Archive for March, 2010


Still no oversight of Gulf charities

March 31, 2010

NPR aired a story last week on the Taliban’s finances.  The media usually focus on the Taliban’s opium revenues, but this report was more helpful because it actually addresses the cash pipeline of zakat “donations” from the Persian Gulf to Afghanistan:

[T]here is a steady stream of cash that flows to the Taliban, wittingly or otherwise, from Muslim charities and religious institutions outside Afghanistan.

‘Charitable’ Donations

Haroun Mir, director of Afghanistan’s Center for Research and Policy Studies, says many of those donations come from the oil-rich countries that make up the Gulf Cooperation Council, or GCC.

“There [is] a network of charities in the GCC countries which directly support institutions in Pakistan which are supporting financially these extremist movements such as the Taliban,” Mir says. “And our estimates are in Afghanistan that between $150 [million] to $200 million every year reaches directly to Taliban via this network of charities that exists in the Gulf countries.”

Mir says he recently asked Bahrain’s foreign minister what can be done to halt the money flowing to the Taliban.

“He recognized the problem,” Mir says. “But he responded there is no mechanism in the region to monitor the transfer of charity funding. And I think it would be good if the United States government, in cooperation with the countries in the region, creates a mechanism in order to monitor. And he also mentioned licensing of the charity organizations.”

Analysts say that in a region where nongovernmental aid groups and charities operating domestically often face severe scrutiny and regulation, such lack of oversight on the religious charities seems a glaring omission.

Read or listen to the full report here.  What’s stunning above is the statement from Bahrain’s foreign minister, big boy Shaikh Khalid Bin Ahmed Bin Mohamed Al Khalifa, that “there is no mechanism in the region to monitor the transfer of charity funding.

This sounds like confirmation that Saudi requirements for SAMA to approve charitable transfers abroad are misleading or meaningless.  It’s also an admission that Bahrain hasn’t done much to regulate its own charitable sector.  This is not very reassuring when Bahrain had at least one state minister laundering up to $30 million and the country has no means of freezing illegally used assets.

U.S. Treasury and State Department officials need to do a much better job of cajoling the Gulf nations to regulate their charitable sectors.


Weekly word: jizya

March 30, 2010

This week’s word is jizya, and the definition comes from Newby’s Concise Encyclopedia of Islam:

jizyah (Arabic: tribute)  A capitulation tax or poll tax paid by non-Muslim members of the Islamic state, the Ahl al-Kitab, who also paid a land tax, the kharaj.

A poll tax is a tax on individuals rather than on wealth or income.  Poll taxes are also known as capitation (from the Latin for “head”) taxes.  Newby doesn’t use the term capitation, but rather capitulation, which is more descriptive.  The jizya is a capitulation tax, in the sense that it is paid when you capitulate, surrender, and feel subdued by Islam.

What’s also helpful about Newby’s definition is that it doesn’t insert a whole lot of editorial fluff or watering down of the jizya.  Folks like Esposito try to defend the jizya in their definitions by saying that it only applies to males in lieu of military service.

Historically, it may be true that the jizya applied to military-age men, but the Koran itself does not make that distinction.  The Koran says the jizya must be imposed upon the people of the book, meaning Christians and Jews, and does not offer any special exemptions.

Newby also does well to acknowledge the kharaj.  Many jihad watchers are unaware of the massive and punitive kharaj that has historically imposed a massive tax burden on non-Muslims.

Other “analysts” also try to describe jizya as “compensation” or “recompense.”  For an explanation of why it is more appropriate to call the jizya a “tax,” see my recent Yahoo! answer to a devious little questioner.  She contradicted my arguments, but she still selected my answer as the best!  Read the exchange for yourself and make up your own mind.

For more details, you can read my three-part essay (i, ii, and iii) on the jizya.  Definitions for other Islamist and terrorist finance terms can be found in the glossary.


“Material support” still a valued tool

March 29, 2010

Supporting terrorism is wrong.  Providing “material support” to a terrorist organization is just a fancier way of saying that.

But “material support” is a controversial subject.  The material support provisions of the Patriot Act have been argued before the Supreme Court.  Countries like the Netherlands don’t even acknowledge material support of terrorism as a crime.

But being able to arrest and prosecute individuals for their material support of terrorism is still a critical tool for U.S. law enforcement.  The latest example of this comes from a jihadist taxi cab driver in Chicago who tried to transfer funds to overseas to an Al Qaeda-linked extremist group.  The cabbie also wanted to blow up an American sports stadium.

