Archive for September, 2012

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UN sanctions only 6 of 34 Taliban governors

September 17, 2012

The Taliban has powerful shadow governors overseeing operations in nearly every province in Afghanistan.  But the UN-imposed asset freeze, travel ban, and arms embargo against the Afghan terrorist group excludes dozens of these Taliban governors from international sanctions.

A new report from the UN’s Taliban sanctions monitoring team indicates that at least six, but no more than 11 Taliban provincial governors, are blacklisted under UN Resolution 1988—the 2011 resolution that separated the Taliban and Al Qaeda sanctions lists.  At least 42 individuals are known to be serving or have served as provincial governors in the past year.

The monitoring team recommends that the UN security council consider sanctioning these individuals, saying “it would seem logical to add the missing names.”

The report notes that the provincial governors often move across borders, and applying the travel ban would help increase pressure against them.

Although the UN report received ample media coverage for its analysis of the Taliban’s revenues, the revelation that so few Taliban governors are sanctioned was totally overlooked by the news wire services.  Reuters didn’t mention the recommendation, the Associated Press focused on sanctions as a negotiation tactic, and Agence France Presse focused on Taliban fundraising.

Hat tip to Twitter user El Grillo for sending a link to the text of the UN report.

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U.S. banks should review Nicaraguan accounts

September 16, 2012

While the report that Hezbollah operates a training camp in Nicaragua has garnered a lot of attention, the terrorist financing implications have barely been discussed.  Fortunately, Kenneth Rijock has taken up the issue, and offers some astute analysis on how the news should affect compliance officers at U.S. and Canadian financial institutions in their evaluation of correspondent relationships in Nicaragua and Honduras.  From Rijock’s financial crime blog last week:

HEZBOLLAH MONEY LAUNDERING OPERATIONS IN THE WESTERN HEMISPHERE

The international media today discussed the reports of a Hezbollah terrorist training camp, located in Northern Nicaragua, near the frontier with Honduras, where 30 cadre are reportedly preparing trainees for attacks upon the United States, in the event that America, or Israel, attempts to destroy Iran’s illegal nuclear programme. This is extremely disturbing; Hezbollah Venezuela has existed for several years, but an organised Hezbollah presence in Central America presents a clear & present danger to the Continental United States.

There is an even more ominous aspect to this camp: buried in the reports about the camp is the information that it is also being utilised for money laundering activities. We know that one of Hezbollah’s principal methods of financing its operation is the sale of cocaine, but are they also laundering the criminal proceeds of others?

Regular readers of the blog will recall the seizure of millions of dollars, in the general area recently, in the possession of a well-prepared group of Mexican bulk cash smugglers, posing as media employees arriving to cover a criminal trial. If Hezbollah is laundering Mexican cartel, or Colombian trafficker profits, it will probably be using commercial banks in Central America to accept the dollars, which means they will later transit US banking centres.

If you are a compliance officer at a North American bank that has correspondent relationships with Nicaraguan commercial banks, casas de cambio, or non-bank financial institutions (NBFIs), you may want to determine whether volume from those correspondents has increased of late, and whether your correspondent’s clients have legitimate lines of business to justify the additional funds.

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HSBC’s mixed record on Sudan

September 14, 2012

Since 1997, the U.S. has maintained sanctions against Sudan, a state sponsor of terrorism.  The United Nations has imposed an arms embargo on Sudan’s Darfur region since 2004 and asset freezes of some Sudanese officials since 2005.  The U.S. Office of Foreign Assets Control (OFAC) has limited U.S. dollar transactions in Sudan since 2005.

But those sanctions have not prevented HSBC from periodically making improper transactions in U.S. dollars in Sudan from 2005 to 2008.  The instances described do not sound like intentional efforts to undermine the international sanctions regime against Sudan, but the actions were nonetheless negligent.  From the U.S. Senate’s report on HSBC earlier this summer (with internal citations omitted):

A second set of OFAC sensitive transactions involved Sudan, a country which is also subject to a comprehensive sanction program in the United States.  Internal bank documents indicate that, from at least 2005 to 2008, HBUS processed a considerable volume of U.S. dollar transactions involving Sudan that, once the new GCL [group circular letter from HSBC’s Compliance Group] took effect, should have decreased. The reasons they continued include a wide range of factors, from inadequate bank staffing reviewing OFAC transactions, to deceptive wire transfer documentation, to ongoing actions by HSBC affiliates to send these potentially prohibited transactions through HBUS.

