Archive for February, 2014

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India’s currency change combats counterfeiting, but backdoor still wide open for money laundering

February 28, 2014

An email from our old friend Puneet aprised us to a new initiative in India to replace old currency notes with new notes with enhanced security features.

The reason for the change is speculated by many, including the BBC, to reduce the flow of black money (including undeclared, untaxed, counterfeit, and laundered money) through India’s economy.

Indeed, counterfeiting is a national crisis in India, and the new security features on the bills should help reduce the ability of counterfeiters to replicate the notes.

But in terms of getting illegally acquired but genuine notes off the street, this program doesn’t do much to cleanse the economy from the scourage of black money.

Live Mint points out that anybody who wants to exchange their old bills for new ones will be able to do so, and they won’t have to divulge their identities:

…If one looks at the RBI announcement, it is clear that the old currency notes can be exchanged for new ones at any bank branch from April to June 2014 without any questions being asked as to the name of the person giving the notes, her Permanent Account Number (PAN), address, etc. One can exchange the notes even at branches where one does not have a bank account. It is only after 30 June that one would have to give the name and PAN to exchange high denomination currency notes. Therefore, any person having undisclosed cash in her possession can easily exchange the old currency notes till June 2014 without disclosing her identity…

Also, Money Jihad notes that there doesn’t seem to be any provision in the new currency roll-out for bank tellers to report unusual amounts of cash that are brought in for exchange, or for them to report exchanges that they suspect are being made on behalf of undisclosed third parties.  Officials should move to incorporate such safeguards.

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Money Jihad’s recommended reading

February 27, 2014
  • Despite budgetary hard times, the Palestinian Authority is able to cough up $46 million to terrorist ex-convicts—from your tax payments… more>>
  • Is a financial-cyber war against America already underway?  More>>
  • Sharia law dictates that gambling is haram (unclean), and Sheldon Adelson is Jewish and pro-Israel. Perhaps those are two of the reasons why Adelson’s Las Vegas Sands has been the target of a major cyber attack… more>>
  • New legislation in Turkey threatens to prevent meaningful due diligence by bank compliance officers by suppressing negative information on the Internet… more>>
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“Charity worker” dies while driving truckload of bombs for al-Nusra

February 25, 2014

A British Muslim who raised £140,000 from supporters in England killed himself in Syria while driving a truck full of explosives into an Aleppo prison. The flags of al-Nusra Front, Al Qaeda’s affiliate in Syria, were found on the scene.

British police are rightly concerned that other Britons fighting in Syria will return to the U.K. to continue their jihad.  The authorities would do well to be concerned also about the use of “charitable” fundraisers in Britain to finance the purchase of weapons and explosives for the battlefronts of the Middle East.

From the Daily Mail on Feb. 13 (with a hat tip to Vlad Tepes):

Are Syria charities a front for Jihadists? Fears convoys in the country are being used to help militants after thousands in cash is seized

  • Security services fear the relief effort is being hijacked by radical Islamists
  • British suicide bomber Abdul Waheed Majeed travelled to Syria under the banner of carrying out charitable work
  • 41-year-old died when he drove a dumper truck full of explosives into the gates of Aleppo prison last week
  • He was revealed as a former driver for hate cleric Omar Bakri
  • Met Police Commissioner ‘deeply concerned’ at threat posed by British jihadists returning from the war zone after being radicalised there

By Chris Greenwood and Emine Sinmaz and Inderdeep Bains

Charity aid convoys are at the centre of a counter terrorism investigation over fears they are supporting Al-Qaeda militants in Syria.

Tens of thousands of pounds in cash has already been seized from relief vehicles travelling from Britain to the war-torn state.

Security services fear the huge relief effort is being hijacked by radical Islamists determined to support networks of violent jihadists.

Yesterday Metropolitan Police Commissioner Sir Bernard Hogan-Howe said he remains deeply concerned at the threat posed by returning British jihadists.

‘We have not changed the policy,’ he said. ‘We are concerned about the number of British people going to Syria for humanitarian reasons or to get involved in the war that is happening.

‘There are a few hundred people going out there. They may be injured or killed, but our biggest worry is when they return they are radicalised, they may be militarised, they may have a network of people that train them to use weapons.’

British Home Counties suicide bomber Abdul Waheed Majeed, 41, was among those who travelled to Syria under the banner of charitable work.

He joined an aid convoy after his Crawley mosque raised more than £140,000 to help refugees in just a few months.

Volunteers travelled the 2,000 mile journey in a fleet of old ambulances loaded with supplies, including food, bedding and medical equipment.

But Majeed left them to kill himself by driving an armoured dumper lorry laden with explosives into the gates of Aleppo prison last week.

The vehicle was draped in the flags of Jabhat al-Nusra, an extremist faction aligned to al-Qaeda and banned in Britain.