From Bloomberg:

March 26 — U.S. prosecutors accused a Chicago taxi driver of providing material support to the al-Qaeda terrorist network by attempting to send money overseas.

Raja Lahrasib Khan also allegedly discussed plans to attack an unidentified stadium in the U.S. later this year, according to the criminal complaint and a supporting affidavit unsealed today after Khan’s arrest.

Khan, 56, a naturalized U.S. citizen who was born in Pakistan, was remanded to federal custody following an initial appearance today before U.S. Magistrate Judge Geraldine Soat Brown in Chicago. His next court date is March 30.

“There is probable cause to believe that Khan has, on at least two occasions, attempted to provide material support or resources, namely funds, to a designated terrorist organization,” U.S. Federal Bureau of Investigation Agent Daniel Glavach said in 35-page affidavit appended to the complaint, identifying al-Qaeda as that group.

He is charged with two counts of providing material support to a terrorist organization. Each count is punishable by up to 15 years imprisonment, according to a statement by Chicago U.S. Attorney Patrick J. Fitzgerald announcing the charges.

The prosecutor said that while Khan is alleged to have ties to Ilyas Kashmiri, one of four men charged in Chicago with plotting to attack a Danish newspaper, this case is unrelated to that one.

‘Extremist Group’

Kashmiri, a Pakistani man who isn’t in U.S. custody, allegedly leads Harakat ul-Jihad-I-Islami or HUJI, which prosecutors today called “a Sunni extremist group” with links to al-Qaeda.

Khan allegedly sent $950 from Chicago to an individual in Pakistan last year with instructions to deliver some of that money to Kashmiri. Earlier this month, he allegedly accepted $1,000 from an undercover agent for delivery to Kashmiri.

Read the rest here.


Setting the record straight on Islam’s camel tax

March 28, 2010

Gulf News offered this syrupy ode to the camel yesterday:

Dubai: The UAE is historically known for its attachment to camels which are of social and economic value in the region.

The animal is famously known as the ship of the desert because of its walk, which is much like the motion of a ship at sea. Patience is one of its most observable features and camels are generally useful animal.

Historically, camels in the UAE were a dependable source of not only transport but also food and milk.

Arabs were proud of the number of camels they possessed.

The camels were given as a bride’s dowry among the Bedouin tribes. Not to mention its use as payment of Zakat — the annual portion of a Muslim’s personal fortune that is given as charity to people in need — as which was at times paid in camels instead of money.

The population of camels in the UAE in 2003 was estimated at over 178,000, according to the Abu Dhabi Culture and Heritage.

Contrary to what Gulf News states above, Islam requires camels to be used as payment for zakat.  Camels are themselves a form of wealth under Islam and are subject to taxation.  As payment, the camel owner must forfeit a number of camels based on complicated ratios set forth in the Hadith.

Like I’ve said before, more passages of the Hadith address the camel zakat than the 2½ percent monetary zakat.  The Gulf News should know better, and they probably do, but they are trying to make a religious obsession with camels sound quaint.

The reason why I spend any time blogging about this subject is that the zakat on camel wealth illustrates perfectly the anachronistic foolishness of carrying forward a tax system devised by Muhammad in the seventh century into the present day.


Treasury freezes this goon’s ass(ets)

March 26, 2010

Who, lil ole' me?

Hopefully none of you has a business deal in the works with this totally innocent, not-at-all creepy looking Al Qaeda in Iraq (AQI) associate.  Terrorism and Financial Intelligence (TFI) Undersecretary Stuart Leavey has designated the man, Muthanna Harith al-Dari, as a terrorist financier.  It is now illegal for any American or U.S. business to deal with him, and American banks must freeze any accounts he may hold with them.

The UN has joined in the designation through the authority of its Resolution 1267.

The Treasury Department’s statement indicated that, “As of October 2008, al-Dari provided $1 million to an AQI member who actively recruits Iraqis in Syria and al-Anbar province to support AQI, instructing the recruiter to tell new AQI recruits that they would be paid up to $10,000 upon completion of their training in Syria.”

Wow–a $10,000 graduation bonus?  Not bad.  Especially compared to Afghanistan where “$10-a-day Taliban” are recruited with far smaller promises.  Notice that al-Dari only told them to tell them they’d get $10,000–not that they actually paid it.


