Posts Tagged ‘CFT’

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China blocks money flow to Pak-backed jihadists

January 28, 2014

Demonstrating its concern that Pakistani-funded terrorists are brewing a witch’s cauldron of jihad in its Western territory, the government of China has signaled that it will crackdown on illicit financial transfers among Islamists in their western frontier.

The key thing for Western readers to understand here is not so much that China is doing anything particularly noteworthy beyond common sense, but to appreciate that most of that part of the world—Afghanistan, India, Bangladesh, and China—recognizes Pakistan as a base for terrorist activity.  The American public, except for U.S. forces who have served in Afghanistan and have witnessed this first hand, isn’t being told this basic fact.  The recent budget bill adopted by Congress included some glancing pre-conditions for the resumption of U.S. foreign aid to Pakistan, but John Kerry is likely to endorse the continuation of such aid regardless of the conditions in the bill.

Thanks to our Twitter friend Moinak for sending this over:

China moves to choke funding of terror outfits in Xinjiang

Move underlines Beijing concern over Pakistan-based outfits

China’s central bank on Friday announced new measures aimed at enabling authorities to freeze assets of domestic terrorist groups and their “overseas affiliates,” in a move seen as underlining China’s continued concern over outfits believed to be operating out of Pakistan.

The People’s Bank of China (PBOC) said the rules, issued along with the Ministry of State Security, “will prevent terrorism and is in accordance with a United Nations requirement that all nations freeze, without delay, funds or other assets of terrorists,” the official Xinhua news agency reported.

This followed a directive from the National People’s Congress (NPC) in 2011 requiring “financial and certain non-financial organisations” to take steps to freeze funds seen as being directed toward terrorist activities.

The PBOC said the regulation “mainly applies at home, but also has effects on overseas branches and affiliates of relevant organisations.”

That the move is aimed at curbing funding towards activities in the far-western Muslim-majority Xinjiang region, which has seen a spate of violent attacks, appears likely in the wake of measures taken by the Ministry of Public Security, or police authority, to restrict funds moving into Xinjiang following attacks in 2012.

In April of that year, the Ministry asked Pakistan to hand over six members of the East Turkestan Islamic Movement (ETIM), and said it had taken steps to freeze their assets.

Identified as “core members” of the outfit, they were named as Nurmemet Memetmin, Abdulkyum Kurban, Paruh Tursun, Tursunjan Ebibla, Nurmemet Raxit and Mamat Imin Nurmamat.

According to Chinese officials, Mr. Memetmin trained terrorists who carried out knife and bomb attacks in Kashgar in 2011 that left at least 20 people killed.

Officials also believe Mr. Nurmamat is hiding in Pakistan, or near the Afghanistan border, after he fled China in October 2009 when an explosion accidentally struck his bomb-making unit in Shache.

The Ministry of Public Security said in 2012 it hoped “foreign governments and their law enforcing departments would help to arrest the six and hand them over to Chinese authorities.”

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Tracking terror finance and government follies: recommended reading

January 16, 2014
  • The recent designation by the Treasury Department of an Al Qaeda financier neglects to mention that he and his organizations have consorted with Yusuf Qaradawi, spiritual father of the Muslim Brotherhood… more>>
  • New details on the sanctioned Saudi billionaire in Turkey and the cover-up by Recep Erdoğan… more>>
  • Government forces the financial sector to do the lion’s share of work in screening for laundered or terrorist funds, but government doesn’t really want to hear financial institutions’ ideas on how the process could be improved, says industry analyst Tom Keatinge… more>>
  • Monitoring compliance with government financial regulations in a war zone in another continent is easy, right?  One expert explains why it isn’t, and how a UK court got it wrong on Dahabshiil… more>>
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Turkey conducts zero probes of terror finance in 30 years

October 22, 2013

If Turkey hasn’t even investigated the financing of the PKK terrorist group, which Turkey regards as a real threat, then Turkey certainly hasn’t investigated the financing of the Turkish charity IHH—a Hamas-linked charity that operates as a proxy of the government.  Nor is Turkey scrutinizing the weapons that are being transshipped through its territory across the border to jihadist rebels in Syria.

