Posts Tagged ‘Al Rajhi Bank’

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J.P. Morgan to Saudi banksters: buh-bye!

March 4, 2014

Fed up with a lack of transparency and flimsy know-your-customer policies, J.P. Morgan has severed ties with the Saudi-based Al Rajhi bank.  The sharia bank, whose founder was named in the Golden Chain list of Al Qaeda benefactors, has provided financial services for East Africa embassy bomber Mamduh Mahmud Salim, Al Qaeda leader Ayman al-Zawahiri, and dangerous Wahhabi organizations like Indonesian Kompak and the Al-Haramain foundation.

Thanks to Sal for sending this over from Bloomberg:

JPMorgan Said Cut Tie to Saudi Bank Amid Focus on Control

JPMorgan Chase & Co. (JPM) dropped Al-Rajhi Bank, the world’s largest Shariah-compliant lender, as a correspondent banking client amid a push to improve risk controls, said two people with direct knowledge of the move.

The relationship with Saudi Arabia’s biggest publicly traded bank ended Dec. 31 because JPMorgan couldn’t get enough information on where payments in dollar-clearing services for Al-Rajhi had originated, said one of the people, who requested anonymity because the decision wasn’t public.

JPMorgan said it cut off the service to about 500 foreign lenders last year as regulators press the world’s biggest banks to verify that transactions are used for legitimate business. The crackdown seeks to halt funds tied to money laundering, terrorism and countries covered by economic sanctions. Correspondent accounts allow lenders to take deposits or make payments on behalf of foreign institutions.

“JPMorgan has to be extra careful to make sure they’re adhering to standards and not even approaching anything questionable,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business.

The two banks haven’t been cited by U.S. regulators for involvement in illegal money transfers. Tasha Pelio, a JPMorgan spokeswoman, declined to comment on clients of the company, which is based in New York and ranks as the nation’s largest lender by assets. A spokesman for Al-Rajhi (RJHI) didn’t respond to inquiries, and there was no response to messages sent to the firm’s Riyadh headquarters.

Biggest Holders

Al-Rajhi, founded in 1957 by billionaire Sulaiman Al Rajhi, had 9,000 employees and about 500 branches in Saudi Arabia, Jordan, Malaysia and Kuwait, according to a January 2012 media kit. Members of the Al Rajhi family, one of Saudi Arabia’s richest, are the biggest shareholders of the company, which had $74.6 billion of assets on Dec. 31, according to data compiled by Bloomberg. Shariah-compliant financial firms provide products adhering to Islam’s ban on interest.

The U.S. Office of the Comptroller of the Currency ordered JPMorgan to improve anti-money-laundering efforts last year, finding that its controls tied to the Bank Secrecy Act were inadequate. The firm failed to find out enough about banking customers and identify suspicious activity, according to the January 2013 consent order. The Bank Secrecy Act requires firms to report all large cash deposits to help prevent crimes such as drug-trafficking and terrorist financing…

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Sharia banks that fund terrorism

January 7, 2013

The connections between ethical finance and violent extremism

The relationship is simple.  Jihadists know they can trust sharia-compliant banks to maintain their anonymity, not ask too many questions, and facilitate high-dollar transactions on behalf of their terrorist groups.  Some Islamic financial institutions, such as National Commercial Bank and Islami Bank Bangladesh, have taken the relationship a step farther by donating a portion of their bank profits in the form of zakat as an act of corporate “charity” to terrorist organizations, or in the case of Al Rajhi, through private zakat donations of leading bankers.  Saudi Arabia and Iran are key bases for these activities, but this is a global phenomenon.  Here’s Money Jihad’s short list of the worst offenders:

Al Rajhi Bank:  The Saudi financial institution has served as the sharia bank of choice for the world’s jihadists, including East Africa embassy bomber Mamduh Mahmud Salim, Al Qaeda leader Ayman al-Zawahiri, and organizations like Indonesian Kompak and Al-Haramain.  Bank co-founder Sulaiman Al-Rajhi appeared on the infamous Golden Chain document of Al Qaeda financiers.  These allegations were reinforced by the recent U.S. Senate investigation into HSBC’s correspondent relationships.