Bahrain gets “tough”

March 25, 2010

If by “tough” you mean no arrest, no indictment, and no freezing of assets for a Bahraini government minister who’s been laundering money to the Iran’s Revolutionary Guard.  From Al Arabiya  via Rantburg on Tuesday:

Bahrain on Monday sacked a state minister after he was accused of links to a domestic and international money laundering network suspected of working for Iran’s elite Revolutionary Guard.

The Gulf state’s ruler, Sheikh Hamad bin Isa al Khalifa, issued a decree relieving Minister of State Mansoor bin Rajab of his official duties as of Tuesday.

It is the first time since Bahrain gained independence from Britain in 1971 that such a high-ranking minister has lost his post and faced prosecution for alleged criminal and corruption charges.

Bin Rajab, 55, was briefly detained by authorities for questioning last week. His home and offices were also searched.

The decision came at a time when judicial investigations in both Bahrain and Kuwait were underway to uncover details of a money laundering network suspected of working for Iran’s Revolutionary Guard.

Read the rest of this entry ?


Shocker: mainstream media acknowledge jizya

March 24, 2010

Zarar Khan, an Associated Press reporter writing in the Seattle Times, has written an article about persecution of Sikhs in Pakistan.  Surprisingly, the article actually acknowledges that Sikhs there are being forced to pay the jizya.  Here’s the beginning of the Mar. 22 article:

PESHAWAR, Pakistan — Five Sikh men who fled their hometown on the Afghan border were making a quick trip back home when masked men blocked their way with a pickup on a mountain road not far from the Khyber Pass.

There were no houses, no buildings, no other cars in sight. The kidnappers covered their faces with black scarves and carried machine-guns.

Surjeet Singh had just wanted to check on the small grocery store he had left behind in Dabori, the Pakistani town he fled a year ago when it was overrun with Taliban fighters and the government launched a bombing campaign against them. In an area torn by Islamist violence, it had quickly become a dangerous place for a non-Muslim.

Read the rest of this entry ?


Treasury outs Hamas’s bank

March 23, 2010

Last Thursday, the U.S. Treasury Department designated the Islamic National Bank in Gaza as being controlled by Hamas.  The Wall Street Journal offered more context on the decision than most news outlets:

WASHINGTON—The U.S. Treasury put two Gaza institutions, Islamic National Bank and Al-Aqsa Television, on its terrorist-financing list as part of its effort to contain Hamas financially because, it said, they were controlled by the militant group.

The designation prohibits U.S. firms or individuals from doing business with the companies, and essentially tries to cut them off from international financing. The U.S. considers Hamas, which runs Gaza politically and militarily, a terrorist organization.

The fight over Islamic National Bank is part of a long-running battle between the U.S., Israel and the Palestinian Monetary Authority—the banking regulator on the West Bank—to limit the Hamas organization’s ability to operate and its ability to do business overseas. Hamas generally gets its funding from abroad, and the money is largely smuggled into Gaza from Egypt, according to PMA and Israeli officials.

The chairman of Islamic National Bank, Ala Rafati, denied the U.S. allegations that the bank was affiliated with Hamas. “They are involving us in politics. We are not at all involved,” he said. “We are a private bank that has been registered through the proper procedures.”

Read the rest of this entry ?


Definition of the week: Islamic banking

March 22, 2010

Although the source is suspect, this definition for sharia finance comes once again from John L. Esposito, author of The Oxford Dictionary of Islam:

Banking, (Islamic)    Islamic banking is interest-free banking inspired by Islamic law.  Its uses include mudarabah (profit sharing), murabahah (advance purchase with later sale at marked up price), ijarah (leasing or long-term credit), and musharakah (equity sharing).  The first modern Islamic banking institutions were farmer credit unions in Pakistan in the 1950s and the Mit Ghamr Savings Bank in Egypt (1963).  Major expansion came in the 1970s due to oil revenues and growing economies in the Persian Gulf and the rising desire for implementation of Islamic values in all spheres, including economic and financial.  Gulf business interests strongly supported the Islamic banking movement, which has spread beyond the Muslim world into the West.  Islamic banking today is particularly strong in Malaysia and Indonesia.  Islamic financial instruments increasingly are accepted internationally, even in non-Islamic countries.  In Iran and Pakistan, the financial system was reorganized in the 1980s to bring it into conformity with Islamic law. (pp. 35-36)

As usual, take a look at the Money Jihad glossary and feel free to submit any requests or better definitions through the contact form.


