Archive for July, 2013

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Hezbollah bank fined

July 11, 2013

The fine of $102 million against Lebanese Canadian Bank is far less than the $1.9 billion settlement with HSBC or the $600+ million settlements with ING and Standard Chartered last year.  It also appears that nobody from the bank will ever face prosecution for aiding Hezbollah, and the extradition of one of their big-time money laundering clients, Ayman Joumaa, appears to have stalled.

From Agence France Presse (h/t El Grillo):

US fines ‘Hezbollah’ bank $102 mn for laundering

(AFP) – Jun 25, 2013

WASHINGTON — A Lebanese bank accused of laundering money from drugs and other operations for clients tied to Hezbollah militants agreed Tuesday to pay US authorities $102 million to settle the charges.

Beirut-based Lebanese Canadian Bank was singled out in February 2011 for allegedly moving hundreds of millions of dollars for criminal groups and traffickers operating in Latin America, West Africa and the Middle East.

Some of the customers it served were closely linked to Hezbollah, which Washington has blacklisted as a “terrorist organization.”

US authorities had already taken control of $150 million the bank set aside for a possible penalty as it was being bought in 2011 by another Beirut bank, Societe Generale de Banque au Liban…

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Term of the week: trade-based money laundering

July 10, 2013

Julie Myers, the former assistant secretary of the Immigration and Customs Enforcement agency, once defined trade-based money laundering as:

The use of trade to legitimize, conceal, transfer, and convert large quantities of illicit cash into less conspicuous assets or commodities. In turn, the tangible assets or value are transferred worldwide in an effort to avoid financial transparency laws and regulations.*

Common methods of laundering money through trade are over-invoicing and under-invoicing.  If you want to transfer money to somebody, you could transfer goods to them and under-bill them.  If somebody is trying to transfer money to you, you could transfer goods to them and over-bill them.  From the outside, it appears to be a legitimate transaction.  But the parties involved know it’s a sham to transfer extra money without drawing attention to themselves from financial authorities.

 

*U.S. House of Representatives Subcommittee on Trade, 109th Congress, 2nd Session, “Customs Budget Authorizations and Other Customs Issues” (Washington:  U.S. Government Printing Office, 2007).

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FATF’s terrorist charity typologies

July 9, 2013

The Financial Action Task Force, an international financial watchdog, has updated its “Recommendation 8” pertaining to government oversight of nonprofit organizations.  (Thanks to Arye Glozman who sent in a link to the report).

Overall, the revised recommendations show greater deference to the nonprofit sector and urge restraint by governments in regulating charities than the 2002 version.  This deference is a bit strange considering that using charities as vessels for funding terrorism has not decreased since 2002 then, neither in the West as illustrated by organizations such as the Holy Land Foundation and WAMY Canada, nor in the Middle East and Northern Africa where Gulf-based charities have played a central role in funding and arming Islamist rebels of the Arab Spring.

That being said, the FATF report does present a useful set of typologies to categorize four different types of terrorist “misuse” of nonprofit groups:

  1. Front charities, where everybody from the donors to the charity workers to the beneficiaries knows that the charity is a sham designed to fund terrorism.
  2. Organizations defrauding donors by telling them the money is going toward legitimate programs but then redirect the proceeds to terrorism.
  3. Branch offices of charities defrauding headquarters by misleading the leadership about the branch’s actual programs.
  4. Charity workers abusing their positions to distribute aid to militants.

The “charities” used by Osama bin Laden to funnel money from wealthy Saudi donors to Al Qaeda in the 1990s are a good example of type #1.  Jamaat-ud-Dawa in Pakistan is a good example of a front charity today, with donors and recipients understanding that the money is really for the Lashkar-e-Taiba terrorist group.  Many analysts would probably say that the Holy Land Foundation fell into type #2, with donors unwittingly funding Hamas (although some donors knew that their zakat was funding “resistance” against Israel).  Islamic Relief Worldwide can be associated with types #3 and #4 by having a branch office in Gaza that passed money along to Hamas, allegedly without the knowledge of headquarters in England.