Al Shamal Islamic Bank:  Osama Bin Laden co-founded the Al Shamal in Sudan and invested $50 million there.  During the 1990s and early 2000s, Al Qaeda distributed money to its cells through Al Shamal.  Funds passed through Al Shamal were used in preparation for terrorist attacks.

National Commercial Bank:  Offering conventional and sharia banking services, Saudi Arabia’s self-described first, largest, and most prominent bank is NCB.  Among other misdeeds, a Saudi audit revealed that NCB transferred $74 million in the 1990s as zakat through its charitable front organizations to Al Qaeda (see here, here, and here).  Khalid bin Mahfouz, the head of the bank, exploited libel laws to sue author Rachel Ehrenfeld in an effort to silence accusations about his role in financing terrorism.

Arab Bank:  This conventional bank in Jordan maintains a wholly-owned subsidiary (Islamic International Arab Bank PLC) that offers full-range sharia services.  Arab Bank has transferred money on behalf of Comité de Bienfaisance et de Secours aux Palestiniens (CBSP), a notorious French charity, to a known financial subunit of Hamas.  The Jordanian bank has paid out insurance benefits to families of suicide bombers for the Saudi Committee—another charity that funds Hamas.  Arab Bank has handled transactions for the Holy Land Foundation, whose leaders now sit behind bars for financing terrorism.  It has been the subject of American investigations, but the bank has consistently refused to turn over related documents to the U.S.

Islami Bank Bangladesh Limited:  IBBL, Bangladesh’s biggest sharia bank, has handled Wahhabi accounts to propagate radical Islam since its inception.  In 2011, the Bangladeshi home ministry intelligence revealed that 8 percent of the bank’s profits were diverted as corporate zakat to support jihad in Bangladesh.  One of the men on IBBL’s board of sharia advisors was arrested in connection with a terrorist attack against Bangladeshi police officers.  The U.S. Senate slammed British bank giant HSBC for maintaining relationships with IBBL despite evidence that it served terrorists like Shaikh Abdur Rahman of Jamatul Mujahideen Bangladesh and terror-funding Islamic charities like IIRO.  The Senate’s report also implicated HSBC for disregarding evidence of terror financing at another Bangladeshi sharia bank with whom it worked:  Social Islami Bank.

Bank Melli:  The Iranian Islamic bank sent “at least $100 million to an Iranian Revolutionary Guard branch that supports Hamas, Palestinian Islamic Jihad, and other terrorist groups, the Quds Force” between 2002-06.

Bank Saderat:  Another major Iranian sharia finance house, the U.S. Treasury Department sanctioned the rocket-funding Bank Saderat, stating that “The bank is used by the Government of Iran to transfer money to terrorist organizations, including Hizballah, Hamas, the Popular Front for the Liberation of Palestine-General Command and Palestinian Islamic Jihad. A notable example of this is a Hizballah-controlled organization that has received $50 million directly from Iran through Bank Saderat since 2001.”

Other culprits include Dubai Islamic Bank, which is active in both the U.A.E. and Pakistan, and Tadamon Islamic Bank.

So much for “ethical finance.”  For further developments, please continue reading Money Jihad, Shariah Finance Watch, and @moneyjihad on Twitter.

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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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Waist deep with Al Rajhi Bank: HSBC

July 25, 2012

Among other correspondent relationships that HSBC maintained with prominent sharia banks that fund terror, HSBC did business with Al Rajhi Bank as late as 2010, according to a report from the U.S. Senate.

Al Rajhi Bank, a Saudi-based sharia bank created by Sulaiman Al-Rajhi, has been implicated by several Western intelligence services for funding terrorist activities from Bosnia to Indonesia.  The bank has also resisted attempts by the 9/11 victims’ families to investigate the funding of the Sept. 11, 2001, terror attacks.