Is it too much to ask a NATO ally to conduct at least one investigation into the financing of terrorism within its own borders?

From Today’s Zaman via Antalya Central:

‘Turkey hasn’t launched any probe on terror financing’

11 October 2013

Turkey has been fighting against terrorism for almost 30 years and this has resulted in the deaths of tens of thousands of people while billions of liras have also been spent.

However, previous efforts have all failed to produce the expected results in this fight. Recent research conducted by experts from the Ministry of the Interior, the Ministry of Justice and the Ministry of Finance has revealed that no judicial investigation into the financing of terrorism has ever been launched nor has any complaint on the issue ever been filed in Turkey.

Stressing that Turkey has been missing out key points in its fight against terrorism, the country’s most urgent problem, experts underlined that most of the criminal cases filed on the issue of terrorism are on propaganda crimes which resulted in Turkey being convicted by the European Court of Human Rights (ECtHR).

Security units in the country have recently taken some steps to eliminate the financial sources of terrorist organizations including the Kurdistan Worker’s Party (PKK) and the Kurdistan Communities Union (KCK), an umbrella terrorist organization that includes the PKK. But while the necessary legal infrastructure have been established, the sources of financing of the terrorist organizations were also discussed in further detail by the experts. Opium fields have been raided to eliminate drug incomes, the most important financial source of the PKK and the KCK. But it was found that money transfers to these organizations have never been fully monitored…

…PKK demands share from tenders

The experts also reported on sources of income for the PKK/KCK in detail. The organization reportedly earned around TL 100 million in 2012 from public tenders originally valued at TL 1 million. In 2013, this figure increased to TL 150 million. In addition, the PKK conducts customs control in various cities, primarily in Hakkari, Van, Şırnak, Mardin, Ağrı and Iğdır. The smugglers who use these customs points have to pay a tax to the terrorist organization, with the amount ranging between 2 and 5 percent of the value of the smuggled items, which amounted to TL 250-300 million in total.

Cash flow through borders

The amount of ilegal money flowing through Turkey’s borders on an annual basis exceeds $2.5 billion, which is described in the country’s financial system as money with unidentifiable sources.

“There is no information on where the huge amount of illegal cash goes or what purposes it serves. Officials need to identify the amount of money used by terrorist organizations,” said a senior official to Today’s Zaman speaking on the condition of anonymity, underlining Turkey’s inefficiency in keeping track of money flowing through its borders.

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Financial data mining yields no gold nuggets

September 19, 2013

Financial privacy is becoming a fading memory of the past due to aggressive regulations by Western governments that require bankers to serve as snitches against their own customers for transactions that may or may not be criminal in nature. These regulations are costly for the banks to comply with (costs which are ultimately passed on to customers), and they carry a price for citizens’ privacy as well.

All that might be forgiven if the invasive policies actually result in stopping terrorists, their financial transactions, or their operations.  But according to new research being conducted in the European Union, the results of such programs are “meager and sometimes debatable.” The government holds the data while you’re left holding the bag.

A tip of the hat to Andrew S. Bowen for sending this over:

Terrorism financing barely traceable using data analysis

28 August 2013

Doctoral research by Mara Wesseling has shown that the data analyses being performed as part of the European fight against terrorism financing are of little use for preventing terrorism. Wesseling will receive her doctorate from the University of Amsterdam (UvA) on 3 September.

Immediately following the terrorist attacks on 11 September 2001, the European Union created the EU Action Plan for Combating Terrorism, which included action against terrorism financing as a ‘core component’. Politicians, policymakers and legal experts stress the importance of combating terrorism financing, as they see money as a crucial element in the propagation of terrorism. Specific programmes have been set up to address the problem.