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Al Qaeda makes millions from Mosul shakedowns

July 8, 2013

Merchants, doctors, and sheikhs in northern Iraq are being blackmailed by Al Qaeda to fund martyrdom operations there and in Syria.  At about $1 to $1.5 million in payments per month, Al Qaeda may be grossing between $12 to $18 million a year—a staggering sum for an organization that was on the verge of bankruptcy following the Iraq surge.

During its pre-9/11 heyday, Al Qaeda was pulling in $30 million a year, but had arguably collapsed to $5 million following the invasion of Afghanistan.  Viewed with that trend in mind, the Mosul extortion racket isn’t just a regional threat to Malaki or to Syria, but a reversal of fortunes that puts Al Qaeda back toward the upper echelons of well-funded terrorist groups worldwide.

From the AP via NPR, with some paragraphs omitted for brevity and relevance:

In Northern Iraqi City, Al-Qaida Gathers Strength

by The Associated Press

June 20, 2013

BAGHDAD (AP) — Al-Qaida’s Iraq arm is gathering strength in the restive northern city of Mosul, ramping up its fundraising through gangland-style shakedowns and feeding off anti-government anger as it increasingly carries out attacks with impunity, according to residents and officials.

It is a disturbing development for Iraq’s third-largest city, one of the country’s main gateways to Syria, as al-Qaida in Iraq makes a push to establish itself as a dominant player among the rebels fighting to topple the Syrian regime.

The show of force comes as Mosul residents cast ballots in delayed local elections Thursday that have been marred by intimidation by militants. Al-Qaida’s renewed muscle-flexing is evident in dollar terms too, with one Iraqi official estimating that militants are netting more than $1 million a month in the city through criminal business enterprises…

Other Sunni militant groups, including Ansar al-Islam and the Army of the Men of the Naqshabandi Order, are also active in Ninevah. Mosul is the capital of the Sunni-dominated province.

Al-Qaida’s growing power is particularly worrying because it is thought to be behind the bulk of the bombings across Iraq and because it is trying to assert itself as a player in neighboring Syria’s civil war. The head of al-Qaida’s Iraq arm last week defied the terror network’s central command by insisting that his unit would continue to lay claim to al-Qaida operations in Syria, too.

“We’re definitely concerned about it,” said a U.S. diplomat about the deteriorating security situation in Mosul. The diplomat, who wasn’t authorized to speak on the record, said al-Qaida’s Iraq arm sees an opportunity to try to build support in the area and is “out blowing things up to show that the government can’t protect and serve the people.”

Al-Qaida’s growing strength in Mosul is painfully clear to businessman Safwan al-Moussili. Traders like him say they are once again facing demands from militants to pay protection money or face grave consequences. Merchants say that practice had largely disappeared by the time American troops left in December 2011.

“They tell us: ‘Pay this amount.’ And if it’s higher than before, they say something like: ‘You recently went to China and you imported these materials and you made such and such profits,'” he said. “It seems they know everything about us.”

Small-scale shop owners, goldsmiths, supermarkets, gas stations and pharmacies are all being hit up for money these days.

Al-Moussili and his fellow businessmen feel they have little choice but to pay up. About two months ago, he recalls, one businessman refused to pay, and insurgents planted a bomb inside his shop that killed the man.

“That forced everybody to pay, because we don’t see the security forces doing anything to end this situation,” he said.

Read the rest of this entry ?

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Qatar gives Libyan arms to Syrian rebels

July 7, 2013

Weapons used during the rebellion against Qaddafi have been spirited out of Libya by agents of Qatar.  The arms are smuggled through Turkey across the Syrian border.  The guns transferred by Qatar are said to be going to fighters who are more extreme and Islamist than the rebels being supported by the Obama administration.

Take a listen to NPR’s four-minute interview with one of the New York Times journalists who reported on the story:

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Mosques and “orphans project” help finance Hezbollah from Germany

July 5, 2013

Hundreds of Hezbollah agents in Berlin are using Germany to raise money for their cause according to a new report from the interior ministry.  Since the EU does not officially consider Hezbollah to be a terrorist organization, law enforcement can’t do much to put a stop to Hezbollah’s financial activities there.