Surprise move by faceless UN bureaucrats

March 21, 2010

Without any explanation, the United Nations has unfrozen the assets of Youssef Nada and taken him off their terror finance listing.  There was no transparency, no public vote, and no public input allowed before a decision was reached.  From Newsweek’s “Declassified” blog:

The U.N. Security Council has quietly dropped Youssef Nada, a prominent financial and diplomatic representative of the Muslim Brotherhood, from an international sanctions list directed at curbing the activities of alleged terrorist financiers. The delisting of Nada, by the Al-Qaida and Taliban Sanctions Committee, was announced by this official notice posted on the Security Council’s Web site. In addition to Nada himself, the notice declares that two businesses associated with him, Waldenberg AG of Liechtenstein and Youssef M. Nada & Co. GMBH of Vienna, also have been removed from the U.N. sanctions list.

The Security Council’s announcement does not explain why the council decided to drop financial sanctions against Nada and his companies—sanctions intended to curb their ability to conduct financial activities anywhere in the world. But Victor Comras, a former adviser on financial sanctions to the U.S. State Department and, later, an adviser to the committee that produced the sanctions lists, says he find the U.N. action troubling. “To my mind this is a great mistake. I’m kind of mystified by it,” Comras told Declassified. When Nada was put on the U.N. sanctions list, it was done with great public fanfare, Comras said. But when the U.N. decided to take his name off, it was done with a minimum of public discussion…

Read the rest of the story here.


IMF’s anti-money laundering efforts: right region, right sector?

March 19, 2010

Here is the full text of an article from The Financial on Mar. 12 called, “IMF Technical Assistance Helping African Countries Step Up Measures Against Money Laundering”:

The International Monetary Fund (IMF) is helping 16 African countries step up their fight against money-laundering and the use of their lucrative gold and diamond industries to fund terrorism through a range of technical assistance programs and seminars targeted at helping countries address institutional weaknesses.

In the last few years, a number of reports have raised concerns about the existence of links between the trade in precious minerals and illicit financial flows, corruption, drug trafficking, arms smuggling and the financing of terrorism.

Anti-money laundering and combating the financing of terrorism is a key focus of the IMF’s program of technical assistance for members. The work of the IMF in this area is financed in large part through a multi-donor topical trust fund on Anti-Money Laundering and Combating the Financing of Terrorism (the AML/CFT TTF), which was launched in May 2009 with contributions from France, Kuwait, Luxembourg, the Netherlands, Norway, Qatar, Saudi Arabia, South Korea, Switzerland, and the UK.

“In the first stage of the technical assistance, representatives from six French-speaking African countries are taking part in a five-day workshop this week in Tunis. The workshop is jointly organized by the African Development Bank and the IMF’s Legal Department, which oversees the Fund’s work on anti-money laundering and combating the financing of terrorism. Another workshop is scheduled for June, also in Tunis, for representatives of a group of English-speaking African countries. In the second phase of the assistance effort, participating countries will draw up national AML/CFT strategies with support from Fund-backed experts. IMF staff will also support continued efforts to curb money laundering and terrorist financing through long-term technical assistance programs,” IMF reported.

“Better regulation and oversight of the precious minerals sector will not only help these countries combat these phenomena, but also boost revenues and improve their fiscal situation,” said Emmanuel Mathias, an IMF Senior Financial Sector Expert involved in the program. Improved regulation will also contribute to increasing the compliance of countries in sub-Saharan Africa with the recommendations of the inter-governmental Financial Action Task Force (FATF).

Africa produces an estimated US$19 billion in gold per year and US$6 billion in diamonds. But an unknown amount is laundered or siphoned each year for criminal purposes. All countries participating in the project either produce or trade in precious metals or stones–mainly gold and diamonds. The countries taking part in the first workshop are: Burundi, the Central African Republic, the Democratic Republic of Congo, Côte d’Ivoire, Mali, and Togo.

Hmm… Africa produces $25 billion in gold and diamonds annually?  Keep in mind, businesses in the Persian Gulf region generate $25 billion annually in corporate zakat alone.

I’m glad the IMF is helping with AML in the mines of Africa, but couldn’t IMF resources be put to better use by redoubling their efforts in the Gulf?