Further details of how the father-of-three was radicalised emerged yesterday as hate preacher Omar Bakri revealed he was a close aide.

The cleric, barred from Britain almost nine years ago, said Majeed was a key member of his banned organisation Al-Muhajiroun.

Bakri said he worked as his driver between his North London home and Crawley, where he nurtured a power base of militant supporters…

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Spotlight: terror finance in the Netherlands

February 24, 2014

A reader recently asked Money Jihad for information on terrorist financing based in the Netherlands.  An examination of Dutch charities, the banking sector, and crime rings is necessary to begin understanding how terrorists have used the Netherlands to fund their activities.

Dutch zakat

The majority of terrorist financing problems in the Netherlands over the past decade have originated from the Islamic charitable sector, particularly from Dutch Muslim groups purporting to provide “relief” in the Palestinian territories.

In 2003, the Dutch blocked Al-Aqsa Foundation assets in the Netherlands after discovering that Al-Aqsa funded terrorism in the Middle East.  A previous manager of Al-Aqsa in the Netherlands, Amin Abu Rashed, was recently described by a financial crimes expert as, “the principal representative of Hamas in Holland.”  Al Haramain Islamic Foundation, the Saudi-based terror front charity, was once active in the Netherlands as well.

Palestinian terror funding probably shifted after the Al-Aqsa closure to Internationale Steun Rechtstreeks Aan Armen (ISRAA).  ISRAA remains active in the Palestinian territories and Syria, and maintains tax-exempt status in the Netherlands.

In April 2011, the Netherlands froze the assets of the Dutch branch of the Turkish, pro-Hamas charity IHH.  A court later overturned the freeze, and IHH Nederland continues to operate in Holland.

Islamic Relief Nederland, a chapter of Islamic Relief Worldwide, is involved at least indirectly in the financing of terrorism through its parent organization. IRW has previously funded Hamas and Al Qaeda operatives.  Like ISRAA, IR Nederland is currently active in Syria.

Groups linked with the Muslim Brotherhood in the Netherlands have used domestic and foreign funds to finance their projects.  Dutch intelligence revealed in 2010 that Salafi networks exploit generous Dutch public benefit programs to fund their own activities.  Europe Trust Netherlands (ETN), a leading Dutch-Muslim group, has worked with Muslim Brotherhood leaders last year to arrange Gulf-based financing for the controversial Blue Mosque project in Amsterdam.

Banking sector threats

The large Dutch banking sector, which includes internationally known firms such as ING (which settled with U.S. authorities in 2012 over Cuban and Iranian sanctions violations), has probably been a factor in drawing some terrorist financiers and interlocutors to have a presence in the Netherlands.  After 9/11, it was reported that the Al Rajhi banking family, whose patriarch was named in the Golden Chain document for funding Osama Bin Laden, reportedly maintained “a large portion of their funding from the Netherlands. The family owns an investment company in Amsterdam, which has funded ‘islamic investments’ for well over a billion dollars.”

The Islamic finance sector in the Netherlands is also a source of concern.  Islamic finance has been documented as a sector marred by a lack of transparency and an increased risk of diverting profits toward terrorism as a form of corporate zakat.

Financial crimes and smuggling

Illicit transfers for terrorism based in the Netherlands have also taken place among criminal rings of various sizes.  Tamil Tiger terrorists have used the Netherlands as a funding base with front organizations operating there.  The trade in khat, a stimulant that is legal to import in the Netherlands, has been known for several years to fund the al-Shabaab terrorist organization in Somalia.  More recently, Sunni donors have transferred funds from the Netherlands for jihad in Yemen.  Meanwhile, a Dutch fugitive from Panamanian justice, Okke Ornstein, is subject to an INTERPOL red notice and is probably involved with laundering money for Hamas.

Lastly, it should be noted that former Dutch dependencies which have relaxed regulatory climates may also be susceptible to abuse for financial crimes.  Hezbollah allegedly maintains bank accounts in the Dutch Antilles.  Khalid Bin Mahfouz (the Saudi billionaire who sued Rachel Ehrenfeld for reporting that he funded terrorism), once parked money in the Dutch Antilles in a company called Pathfinder Investments, according to the Wall Street Journal.  Pathfinder funds were subsequently transferred to the Success Foundation, a Virginia-based front charity for the International Islamic Relief Organization, a Saudi-backed office which was closed after 9/11 for its role in financing Al Qaeda.

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Accounting for Kuwaiti cash among Syrian rebels

February 23, 2014

How Kuwait came to be such a major regional player in the financing of radical rebels in Syria is the subject of a recent interview with Elizabeth Dickens of the Brookings Institute conducted by Syria Deeply, a website run by journalists. Dickens chalks Kuwait’s ascendance as a financier up to:

  • Lax regulation (ie, the failure of Kuwait to criminalize terrorist financing until recently)
  • Business ties between Kuwait and Syria
  • Numerous, experienced NGOs operate in Kuwait

Here’s an excerpt of the interview, with thanks to Arye Leonid Glozman for sending over a link:

Syria Deeply: Why has Kuwait emerged as a financing and organizational hub for charities and individuals supporting Syria’s rebel groups?