Take special note of the Orphans Project Lebanon, which is described in the report as a channel for Hezbollah’s money.  Exploiting sympathies about orphans is a frequent fundraising tactic used by Islamist terrorist groups.

From the Jerusalem Post (h/t Jihad Watch):

German mosque groups raising funds for Hezbollah

By BENJAMIN WEINTHAL, JERUSALEM POST CORRESPONDENT

06/23/2013

BERLIN – The head of Germany’s federal agency for domestic intelligence and the country’s Interior Ministry have recently presented a report showing Hezbollah’s use of German based mosques and their affiliated organizations to raise funds for the terrorist group’s activities in Lebanon.

According to the 2012 report published this month by the domestic intelligence agency, known as the Federal Office for the Protection of the Constitution, the terrorist organization finances its activities through “Hezbollah-affiliated mosque associations” and raises funds within the framework of “religious ceremonies” as well as membership contributions.

Dr. Hans-Peter Friedrich, the head of Germany’s Interior Ministry, and Dr. Hans-Georg Maaßen, the relatively new director of the intelligence agency introduced the report several weeks ago in Berlin.

It is unclear from the report if the Hezbollah funds in Germany are funneled to aid the terrorist group’s efforts in Syria to support the regime of President Bashar Assad.

The report showed a steady presence of Hezbollah members in the Federal Republic, 950 members, the same figure for 2011. The intelligence agency’s 2010 report showed the number of Hezbollah members to be 900.

The 381-page 2012 intelligence report lists the Hezbollah attack on Israeli tourists in Burgas, Bulgaria, under the category of Islamic terrorism.

Although the Bulgarian Interior Minister blamed Hezbollah for the attack, which resulted in the deaths of five Israelis and their Bulgarian bus driver, the German report stated that “Hezbollah was brought into connection with the attack” but that the link was not yet definitively proven. The report was published before the Bulgarian government submitted new evidence, according to a JTA article last week, showing a Hezbollah operative used a printer in Lebanon to aid the terrorists with fake documents as part of their planning for the attack.

The German report also contained information about the July 7, 2012, arrest of a Hezbollah member in Cyprus who plotted to kill Israelis and Jews on the Island. Germany’s report, however, does not contain the March conviction of Hossam Taleb Yaacoub, who admitted he was a Hezbollah operative and part of the terrorist organization’s global mission to monitor Jews.

Young German Hezbollah members are strongly connected and active on the Internet, including social media and various web forums, the report noted. Growing street demonstrations involving Hezbollah supporters and members were documented, including an event attended by 1,100 Hezbollah supporters last year at the Al-Quds Day march in Berlin. At 600, the 2012 number of young members almost doubled from 2011.

According to the report, as many as 3,000 Hezbollah supporters participated in the Iranian-sponsored Al- Quds Day march in the 1990s. The event calls for the destruction of Israel and stokes anti-Western hate.

Though not cited in the agency’s report, The Jerusalem Post reported in 2012 that the Imam Ali Mosque in Hamburg, widely considered by experts in Germany and abroad to be part of the long arm of Iran’s regime in the Federal Republic, chartered buses and sent Hezbollah supporters to an anti-Israel and anti-Western demonstration. Hamburg’s local intelligence agency stated that “two buses with roughly 90 people traveled to Berlin this year. The costs for the travel were paid for by the IZH,” an organization that operates the Shi’ite mosque.

According to the report, Berlin has 250 active Hezbollah members. It revealed that in Berlin there is an annual “victory celebration of the liberation” celebrating the IDF withdrawal from south Lebanon in May 2000. On May 26, 2012, roughly 700 Hezbollah participants took part in the event.

The report noted that in September 2012, Hezbollah members in many German cities protested against the anti-Islam film Innocence of Muslims.

Hezbollah leader Hassan Nasrallah called for worldwide demonstrations against the film.