From Jihad Watch and Business Insider:

Global finance completely compromised. “Report Shows How HSBC Maintained Its Ties With One Of Osama Bin Laden’s Key Benefactors,” by Linette Lopez for Business Insider, July 17 (thanks to Twostellas):

Yesterday, the Senate released a report on HSBC’s ties to the darkest actors in global finance. Today, the details of the 335 page investigation are trickling out and shocking everyone.The laundry list of offenses includes everything money laundering for Mexican drug cartels to ignoring U.S. regulations meant to prevent dollars from reaching our country’s known enemies.

Enemies like Al Qaeda.

One of the most damning parts of the report details HSBC’s relationship with Saudi based Al Rajhi Bank, a member of Osama bin Ladin’s ‘Golden Chain’ of important Al Qaeda financiers. The relationship has spanned decades, perhaps that is why even when HSBC’s own internal compliance offices asked that it be terminated in 2005, even when the US government discovered hard evidence of Al Rajhi’s relationship with terrorism, HSBC continued to business with the bank until 2010.

Al Rajhi bank is owned by the billionaire Al Rajhi family and holds $59 billion in assets. It is Saudi Arabia’s largest private bank.

Al Rajhi’s links to terrorism were confirmed in 2002 when U.S. agents searched the offices of a Saudi non-profit and U.S. designated terrorist organization, Benevolence International Foundation (page 193). In that raid, agents uncovered a CD-ROM listing the names of financiers in Osama bin Ladin’s elite ‘Golden Chain.’ One of those names was Sulaiman bin Abdul Aziz Al Rajhi, a founder of Al Rajhi bank….

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HSBC flouted warnings, cozied up to IBBL

July 20, 2012

A report by the U.S. Senate has documented extensive ties between HSBC and Islami Bank Bangladesh Limited (IBBL), the biggest sharia bank in Bangladesh.  HSBC engaged in business activity with the Bangladeshi financial institution despite ample evidence of IBBL facilitating terrorist financing.

As previous Money Jihad coverage has shown, IBBL helped bankroll the dangerous spread of Wahhabi Islam in Bangladesh.  Last year, IBBL was also named by its own government for diverting zakat to fund militant jihad, and one of its sharia board advisers was arrested an interrogated for an attack against police officers.  And that was without even knowing the contents of this report, which are quite damning.

IBBL remains one of the world’s worst examples of the nexus between sharia finance and terror finance.  But HSBC didn’t seem to mind too much.

From Wednesday’s Daily Star:

Terror financed due to HSBC failure

US probe into British bank’s operation in Bangladesh exposes links of 2 local Islamic banks

Terror sharia bank worked closely with HSBC

Islami Bank Bangladesh Ltd and Social Islami Bank Ltd came into the spotlight yesterday for their alleged links to terrorist financing after a US Senate report exposed British banking giant HSBC’s internal governance failure to control flows of suspect funds.

Click here to read Full Text of US report

One of the banks was allegedly funding al-Qaeda, and Osama bin Laden’s brother-in-law held shares in a company that has shares in the bank.

In all these cases, profit motive rather than cautions from various levels within the bank and standard procedures ruled the game.

More thoughts were given to the bank’s making $47,000 in revenue that might go up to $75,000 a year later than to the terrorist links the banks allegedly had, or the US authorities’ view of the banks.

A report of the US Senate Permanent Subcommittee on Investigations, a congressional watchdog panel, has revealed these troubling information which show a “pervasively polluted” culture at HSBC Holdings Plc.

The bank acted as financier to clients seeking to route shadowy funds from the world’s most dangerous and secretive corners, including Mexico, Iran, Saudi Arabia and Syria, according to the report.

The US report also mentioned that Al Rajhi Bank, a Saudi bank, was involved in suspicious transactions.

HSBC apologised to the US Senate, saying it takes “compliance with the law, wherever it operates, very seriously”.

In one instance, when Islami Bank wanted to open a US dollar account with the HSBC US office, questions were raised about the Saudi bank Al Rajhi’s 37 percent ownership in Islami Bank. Ears of HSBC’s anti-money laundering unit were cocked.

But the then head of HSBC Global Banknotes, Chris Lok, felt that his interest in considering a new account depended upon whether there was enough potential revenue to make.