Elizabeth Dickinson: It’s a perfect storm. Kuwait has all the things that one would need to set up such a financing hub. The most important thing it has, or that it had until very recently, was extremely lax regulation. So after Sept. 11, most of the Gulf states had these really strict counterterrorism financing laws that gave them the ability to stop any suspicious transactions very swiftly, and they were cooperating with Western intelligence to build their capacity to find any suspicious transactions in the banking system.

Kuwait, however, did not do that, and its counterterror financing law basically said nothing about terrorist financing being illegal. And its central bank just didn’t have any investigative capacity  so even if they did want to stop something from going on, they wouldn’t really have the ability to investigate and figure out how to stop it.

Factor number two is extremely deep ties between Kuwait and Syria. Before the conflict started, Kuwaiti investors were among the single largest direct foreign investor in Syria, so there’s a lot of really longstanding business ties. You have a lot of Kuwaitis with homes and businesses in Syria, with Syrian wives. So there’s a really close personal connection there. There’s also 120,000 Syrian expats in Kuwait, which is a lot considering the population of Kuwait is only 3 million people.

Then you have all the factors that have made the Gulf a hub for financing  you have a lot of money, and a lot of people who are personally affected by what’s going on in Syria. I’ve had lots of people start crying in meetings there. They had the willpower to start getting involved.

The last part of this perfect storm is that Kuwait has the longest history in the Gulf of charitable and humanitarian work. Because of its relatively open political system, people living in Kuwait are allowed to start NGOs, there are private charities that are private, not semi-state organizations like they would be in Saudi Arabia. The Kuwaitis have a lot of experience doing project finance, going into a country and building mosques, wells and schools. The infrastructure of charitable giving is really strong there, and it has allowed a lot of people with expertise to move into sectors of aid that are more geared towards the military side.

There’s a lot of overlap  sheikhs will do a fundraiser for the mujahideen and their weapons … and hospitals.

Kuwait’s ability to be a hub was recognized early in the conflict by other Gulf citizens who were interested in getting financially involved in Syria. If I’m a Saudi and I want to give money to the rebels in Syria, I’m probably aware that my government is not going to look favorably upon that, so individuals elsewhere in the Gulf rely on bundlers in Kuwait to accept their donations on their behalf, and then the donations go from Kuwait to Syria, rather than directly from Saudi to Syria.

SD: What’s the breakdown of where the money from Kuwait is going?

ED: We have rough ideas of how much it is and where it’s going. Among the pro-rebel groups, the vast majority of the money is going to groups that are in the Islamic Front, like Ahrar al-Sham and Jaish al-Islam. There’s evidence that funds are going to Jabhat al-Nusra…

Read the rest here.  Previous Money Jihad coverage of Kuwaiti financing of Syrian militants can be found here, here, and here.

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U.S. levies sanctions on LeJ leader

February 21, 2014
Lashkar-e-Jhanghvi co-founder

LeJ leader Malik Ishaq

Lashkar-e-Jhanghvi co-founder and leader Malik Ishaq has been blacklisted by the U.S. State Department.  The move prohibits Americans from activities such as doing business with, maintaining bank accounts for, and wiring money to or making donations to Ishaq.  LeJ was already under U.S. sanctions which have been renewed.

The Pakistani newspaper The News reports that Ishaq’s family received a monthly stipend from the government of Punjab while he was previously on trial for the murders of more than 100 people.  Such a stipend is reminiscent of rewards and pensions paid by the Palestinian Authority to the families of terrorists.  Ishaq is reportedly in jail again, but this time on hate speech charges.

The Long War Journal describes LeJ as an “anti-Shia terror group that has integrated with al Qaeda and the Taliban in Pakistan’s tribal areas. The Lashkar-i-Jhangvi has an extensive network in Pakistan and its members often serve as al Qaeda’s muscle for terror attacks.”

LeJ receives funding from Saudi Arabia and other Persian Gulf countries.

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Illicit transfer news: recommended reading

February 20, 2014
  • Palestinian Islamic Jihad “receives between $100-$150 million dollars annually from Iran,” says an Iranian expert… more>>
  • FinCEN shuts down a Michigan-based hawala dealer who sent 8,000 wires to Yemen and never checked a single customer’s ID… more>>
  • We don’t know how much money is financing terrorism, and we don’t know how much it costs to combat its financing either, so how do we know if what we’re doing is working?  More>>
  • A New Jersey company illegally shipped $70,000 worth of protective gloves to Iranmore>>