‘My research shows that it cannot yet be demonstrated whether these programmes have had much success with regard to tracking down suspected terrorists or preventing terrorist attacks. In light of the meagre and sometimes debatable results of both programmes, the question arises whether the social and political changes instituted as part of the data-analysis-driven fight against terrorism are (still) desirable or justified,’ Wesseling says.

Terrorist Finance Tracking Program

In her research, Wesseling analysed the Terrorist Finance Tracking Program (TFTP – better known as the SWIFT programme in the wake of the ‘SWIFT affair’) and the Third European AML/CFT directive. These two programmes constitute the most significant initiatives in the European fight against the financing of terrorism.

It has been shown that risk analyses carried out by banks as part of the Third European AML/CFT directive have revealed virtually no patterns that point to terrorism financing. Wesseling goes on to say that the preventive power of the TFTP to detect terrorist networks at an early stage is also limited…

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Pakistan scrambles to get off FATF’s gray list

September 16, 2013

The world’s leading financial standards body, FATF, alerted the international community earlier this summer that Pakistan and 11 other countries have failed to make sufficient progress in preventing money laundering and terrorist financing.

The newspaper Pakistan Today notes that if Pakistan fails in “coming up with proper and combating the financing of terrorism and anti-money laundering legislations the country may face severe financial sanctions that may affect its financial deals with the World bank, the Asian Development Bank and other top financial institutions” (h/t Zia Ur Rehman).  Pakistan should make reforms prior to FATF’s next meeting in October to avoid such sanctions.

Not so coincidentally, Pakistan’s central bank has rolled out a new requirement for Pakistani financial institutions to adopt nationwide software by Sept. 30 that will facilitate the filing of suspicious activity reports by bank employees.  When a certain customer or transaction is regarded as suspicious, the financial institutions would use this software to report their observations back to the central bank.

Anybody familiar with new software deployments, even under the best circumstances in well-developed high-tech nations, will recognize that this is an overly ambitious timetable to for implementation.  Widespread training and adoption of the software is unlikely to be complete by FATF’s deadline, but the stated goal may be enough to persuade FATF that Pakistan is moving in the right direction.

Pakistan has been cited before by the Financial Action Task Force for its financial regulatory deficiencies.  Despite the history of shortcomings, Western nations have continued to saturate Pakistan with foreign aid.  Without adequate money laundering an CFT controls in place, there is a high risk of any such military and development aid being abused by malicious actors without fear of detection or prosecution.

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Former spooks question financial surveillance

July 2, 2013

Sanctions, asset freezes, and financial surveillance have produced the opposite result from what policy makers intended by driving Al Qaeda deeper underground and creating a more diffuse system of financial transactions by the terrorist group.  This is the analysis from LIGNET, a group of ex-CIA and intelligence officials.

There is a lot of truth to what these analysts are saying.  The regulatory regime has cost banks and our overall economy billions of dollars in compliance costs while producing thousands of meaningless currency transaction reports and foiling few plots.  This analysis is also consistent with what Jean Charles Brisard has written about counterterror finance bureaucracy, which he considers “basically useless.”  And recent revelations about the federal government’s domestic monitoring policies only cast financial data mining programs such as SWIFT in further doubt.

An excerpt from LIGNET’s analysis follows.  Reading their full piece requires registration.

With New Ways to Fund Attacks, Al-Qaeda Now a Bigger Threat

Posted on June 18, 2013

The overreliance by the United States on sanctions and surveillance in the war on terror has allowed al-Qaeda to adapt its methods of financing to avoid detection, and resulted in a decentralized al-Qaeda structure — and a much greater threat.

Al-Qaeda has transitioned from a hierarchical cell structure to a franchise organization that is now responsible for four times as many terrorist attacks a year as it was before 9/11. Al-Qaeda training camps are now being established on the Arabian Peninsula, in Africa, countries of the former Soviet Union, and Southeast Asia.