The most recent intelligence report cited the Hezbollah-controlled Orphans Project Lebanon in Germany as a way to send money to Lebanon.

Hezbollah has long used German territory to raise funds for the families of suicide bombers involved in killing Israelis. A 2009 report from the European Foundation for Democracy titled “Hezbollah’s Fund-raising Organization in Germany” revealed that the Orphans Project Lebanon, based in Göttingen, Lower Saxony, is “the German branch of a Hezbollah suborganization” that “promotes suicide bombings” and aims to destroy Israel.

Germany still allows the Orphans Project Lebanon to operate but eliminated its tax subsidy several years ago…

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Barclays severs ties with Somali wire service over terror finance, money laundering concerns

July 4, 2013

The international company in question is Dahabshiil—the same money transfer service that has exhibited worrisome shortcomings in its anti-money laundering and counter-terror finance compliance programs.  It is also the same company that has been subjected to alleged extortion demands from the terrorist group al-Shabaab in exchange for remaining in business in Somalia.

Thank goodness Barclays has acknowledged the warning signs.  Thanks to El Grillo for sending over this Jun. 25 article from the AP:

Terror financing fears stop transfers to Somalia

By ABDI GULED and JASON STRAZIUSO

Associated Press

MOGADISHU, Somalia (AP) — When a bank transfers money to Somalia, can it be sure it’s not sending money to terrorists? That question is forcing one of Britain’s largest banks to cut ties with the largest cash transfer bank in Somalia, a company that brings in the majority of the country’s $1.2 billion in yearly remittances.

Many in Somalia are in desperate need of money. Payments from family and friends overseas are how many get by, and that’s why more than 100 aid workers and Somalia experts signed a letter this week pleading with the British government to find a solution.

Barclays bank will no longer allow customers to send money to Somalia via the Somali bank Dahabshil. A financial power-house in Somalia, Dahabshil describes itself as “the most trusted money transfer company for many immigrants willing to support their families and friends.” But anti-terror laws hold banks – like Barclays – responsible if they transfer money to criminal or terror elements. As a result, fewer are willing to send money into Somalia.

Such transactions for Somalis in the United States became more difficult in late 2011, when a bank in Minnesota closed accounts that facilitated such transfers. Sunrise Community Banks decided to halt the transactions after two women were convicted of sending money to the terrorist group al-Shabab.

“It is recognized that some money service businesses don’t have the proper checks in place to spot criminal activity and could therefore unwittingly be facilitating money laundering and terrorist financing,” Barclays said in a statement. “We want to be confident that our customers can filter out those transactions, because abuse of their services can have significant negative consequences for society and for us as their bank.”

Abdirashid Duale, chief executive of Dahabshiil, noted that his company is one of a number of transfer businesses affected by of Barclays’ decision.

“Naturally, Dahabshiil is appealing this decision and would like to emphasize that to date Barclays’ has acknowledged that our Anti-Money Laundering and Anti-Terrorist Financing policies are fully compliant with industry regulations,” he said.

Dahabshiil, he said, remains operational while it explores alternative banking arrangements.

The group of aid workers and researchers said the decision at stake here “is a lifeline that provides essential support to an estimated 40 percent of the population of Somalia.” The group said it has seen firsthand the impact remittances have on families in the Horn of Africa.

“My son is in the U.K. He sent us money every month for our sustenance and school fees for the children. Where are we going to get the money to pay our bills?” said Dahabo Afrah, a longtime customer of Dahabshil in Mogadishu. “This is unfair to us and will affect hundreds of thousands of Somali people.”

Many big banks in the U.S. have already stopped handling transfers to Somalia, saying the federal requirements designed to crack down on terrorism financing were too complex and not worth the risk. Last April, U.S. Bank confirmed it is working with Dahabshil to allow Somalis in Minnesota to send money back home. U.S. Bank spokeswoman Teri Charest said Monday that the bank is working closely with Dahabshil but the transactions have not yet started.

Barclays said it remains happy to maintain a relationship with businesses that have anti-financial crime controls…