“Is this an account worth chasing….How much money can you expect to make from this name? It’s just that if the revenue is there then we are prepared for a good fight,” he wrote. “The money is there and we should go for this account.”

“Then Lok and others approved the account despite questions about its [Islami Bank] primary shareholder Al Rajhi Bank, whose past links to terrorist financing had received attention in the media …and troubling information about Islami Bank itself,” the senate report said.

HSBC’s own Financial Intelligence Group (FIG) unit had reported that Shaikh Abdur Rahman, chief of Bangladesh’s terrorist outfit JMB, had an account with Islami Bank. Bangladesh Bank found that two branches of Islami Bank had been engaged in “suspicious transactions” and urged the bank to take action against 20 bank employees for failing to report the suspicious transactions, according to the FIG report.

Six top militants including JMB chief Abdur Rahman and his deputy Siddiqul Islam alias Bangla Bhai were executed for killing two Jhalakathi judges in 2007.

HSBC’s Know Your Customer unit had reported that Islami Bank be classified as a highest risk client but HSBC rejected the suggestion. It meant HSBC did not subject the bank to any enhanced monitoring.

HSBC’s another internal report said a Saudi NGO, International Islamic Relief Organisation (IIRO), had been implicated in terrorist financing by the US government and included on the list of those prohibited to do business in the US. The IIRO had accounts with both Islami Bank and Social Islami Bank, and yet HSBC’s Compliance Department denied an internal request of due diligence on the bank.

“Today, although HSBC exited the US banknotes business in 2010, Islami Bank remains a customer of two dozen HSBC affiliates,” the report said.

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Billionaire Saudi banker: “I have worked out a meticulous scheme for this endowment”

June 29, 2012

Sulaiman Al-Rahji, co-founder of the Sunni world’s largest sharia bank and one of Saudi Arabia’s richest men, has reportedly set aside all his wealth for an endowment (waqf) and inheritance by his children.  Given the questions raised about his bank’s involvement in terrorist financing and fighting an investigation into the funding of 9/11, this development is not as heartwarming as the Arab News presents in a nearly 3,000 word article last month:

Saudi Arabia’s rags-to-riches billionaire Sulaiman Al-Rajhi is also a world-renowned philanthropist. He is the founder of Al-Rajhi Bank, the largest Islamic bank in the world, and one of the largest companies in Saudi Arabia. As of 2011, his wealth was estimated by Forbes to be $7.7 billion, making him the 120th richest person in the world. His flagship SAAR Foundation is a leading charity organization in the Kingdom. The Al-Rajhi family is considered as one of the Kingdom’s wealthiest non-royals, and among the world’s leading philanthropists.

Al-Rajhi is a billionaire who chose last year to become a poor man at his own will without having any cash or real estates or stocks that he owned earlier. He became penniless after transferring all his assets among his children and set aside the rest for endowments. In recognition of his outstanding work to serve Islam, including his role in establishing the world’s largest Islamic bank and his regular contribution toward humanitarian efforts to fight poverty, Al-Rajhi was chosen for this year’s prestigious King Faisal International Prize for Service to Islam.

In an interview with Muhammad Al-Harbi of Al-Eqtisadiah business daily, Al-Rajhi speaks about how he was able to succeed in convincing chiefs of the leading central banks in the world, including that of the Bank of England, nearly 30 years ago that interest is forbidden in both Islam and Christianity, and that the Islamic banking is the most effective solution to activate Islamic financing in the world and make it a real boost to the global economy.

The story of Al-Rajhi is that of a man who made his fortunes from scratch, relying on grit and determination. Al-Rajhi threw away his huge wealth through two windows — distributed a major part of his inheritance among his children and transferred another portion to endowments, which are regarded as the largest endowment in the history of the Islamic world. He had to fight poverty and suffering during his childhood before becoming a billionaire through hard work and relentless efforts, and then leaving all his fortunes to become penniless again.

Al-Rajhi is still very active and hardworking even in his 80s with youthful spirits. He begins his work daily after morning prayers and is active until Isha prayers before going to bed early. He is now fully concentrated on running the endowment project under his SAAR Foundation, and traveling various regions of the Kingdom managing activities related with it. He always carries a pocket diary containing his daily programs and activities and he is accustomed to stick on to the schedule he had prepared well in advance.

