Posts Tagged ‘Afghanistan’

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Hawala saturates 90% of Afghan financial market

April 27, 2015

The U.S. State Department has published its international narcotics report for 2015. The report notes that only 10 percent of financial transactions in Afghanistan are handled through the formal banking sector. The other 90 percent are handled through hawala, the traditional Islamic system of debt transfers. Hawala is a way of moving value without moving physical cash. Its untraceable nature is tailor made for terror financing and other illicit activities.

The State Department report indicates that the prevalence of hawala in Afghanistan facilitates the movement of proceeds from the Afghan drug trade. As crazy as it may sound to Western compliance officers, the thousands of hawala dealers in Afghanistan have yet to file any suspicious transaction reports to Afghanistan’s central financial regulator—not even a single one. And even their banks are using hawala! All this and we’ve been there for over 13 years…

The growth in Afghanistan’s banking sector has slowed considerably in recent years; and traditional payment systems, particularly hawala networks, remain significant in their reach and scale. Less than 10 percent of the Afghan population uses banks, depending instead on the traditional hawala system, which provides a range of financial and non-financial business services in local, regional, and international markets. Approximately 90 percent of financial transactions run through the hawala system, including foreign exchange transactions, funds transfers, trade and microfinance, as well as some deposit-taking activities. Official corruption and weaknesses in the banking sector incentivize the use of informal mechanisms and exacerbate the difficulty of developing a transparent formal financial sector in Afghanistan. The unlicensed and unregulated hawaladars in major drug areas such as Helmand likely account for a substantial portion of the illicit proceeds being moved in the financial system. Afghan business consortiums that control both hawaladars and banks allow criminal elements within these consortiums to manipulate domestic and international financial networks to send, receive, and launder illicitly-derived monies or funds intended for criminal, insurgent, or terrorism activities…

…There is no clear division between the hawala system and the formal financial sector [in Afghanistan]. Hawaladars often keep accounts at banks and use wire transfer services to settle their balances with other hawaladars abroad. Due to limited bank branch networks, banks occasionally use hawalas to transmit funds to hard-to-reach areas within Afghanistan. Afghanistan’s financial intelligence unit, FINTRACA, reports that no MSBs or hawaladars have ever submitted suspicious transaction reports (STRs)…

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Money for terror: recommended news reading

April 16, 2015
  • This young couple in St. Louis would rather fund jihad than make love… more>>
  • ISIS demands a ransom of $100,000 per Christian’s head… more>>
  • The U.S. Council of Muslim Organizations, which is connected to a jihad fundraising website, recently visited with congressional Democrats… more>>
  • An Afghan colonel’s murder of 8 U.S. airmen may have been a quarter-million-dollar contract killingmore>>
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Ted Talk: Hawala focus distracts from Gulf donors

February 17, 2015

Following 9/11 and the invasion of Afghanistan, concerns about the use of hawala in terror finance schemes led Coalition forces and the new Afghan government to refrain from paying Afghan troop wages through hawala, although no other formal banking or payroll system was available at the time. Dr. Edwina Thompson argues that the preoccupation with hawala also distracted Coalition partners from confronting the true source of terror finance:  Gulf donors.

Here’s Thompson’s recent TEDxClapham talk on the subject.  Pay particular attention to minutes 11-14.  But watch the whole video—it includes Thompson’s reflection on her own near abduction by militants while doing research in Jalalabad:

The point is well made. As Money Jihad has often said, hawala is not a source of financing terrorism, it is a method. We can regulate or eliminate methods, but determined sources of financing will find other ways of transferring value unless we stop those donors where they live.

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$1 million in Afghan smuggling a day

January 25, 2015

A hundred million Pakistani rupees (roughly 1 million USD) worth of merchandise is smuggled out of Afghanistan through the Afghan Trade Transit (ATT) corridor with Pakistan every day according to check-post and customs officials. In their 2010 book On the Trail of Terror Finance, John Cassara and Avi Jorisch wrote that the ATT “has resulted in massive smuggling and trade fraud, and it continues to facilitate the laundering of narcotics proceeds that help finance the Taliban.” ATT smuggling serves as another arrow in the Taliban’s quiver as U.S. troop presence in Afghanistan draws down.

From Customs Today:

Smuggling of Rs 100m carried out daily thru Afghan Transit route: sources

Reported by: Sohail Rab December 25, 2014

KARACHI: The smuggling of around Rs 100 million is being carried out daily through Afghan Transit Trade (ATT), it was learnt here.

The highly informed sources while sharing their views with Customs Today have disclosed that 95 percent of smuggling of goods including tiles, diesel, cloths, tea, tyres and others is being carried out through Afghan Transit Trade.