In August 2005, a month after HSBC Group issued the GCL policy barring HSBC affiliates from engaging in U.S. dollar transactions in violation of OFAC prohibitions, HSBC Group head of Global Institutional Banking, Mark Smith, circulated a managerial letter identifying correspondent relationships that would be affected.  The letter stated: “An overriding observation is that the revised policy will most significantly impact the Cuban and Sudan correspondent bank relationships.” It also observed: “For Sudan and Cuba, most of our business is conducted in USD and the discussions already initiated with the affected banks will dictate the extent of our ongoing relationships.” In September 2005, a senior HBEU payments official Rod Moxley completed an analysis of U.K. transactions over a 10-day period that were stopped by the WOLF filter and noted “a considerable number of USD denominated transactions” for Sudan.

A year after the GCL took effect, however, one affiliate attempted to clear a Sudan-related transaction through HBUS in violation of company policy. On December 6, 2006, HBUS blocked a $2.5 million payment originating from an HSBC branch in Johannesburg, because the payment details referenced the “Sudanese Petroleum Corporation.” Although the payment had also been stopped by the WOLF filter in HSBC Johannesburg, an employee there had approved its release and sent the transaction through their correspondent account at HBUS. An internal email from HSBC Johannesburg explained that the release of the funds was:

a genuine error in an attempt to push the day[‘]s work through before the cut-off time. I believe the loss of three staff in the department leaving only two permanent staff remaining is causing the[m] to work towards clearing their queues rather than slow down to read the warnings such as these. … Having said that I also feel it is a matter of training where seeing the word ‘Sudan’ alone should have been warning enough.

The email also noted that the transaction had been sent by Commercial Bank of Ethiopia, which was “aware that this payment may not go through as they have attempted to make this payment via their other correspondent banks and failed.”

In July 2007, HBUS discovered that another client, Arab Investment Company, had been sending “multiple Sudan-related payments” through its U.S. dollar account at HBUS, that other banks later blocked for specifying a Sudanese originator or beneficiary, “suggesting that HBUS has been processing cover payments for this client.” An email identified seven wire transfers over a one-year period, collectively involving more than $1.1 million, in which the documentation provided to HBUS made no reference to Sudan, preventing the transfers from being stopped by HBUS’ OFAC filter. The email noted that two of the wire transfers later blocked by other banks had resulted in letters from OFAC seeking an explanation for HBUS’ allowing the transfers to take place, and suggested closing the client account to prevent more such incidents.

On another occasion, HBUS identified five wire transfer payments between January and November 2007, totaling more than $94,000, that turned out to be intended for a Sudanese company, but had been processed as straight through payments at HBUS, because “there was no beneficiary address and no mention of ‘Sudan’.”

In still other cases, wire transfers clearly referencing Sudan were stopped by HBUS’ OFAC filter for further review, but then allowed by HBUS staff to proceed. An HBUS internal report on OFAC compliance noted, for example, two blocked wire transfers involving Sudan, one for over $44,000 and the other for over $29,000, blocked on November 5 and December 7, 2007, respectively, by HBUS’ OFAC filter, but subsequently “released due to human error.”

In August 2008, HBUS noted that it was then holding over $3.2 million in Sudan-related payments sent to the bank from other HSBC affiliates.

The bulk of the funds came from blocking a $2.5 million payment from HSBC Johannesburg destined for the Sudanese Petroleum Corporation, but three other Sudan-related payments from HSBC affiliates were also identified, a $300,000 payment sent by HSBC Hong Kong; a payment for more than $367,000 payment from HSBC Dubai, and a payment for more than $58,000 from British Arab Commercial Bank Ltd.

The email listing these blocked funds noted that a court order was seeking transfer of the funds to a federal court in the United States in connection with a lawsuit seeking compensation for the families of 17 U.S. sailors killed in a 2000 terrorist attack on the USS Cole in Yemen.

In August 2010, in connection with an effort to exit correspondent relationships with 121 international banks that HBUS determined it could no longer support, HBUS CEO Irene Dorner sent an email noting references to 16 banks in Sudan. Ms. Dorner wrote:  “In Phase 2 there will be Trade names the exit for which may be more complicated but to give you a flavor of the problem we seem to have 16 correspondent banks in Sudan which cannot be right.”

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The Haqqani network’s bottom line

September 13, 2012

NPR’s Scott Simon recently interviewed Jackie Northam about the U.S. designation of the Haqqani network as a terrorist organization and the financial sanctions against it.  The jihadist group is funded by Pakistan’s spy agency, the ISI.