Al-Rajhi scored excellent performance results in almost all businesses in which he carved out a niche for himself. In addition to establishing the world’s largest Islamic bank, he founded the largest poultry farm in the Middle East. The credit of activating the organic farming experiment in the Kingdom mainly goes to him through launching a number of farming projects, including Al-Laith shrimp farming. He also established real estate and other investment projects.

Excerpts:

Sheikh Suleiman, have you become a poor man again?
Yes. Now I own only my dresses. I distributed my wealth among my children and set aside a portion for endowment to run charity projects. As far as I am concerned, this situation was not a strange one. My financial condition reached zero point two times in my life, and therefore I have had the feeling and understanding (about poverty) well. But now the feeling is accompanied by happiness, relaxation and the peace of mind. The zero phase in life this time is purely because of my own decision and choice.

Why did you choose this path?
All wealth belongs to Allah, and we are only those who are entrusted (by God) to take care of them. There were several reasons that prompted me to distribute the wealth and that resulted in performing this virtue. Most important among them is to foster brotherhood and love among my children and safeguard their harmonious relationship. This is more significant than any wealth in this life. I was also keen not to be instrumental in wasting the precious time of courts in case of any differences of opinion among them with regard to partition of inheritance. There are several examples that everybody could see when children entered in dispute over wealth and that led to the collapse of companies. Nation has lost many large companies and their wealth that we could have been saved if we tackled the matter in a right manner. Apart from this, every Muslim should work on some endowments that could benefit him in the life after death. Likewise, I prefer my children to work on developing wealth, which they inherit after my death, during my lifetime itself rather than I continue working to increase them.

Are you getting enough free time after the distribution of wealth?
As earlier I am still working on developing endowments. I will donate and give alms from it until Allah takes over this trusted deposit. I have worked out a meticulous scheme for this endowment and developed it with the support of specialist consultants and agencies. This idea struck me long before. Usually people in the Islamic world set aside one-third or one-fourth of their wealth for endowment and that will be effective only after their death. But in my case, I decided to implement this decision in my lifetime itself. So I invited my children to Makkah during the end of Ramadan and presented the idea in front of them. They readily agreed it and then I distributed my wealth among my children in addition to setting aside a part of it for endowment. I sought the help of consultants to facilitate the procedures for the distribution of all my assets including properties, real estates and stocks, and that was completed in a cordial atmosphere. All my children are now fully satisfied with my initiative and they are now working on these properties in my lifetime.

How much wealth you distributed among children and set aside for endowment?
He laughed without giving an answer.

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The 10 largest sharia banks in the world

May 28, 2012

The Lebanese-based Union of Arab Banks published a report last year naming the world’s ten biggest Islamic financial institutions:

Bank Country Assets
Al-Rajhi Saudi Arabia $49.2 billion
Kuwait Finance House Kuwait $43.7 billion
Dubai Islamic Bank U.A.E. $24.5 billion
Abu Dhabi Islamic Bank U.A.E. $20.5 billion
Al-Baraka Group Bahrain $15.8 billion
Qatar Islamic Bank Qatar $14.2 billion
Al-Rayyan Qatar $9.5 billion
Emirates Islamic Bank U.A.E. $8.9 billion
Al-Jazirah Saudi Arabia $8.8 billion
Al-Ahli United Bank Kuwait $8.5 billion

A few comments on the top three sharia banks:  1)  Al Rajhi Bank has been sued for financing the 9/11 terrorist attacks, and was highlighted for its facilitation of terrorist financial transactions in the book Funding Evil by Dr. Rachel Ehrenfeld; 2) The Kuwait Finance House was a shareholder of Tadamon Bank, a financial institution that helped transfer funds for Osama bin Laden; and 3) BusinessWeek reported that “In 1999, U.S. intelligence agents reported that Dubai Islamic Bank in the United Arab Emirates was a conduit for bin Laden funds.”

Quite the group.