they say are the symbiotic relationships that sometimes exist between terrorist groups and narcotics traffickers, from Al Qaeda in Afghanistan and Hezbollah in the Middle East to the Revolutionary Armed Forces of Colombia, or FARC…

By merging the units, Terrorism and National Security and International Narcotics Trafficking, Mr. Bharara said he is combining two groups that have developed many of the same skills — working overseas, often using classified information, to build complex cases against sophisticated targets…

The move effectively doubles the number of prosecutors in the office handling terrorism cases as it prepares for the trial of the self-described mastermind of the 9/11 attacks, Khalid Shaikh Mohammed, and four other former Guantánamo Bay detainees. It is a major undertaking that will unquestionably prove to be a significant draw on the unit’s resources…

Dubai atop a “toxic tide of illicit cash”

Today’s post involves another news story about the connections between crime and terrorism.  However, this article is better than average, because it doesn’t try to equate terrorism with international crime, like the speech analyzed here in yesterday’s post.

Last Sunday’s Guardian printed a follow-up to the story of hawaladar Naresh Jain’s arrest.  I’ve blogged about Jain here earlier, so I’ll cut out the background and go straight to the heart of the Guardian piece, which is how Dubai was the perfect setting for Jain’s and other people’s crimes:

Jain has reportedly admitted to Indian police that he has laundered cash, but denies being involved in the drugs trade.

However, investigators believe that his businesses are based on huge sums of cash originating in Africa and passed on to him by diamond smugglers and drug dealers – and that most of that illicit cash flows into Dubai. But the allegations against him do not make him unique in the emirate. “[Jain’s arrest] was an important incident, but many wanted men reside in Dubai,” says Dr Christopher Davidson, an expert on Gulf economics at the University of ­Durham.

To many, Jain is the latest, perhaps the biggest, example that proves the United Arab Emirates is not so much awash with vast oil wealth but built on a toxic tide of illicit cash: a place where Russian mafia and drug cartels clean their dirty cash and al‑Qaida finances terror atrocities. And at its heart is Dubai, a world financial centre that in the past 15 years has grown exponentially.

As Dubai’s ruling elite pick through the wreckage of its bombed-out economy, which exploded under the weight of $60bn of debt last year, an equally pressing issue threatens to undermine not just Dubai but the UAE as a whole.

Next month, a meeting of the Financial Action Task Force (FATF), the powerful intergovernmental body responsible for combating money laundering and the financing of terrorist networks, will meet in Abu Dhabi. The meeting is expected to establish which countries to put on a high-risk jurisdiction list following a request by G20 finance ministers last year. It is thought likely that the UAE will feature on the list. Such a development would be a serious blow to the money men of Dubai, but would confirm many people’s fears that it remains a port of choice for dirty cash.

Mild milestone

As of this evening, Money Jihad has been viewed over 4,000 times in the less than four months since we launched.  Thank you to all the readers!  It’s gratifying to see steady and growing readership.

But the best part is that as the word spreads, the lights are shining brighter and brighter on the darkness of terrorist financing.

Bureaucrat blurs terror & ordinary crimes

David T. Johnson, Assistant Secretary, Bureau of International Narcotics and Law Enforcement Affairs delivered a speech last week entitled, “The Escalating Ties Between Middle Eastern Terrorist Groups and Criminal Activity.”

His full speech is worth a read, but three passages from his remarks that I’ve excerpted below are worth special attention and correction.  [My observations are bracketed, bold, and green.]

The first problem is that Johnson exaggerates the role of drugs in financing terrorist organizations.

In recent years, many of these (terrorist) groups have focused almost exclusively on using narcotics as a means to finance their activities. [Groups such as?  Even senior U.S. officials concede in unguarded moments that most of the Taliban’s revenues come from donations, not from drugs.]  As the international community clamped down on state-sponsored terrorism and pressured governments from financially supporting terrorist organizations, many groups resorted to drug trafficking and other illicit activities as sources of revenue. According to the U.S. Drug Enforcement Administration, 19 of the 44 groups that the U.S. Government has designated as Foreign Terrorist Organizations (FTOs) participate in the illegal drug trade and many also engage in financial and other forms of crime.