Northam correctly dismissed the financial impact of the designation, which prohibits U.S. business deals with the Haqqani network and freezes any assets they have in American banks, as “largely symbolic.”  It does little to alter their domestic and Gulf revenue sources.  An excerpt from their conversation:

SIMON: The State Department says that among other things this designation as a terrorist organization is going to ban any Americans from doing business with the Haqqanis and it’ll block any assets they hold in the U.S. What kind of potential impact could it have on the Haqqani Network?

NORTHAM: You know, Scott, the Haqqani network has shown a lot of determination to create trouble in Afghanistan and so the analysts I’ve talked with here in Pakistan say this decision really probably won’t have much of an impact and it’s really largely symbolic. They say that the Haqqani network itself doesn’t have financial interests in the U.S. and instead it has a very much a profitable business network in this area and the Persian Gulf region and a good part of it is thought to be criminal activities.

But the U.S. is hoping that this designation will just strangle any efforts by the Haqqani Network to raise funds in places like Saudi Arabia or the United Arab Emirates, where there are sympathizers to their cause. But, frankly, this is really an informal network of raising money, and it could be hard to track, you know, who’s getting the money and how it’s coming into this area.

And this is part of the debate in Washington, just trying to weigh what impact blacklisting the Haqqani Network would have, versus how this decision would affect U.S./Pakistan relations going forward.

SIMON: NPR’s Jackie Northam in Islamabad, thank you.

It’s a classic too little, too late scenario:  Sen. Diane Feinstein (D-CA), Sen. Carl Leven (D-MI), and Gen. David Petraeus asked Sec. Hillary Clinton to make this designation two years ago.

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PFLP enriched by Australian aid

September 12, 2012

A civil rights legal foundation that represents the victims of terrorism is reporting that the Australian government is passing funds to the Popular Front for the Liberation of Palestine terrorist group through two non-governmental organizations.  Chalking it up to confusion over names, the government of Australia claims it has done nothing wrong.

Of course it isn’t the first time that a Western government has funded Gaza jihadists through gross negligence, and it won’t be the last.  From the Israel Law Center via Israel.co.nz:

World Vision Continuing to Fund Terror Group?

Last February Shurat HaDin [Israel Law Center] revealed that the large NGO World Vision, which distributes massive amounts of Australian government aid to Gaza, has been funding a Palestinian terrorist organization’s charitable front. AusAid, the Australian government’s entity in charge of supervising the country’s foreign aid grants, initially suspended funding to the Union of Agricultural Workers Committees (UAWC), alleged by us to be an instrument for the Popular Front for the Liberation of Palestine (PFLP). The PFLP is a designated terrorist organization in Australia and the providing of any material support to it is illegal.

After suspending funding for a month, however, AusAid, on behalf of Australia’s Foreign Ministry, declared it had thoroughly investigated the matter and found no reason why it shouldn’t reinstate its support for the PFLP group. AusAid, while announcing this resumption of funding, proclaimed that it decided to reinstate its support to the UAWC because it was a registered charity in Israel! We were shocked by this explanation, as we had already searched and could not find that the UAWC was listed in Israel’s registry of charities. Moreover, there was overwhelming proof that there was a connection between the UAWC and PFLP. The PFLP’s website stated that it established the UAWC, with the latter agreeing that the terrorist group could utilize its Gaza buildings for training. In addition, several of UAWC’s executive directors are known terrorists, including its director, Bashir al Khieri, who had served time in an Israeli prison for PFLP activities. This past week, the UAWC even put out press releases complaining that Israel’s security services recently raided their offices in Jericho and arrested staff members for their involvement in terrorism.

All of this is going on while AusAid continues to publicly maintain that the UAWC is not the PFLP. Australian Foreign Minister Bob Carr, defending AusAid, gave public assurances that no Australian taxpayer funds were being provided to the Palestinian terrorist group. After our investigation, it was conclusively determined that a tremendous fraud was being perpetrated by World Vision and AusAid against the Australian public. Above all, the organization they claim is registered in Israel is not the UAWC but a different charity with a similar sounding name – the Committee of Agricultural Works (CAW). CAW and the UAWC, which AusAid believes is one and the same, have very similar names but were founded ten years apart, all while having a totally different board of directors. One is indeed registered in Israel and the other is indeed an instrument of the PFLP.