The sources revealed that ‘Sheela Bagh’ check-post near Chaman border is among one of the burning spots where the smuggled goods are being transported to Quetta and then Karachi while the smuggled goods are also being loaded on the retrograde containers on returning from Afghanistan near ‘Waish’ Border.

They further disclosed that the smugglers have strong nexus with the security personnel of Frontier Constabulary (FC) and Customs officials at different check-posts and the biltee of smuggled consignments under the smugglers’ name is being cleared from different check-posts easily without any checking.

The sources claimed that 60per cent of smuggling would be curtailed, if strict surveillance and vigilance would be conducted at ‘Sheela Bagh check-post near Chaman Border. They further recommended the authorities concerned of FBR to form joint examination teams comprising of the personnel of Pakistan Customs, Coast Guards and Rangers at National Highway, RCD and Superhighway in order to eliminate smuggling of goods. They further said that the Quetta to Karachi Bus Terminal and Northern Bypass are two more “deliberately” vulnerable spots where the smuggled goods are easily coming into Karachi…

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Taliban arms dealer released from Guantanamo

January 19, 2015

Mohammed Zahir

Taliban weapons trafficker and drug smuggler Mohammed Zahir has been released from his Guantanamo jail cell back to freedom in Afghanistan by the Obama administration. Described by the Telegraph as “a leading Taliban weapons supplier,” Zahir reportedly had Stinger missiles and uranium on his property in Afghanistan prior to his arrest years ago. Zahir intended to use the uranium to produce an “atom bomb,” earning him a designation by Daniel Greenfield as a “nuclear terrorist.” In any case, the release of this major arms trafficker who can now revive his old gunrunning network would not, to put it politely, enhance security in Afghanistan; nor would it align with Pres. Obama’s professed support for gun control.

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Terror finance predictions for 2015

January 1, 2015
  • Counter-terror attorney Nitsana Darshan-Leitner says that a jury trial will begin in January for the Sokolow v. Palestinian Liberation Organization. The case is notable in that it takes on the Palestinian Authority itself in addition to the PLO, and could set the precedent for further lawsuits to help de-fund the PA and PLO by terrorist victims’ families.
  • A trial to set damages for Arab Bank PLC’s role in financing terrorism is scheduled to begin in May (h/t Sal). Arab Bank wanted to skip the trial and settle for $12 million, but U.S. District Judge Brian Cogan ruled that a trial would be a more useful starting point.
  • NYU professor Maha Hosain Aziz predicts that lone wolf Islamist terrorist attacks will increase, requiring closer monitoring of social media by law enforcement (h/t Don). Money Jihad predicts that public officials will cite these increased lone wolf attacks as an excuse for why they fail to interdict terrorist funds. They will claim that self-financed attacks are harder to detect than transactions across terrorist financial networks.
  • Marine Gen. Joseph Dunford says Afghan forces will be “tested” by the Taliban in 2015. As Obama’s premature withdrawal from Iraq indicated, leaving inadequate forces to combat terrorists can lead to their financial resurgence as it did with ISIS. This looks even more ominous when coupled with the Pakistani Taliban’s “stockpiling” of cash through extortion and kidnap-for-ransom schemes in 2014.
  • The FC Barcelona soccer team will not renew its sponsorship deal with Qatar in 2015 over terror finance concerns.
  • Finally, increased cyber-attacks and cyber-theft are always a safe bet. McAfee Labs predicts that “Small nation states and foreign terror groups will take to cyberspace to conduct warfare against their enemies” and increased ransomware attacks in 2015.

Money Jihad predictions last year for 2014 were somewhat prescient, including the projection that Narendra Modi would move against illicit finance if elected as prime minister of India, which he was and which he did, and that ransomware would develop into a larger cyber-security threat. But our predictions that Congress would declassify 28 redacted pages of its report into 9/11, and that Congress would tighten sanctions on Iran proved to be off.

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Dialing for terror dollars: recommended reading

July 3, 2014
  • The disembowling of Iraq by Al Qaeda (ISIS) is being funded by Turkey, Qatar, and Saudi Arabia… more>>
  • ISIS’s annual report is more than a balance sheet or summary of operations.  It’s actually an appeal to potential investorsmore>>
  • The Taliban taxes poppies and blackmails businessmen.  But the dirty little secret behind most of the Taliban’s wealth lies with Arab sheikhs, say Afghan reporters… ground truth>>
  • An Arab interest group in New York opposed to NYPD tactics turns out to be funded by Qatar, the de facto sponsor of the global Muslim Brotherhood… more>>
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