[Like I said earlier this week, some observations about the connections between drugs and terror are valid, and some are mere hyperbole.  “Participate” does not equal focusing “almost exclusively on using narcotics as a means to finance their activities.”  None of the world’s most dangerous terrorist organizations—Al Qaeda, the Taliban, Hezbollah, and Hamas—have focused almost “exclusively” on narcotics.  The Taliban comes close, but even that is an arguable and possible outdated viewpoint.]

Secondly, Johnson exhibits typical Western short-sightedness about hawala:

A convergence of crime and corruption can also pave the road for terrorist organizations to finance their terror, as was the case in Bali, Madrid and Mumbai. In particular, terrorist financiers are not only concealing their financing assets through complex transactions in the formal banking system, but also harnessing centuries-old money laundering tactics. They exploit informal value transfer mechanisms such as hawala or hundi and trade-based money laundering, and use illegal cash couriers as bulk cash smugglers, particularly in countries with non-existent or weak anti-money laundering enforcement practices.  

[With all due respect, sir, hawala did not finance the terror in Mumbai.  Hawala is a type of transaction—a verbal wire if you will—but fundamentally it is not a revenue source.  It is a transfer; the question is, a transfer from whom?  Most reports have indicated that Lashkar-e-Taiba funded the Mumbai attacks, and yes, LeT transferred funds via hawala, but LeT did not obtain their wealth through hawala.  LeT’s money came from zakat “donations”.]

Lastly, Johnson repeats the conventional wisdom about the role of state sponsorship of terrorism:

In the Middle East, and other parts of the world, the United States is working with partner governments to develop effective, democratic, civilian-led and skilled law enforcement and justice sector institutions. Hamas and Hizballah continue to finance their terrorist activities mostly through the state sponsors of terrorism , Iran and Syria, and through various fundraising networks in Europe, the United States, and the Middle East. The funds channeled to these organizations frequently pass through major international financial capitals, such as Dubai, Bahrain, Hong Kong, Zurich, London, or New York. Hizballah also continues to profit from the drug trafficking groups in the Bekaa Valley of Lebanon.

[Don’t get me wrong—state sponsorship by countries like Iran is significant, and I have blogged about state sponsorship many times myself.  But according Hezbollah itself, most of its revenues come from the khums, the Shia Islamic 20 percent tax on all profits, which originates from Iran without necessarily being “state sponsored.”  It would be more accurate to say “Islam sponsored.”] 

Overall, Mr. Johnson did not acknowledge the true sources of terrorist revenue.  He only referenced the ushr obliquely, and he didn’t mention zakat or khums at all, which are the true revenue sources behind the trends he described.

I don’t mean to pick on David Johnson.  He’s got a tough job which mostly involves anti-drug enforcement, so naturally his bias is to perceive terrorism as the twin brother of drug trafficking.  And actually his speech is more detailed, honest, and informative than the spin job we were treated to last October by David S. Cohen.

Still, it seems that our public officials and media are too afraid to say the word “Islam.”  It’s far easier for them to talk about “narco-trafficking,” “money laundering,” and “state sponsorship” instead.  They have effectively “de-Islamized” discourse about the financing of terrorism.

Word of the week: hawala

Hawala is Arabic for “transfer.” 

Unfortunately, all too many definitions of hawala highlight the positive aspects of the “transfer,” like the Interpol report that highlights the “cost effectiveness” and “efficiency” of hawala.

And the definitions with more cynical views don’t even bother to tie the hawala back to Islam.  Princeton’s online lookup calls hawala, “an underground banking system based on trust whereby money can be made available internationally without actually moving it or leaving a record of the transaction.”

One of the only definitions I have come across (which I’ll add to our glossary soon) that succinctly describe what the hawala is, its benefits when used legally, and its inherent risk of terrorist or criminal activity comes from a report* issued by the Council on Foreign Relations defining hawala as:

[An] underground banking system, which allows money transfer without actual money movement, or any wire transfer.  There is nothing inherently illegitimate about the hawala system—it offers critically needed financial services in many remote corners of the globe and is used extensively by millions of law-abiding persons… But its nature makes it particularly susceptible to abuse by terrorists and other criminals (Greenberg).

I’d like to think that my own post on hawala here also helps clarify the concept.

What’s important to emphasize is that the hawala is just a type of transaction.  Nothing about hawala implies the source of the money being transferred.  That’s why it’s so absurd to blame hawala for “funding” terror.  What it does is conceal the funding trail.  But our own government officials don’t even seem to understand that.  More on that tomorrow.