Amazingly, AusAid and World Vision continue to pretend that they are funding the Israeli charity CAW, while Australian funds are actually being provided to the UAWC in Gaza. Read the rest of this entry ?

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Revisiting the Golden Chain, 11 years later

September 11, 2012

At large:  Sulaiman Al-Rajhi

It was the 1990s.  Osama bin Laden was broke, busted, and disgusted.  Al Qaeda had spent its last dime, and Osama needed a bailout.  Sulaiman Al-Rajhi and 19 other millionaire and billionaire Muslims came to the rescue.  They constituted a “golden chain” of financial backers that would enable a second life for Al Qaeda in Afghanistan from which to stage the terrorist attacks of 9/11.

The U.S. Senate presented the evidence against the Golden Chain once again this summer in its report about the misdeeds of the British bank HSBC.  HSBC maintained a relationship with Al-Rajhi Bank, of which Sulaiman Al-Rajhi was a founder, until 2005 despite the earlier discovery of the Golden Chain and Al-Rajhi Bank’s record of facilitating terrorist transactions.

Don’t take my word for it.  This comes from the Senate’s Jul. 17, 2012, report:

Al Qaeda List of Financial Benefactors. The al Qaeda list of financial benefactors came to light in March 2002, after a search of the Bosnian offices of the Benevolence International Foundation, a Saudi based nonprofit organization which was also designated a terrorist organization by the Treasury Department, led to seizure of a CD-ROM and computer hard drive with numerous al Qaeda documents.  One computer file contained scanned images of several hundred documents chronicling the formation of al Qaeda. One of the scanned documents contained a handwritten list of 20 individuals identified as key financial contributors to al Qaeda. Osama bin Laden apparently referred to that group of individuals as the “Golden Chain.” In a report prepared for Congress, the Congressional Research Service explained:

According to the Commission’s report, Saudi individuals and other financiers associated with the Golden Chain enabled bin Laden and Al Qaeda to replace lost financial assets and establish a base in Afghanistan following their abrupt departure from Sudan in 1996.

One of the 20 handwritten names in the Golden Chain document identifying al Qaeda’s early key financial benefactors is Sulaiman bin Abdul Aziz Al Rajhi, one of Al Rajhi Bank’s key founders and most senior officials.

The Golden Chain document has been discussed in the 9-11 Commission’s report, in federal court filings, and civil lawsuits. Media reports as early as 2004 noted that the al Qaeda list included the Al Rajhi name. HSBC was clearly on notice about both the al Qaeda list and its inclusion of Sulaiman bin Abdul Aziz Al Rajhi.

What became of the Golden Chain?  As for Al-Rajhi, the most prominent individual listed, he remains at large with an estimated net worth of $6 billion, showing up on Forbes magazine cover stories and feature interviews in the Arab News.  By Al-Rajhi’s own admission, he’s working out a “meticulous scheme” for a mysterious charitable endowment to dispose of his assets.

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Finding manna from heaven under the sea

September 10, 2012

The Financial Times has an excellent article on recent natural gas discoveries off the coast of Israel.  For many decades, the commonly held perception of Israel was that it is the only country in the Middle East without oil.  The recent discoveries, which involved hard work and long odds, turn the old perception on its head.

Energy independence is extremely important for the U.S. and the West at large.  But it may be a matter of existential survival for Israel.  Israel has had to depend exclusively on imported energy in the past, leaving it vulnerable to price shocks and supply interruptions.  Natural gas deposits at Tamar and Leviathan will go a long way in helping Israel to write its own future.

Here’s a long excerpt, but you should take a look at the full piece:

Field of dreams: Israel’s natural gas

Aug. 31

By Tobias Buck

After decades of importing every drop of fuel, Israel has struck it rich, uncovering vast reserves of natural gas in the Mediterranean

The black and yellow helicopter heads north from Tel Aviv, passing over empty beaches, a yacht harbour and a string of sprawling seafront residences that house some of Israel’s wealthiest families. After a few minutes the pilot makes a sharp turn to the left and steers his ageing Bell 412 towards the open sea.

For more than half an hour, all there is to see is the blue waters of the Mediterranean. Then suddenly a hulking mass of brightly painted steel rises from the midday haze. Towering more than 100m above the water, this is the Sedco Express, a drilling rig that has been operating in this stretch of ocean for almost three years. As the helicopter touches down on the landing pad, we see a small blue and white Star of David flag fluttering in the wind. It is the only sign that the Sedco Express sits atop one of the greatest treasures that Israel has ever found. Far below, connected to the rig by a slender steel pipe that runs through 1,700m of ocean and another 4,500m of rock and sand, lies a vast reservoir of natural gas known as the Tamar field.

The men on board the Sedco Express are busy testing the field’s multiple wells in preparation for the long-awaited day next April, when a US-Israeli consortium will start pumping the gas onshore. With reserves of almost 10 trillion cubic feet of natural gas, the Tamar field is a hugely valuable asset for the Israeli economy. Discovered in January 2009, it was the biggest gas find in the world that year, and by far the biggest ever made in Israeli waters. But the record held for barely two years. In December 2010, Tamar was dwarfed by the discovery of the Leviathan gasfield some 20 miles farther east – the largest deepwater gas reservoir found anywhere in the world over the past decade. The two fields, together with a string of smaller discoveries, will cover Israel’s domestic demand for gas for at least the next 25 years, and still leave hundreds of billions of cubic feet for sale abroad. The government take from the gasfields alone is forecast to reach at least $140bn over the next three decades – a staggering sum for a relatively small economy such as Israel’s.

Read the rest of this entry ?

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Hyena meat trade profits al-Shabaab

September 9, 2012
African woman sells meat

Mmm… tastes like chicken

Never mind that the hyena is a scavenger that most Muslims regard as unclean.  Al-Shabaab reasons that as long as the revenues are used for jihad, that makes it permissible under Islam.

The terrorists’ gain is the hyenas’ loss.  But on the bright side, this suggests that al-Shabaab is struggling financially.  Read all about it.

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Halal slaughter leaves consumers in the dark

September 7, 2012

The YouTube channel MegaFraudbuster uploaded a video earlier this week about undisclosed halal slaughter of lamb and cattle in the U.K.

The video entitled “The Secret Halal Meat Scandal in UK” was originally produced by Christian Voice in November 2010, but this is our first time seeing it.  In the short film, Christian Voice director Stephen Green points out that halal slaughter involves not just a specialized throat slitting technique, but a prayer in which the meat is ceremonially sacrificed to Allah.  Green further explains that the Bible tells Christians not to eat meat sacrificed to idols or foreign gods, and that Sikhs are also prohibited by their religion from consuming halal products.

The problem is that U.K. consumers don’t know when the meat they buy has been slaughtered under halal methods.  The Islamic prayer is often made during slaughter, but the meat is not labeled halal.  This video documents which grocers sell insufficiently labeled halal meat:

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Top cleric ran front group, found Gulf donors

September 6, 2012

The U.S. has sanctioned eight senior members of the terrorist organization Lashkar-e-Taiba (LeT).  One of the men, Qari Muhammad Yaqoob Sheikh, ran a front group to raise money for the terrorist for four years.  He also participated in at least two missions to the Gulf to obtain zakat and sadaqa donations from rich Arabs.  Sheikh’s biography is further evidence of the extent to which militant jihad relies on big money from the oil and banking powerhouses of Saudi Arabia and its neighbors.

From the Treasury Department’s press release:

Qari Muhammad Yaqoob Sheikh, a member of LET’s central advisory committee, has held several different leadership positions in the group since approximately 2006. Sheikh has served as a leader in LET’s foreign affairs department since 2006, including acting as the department’s deputy director of political and foreign affairs between 2008 and 2009. As of mid-2008, Sheikh was also in charge of LET’s Islamabad office, including managing LET’s general operations in and around Pakistan’s capital.

Between 2008 and 2011, Sheikh ran LET front organizations that were used to raise funds and recruit on behalf of the group. Sheikh ran Falah-e Insaniat Foundation (FIF), a front used by LET for fundraising purposes, from early 2009 until mid-2010, when he was replaced as the FIF head by Hafiz Abdur Rauf. FIF and Rauf were designated by the U.S. pursuant to Executive Order 13224 on November 24, 2010. Falah-e Insaniat Foundation was added to the UN 1267 Consolidated List on March 14, 2012.

As of early 2010, Sheikh was the head of LET’s ulema (clerics) wing. Sheikh has also worked with LET’s international donors. In late 2006 and late 2007, Sheikh was part of an LET delegation that traveled to the Gulf on behalf of LET seeking support.

Head of the clerics?  Since Islamic law calls upon Muslims to wage jihad with their wealth, should we be surprised that a group of clerics would support the financing of jihad?

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Seven ways to stop funding terror

September 5, 2012

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:

    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. Read the rest of this entry ?