*Greenberg, Maurice R.  Terrorist Financing.  Council on Foreign Relations:  New York, 2002.

Terror & drugs

When it comes to the connection between drugs and terrorist financing, there are two types of observations:  those that are legitimate causes for concern and further investigation, and those that are designed to distract from the larger money jihad against the West and make terrorism appear like any other form of international crime.  (See one of my posts on our government’s attempt to sanitize jihadist financing here.)

Today and later this week I’ll make several posts about terror & drug stories in the news—again, some are legitimate, but some are case studies in misdirection.

For now let’s look at a development that is genuine cause for alarm, which is the exploitation of the African Sahel by Al Qaeda.  Deutsche Welle ran this lengthy piece about the Sahel being used as a transshipment point for drugs from Latin America into Europe:

Two incidents involving the trafficking of drugs to Europe have highlighted concerns about links between Islamist militants and drug-trafficking militants in Latin America.

A little-noticed smoldering plane wreckage with traces of cocaine in a remote area of the West African state of Mali in which an Al Qaeda affiliate and nomadic rebels are active has focused attention on the emergence of the region as a major hub for the trafficking of drugs to Europe.

So has the arrest of three al Qaeda operatives in Ghana, who were charged with narco-terrrorism in New York after being handed over to the US Drugs Enforcement Agency (DEA) and transported to the United States.

Analysis of S. 569 on OpenCongress.org

One of the most popular posts here on Money Jihad (according to WordPress‘s stats) has been my review of the Incorporation Transparency and Law Enforcement Assistance Act (S. 569) currently proposed in the U.S. Senate.

OpenCongress.org has posted the lead and link to my original post here. Take a look!  OpenCongress provides blog links to additional perspectives on the bill, including an October article I had never seen before from Heritage.org that called S. 569 “another Sarbanes-Oxley” that would put small businesses “under seige.”

Incorporation Transparency and Law Enforcement Assistance Act

Little economic freedom in Muslim countries

The Heritage Foundation and the Wall Street Journal have just published their 2010 Index of Economic Freedom.  Of the 41 majority-Muslim countries rated, 29 were designated poorly as either “mostly unfree” or “repressed.”

Eleven Muslim countries were deemed “moderately free,” and Bahrain, the highest rated Muslim country at #13, was the only one of the lot ranking “mostly free.”  Iran, Turkmenistan, and Libya ranked among the bottom dozen.

I filtered and sorted the index data to show you the index’s ranking for each Muslim nation:

USAID turns up nose at Pakistan

Saudi Arabia’s King Abdullah isn’t the only one with an accounting shitstorm, I mean sandstorm, on his hands.  Pakistan still has its own accounting embarrassment after embarrassment.

Most recently, the U.S. Agency for International Development says the lack of financial controls within Pakistan are so severe that the United States should not give foreign aid to Pakistan at this time.  From The Gov Monitor earlier this month:

As the United States prepares to drastically increase civilian aid in Pakistan, the agency in charge has asked for help training the local organizations that will spend that aid money, saying those organizations “do not meet the minimum standards for managing” U.S. government funds.

Emerson profile highlights fishy “charities”

George Michael has written a profile of national security reporter Steve Emerson in the latest issue of the Middle East Quarterly.  Emerson has exposed many vulnerabilities in America’s defenses over the years, but of special interest for this blog is Emerson’s work investigating Islamic charities:

In later testimony before the U.S. Senate Judiciary Committee on November 8, 2005, he [Emerson] charged that Saudi Arabia had funded a vast network of charities and religious organizations that had ties to terrorist groups, including Al-Qaeda and Hamas.[21] This testimony prompted Treasury and National Security Council investigations into the labyrinth of radical Islamic charities operating in the United States. According to federal officials, these investigations led to an effort within the agencies to shut down some of the charities but nothing was done; the Clinton administration lacked the political will to close down the charities. Only after the 9-11 attacks did that will emerge and efforts to shut down the charitable fronts succeed.[22]

Emerson has focused primarily on the fundraising activities of mainstream Muslim groups and their links to the more radical organizations for which they serve as fronts. As he has observed, one of the most important activities carried out by Islamist groups in the United States has been the establishment of nonprofit, tax-deductible organizations