Background

The current counterterrorism strategy is to rely on economic sanctions and financial surveillance to identify and then stop terrorist financing. Examples of this are the U.S. PATRIOT Act, UN Resolution 1617, and the EU’s Third Money Laundering Directive.

The success of counterterrorism efforts in freezing the assets of terrorists has diminished over time. The UN found that while $112 million was seized in the three months after 9/11, only $24 million was seized in the two years that followed.

The continued targeting of al-Qaeda’s financial assets has had the unintended consequence of transforming al-Qaeda into a loose coalition of localized, autonomous, and self-sufficient terrorist “franchise” cells. These cells, held together by a world view rather than by a hierarchical structure, have been enormously effective. The number of terrorist attacks quadrupled in five years from 208 in 2003 to 864 in 2008.

In terms of financing, al-Qaeda’s shuria or high command council, no longer plays a central role in allocating expenditures or soliciting funds. Instead, terrorist financing has moved further into the ‘grey’ economy. Cells raise funds from a combination of charities, independent criminal ventures, and licit businesses. In fact, crime is now regarded as the main source of funds for al-Qaeda. Criminal ventures generally include extortion, hijacking, theft, blackmail, the drug trade, and kidnapping for ransom (KFR). LIGNET has previously covered al-Qaeda’s use of KFR on the Arabian Peninsula.

Even the transferring of funds between franchise cells has evolved to get around U.S. counterterrorism strategy. Originally, al-Qaeda moved funds through the financial sector, using banks such as France’s Credit Lyonnais, Germany’s Commerzbank, and the Standard Bank of South Africa. However, counterterrorism measures have driven al-Qaeda’s transferring of funds under ground, forcing it to rely on hawaladars and couriers. These provide untraceable methods of securely moving funds. Al-Qaeda recently used Pakistani-based hawaladars to move $1 million from the UAE into Pakistan, at which point the money was couriered to Afghanistan. Al-Qaeda’s pushing of its finances into illicit activities and localized funds have made it difficult for counterterrorism strategies that rely on economic sanctions to be effective. The results can be seen in Table 1, which shows the trend of cheaper – yet more frequent – terrorist attacks.

Operational expenses of jihadist attacks over timeExperts previously believed that the financial war had been a success. This presumption was based, in large part, on the success the United States had in closing down al-Qaeda’s traditional source of funding. But al-Qaeda has evolved and adapted. New al-Qaeda cells, recruiting centers and finance operations have appeared in remote areas of the world, with key affiliates on the Arabian Peninsula and in North Africa.

Analysis

The measures that have been taken in the war on terror since 9/11 to intercept al-Qaeda’s funding have seen diminishing returns. And while financial sanctions certainly weakened al-Qaeda’s ability to launch attacks, at least for a few years, they undercut the ability of intelligence agencies to “follow the money.” The importance of money trails is highlighted by the fact that al-Qaeda spends around 10 percent of its income on operational costs: The other 90 percent goes toward maintaining an international network of cells…

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Chase assesses risk, closes suspected accounts

June 21, 2013

Banks have a responsibility under federal law to deny account services to customers who are at risk for funding terrorism, money laundering, or evading economic sanctions.  Banks can’t allow customers to send money to countries that lack safeguards against such activities either.

Accordingly, JPMorgan Chase has closed an unspecified number of accounts that are at risk for abuse or criminal behavior by customers who are, according to the Michigan chapter of the Council on American-Islamic Relations, Muslims or Arabs.

The Arab-American Civil Rights League also alleges 50 “improper” account closures by banks such as Flagstar, Charter One, and Comerica.

Opponents of such bank closures would be better served by proposing changes to federal law rather than threatening lawsuits against banks that are simply carrying out their duties under the existing rules.

From the Detroit News:

Muslim, Arab-American groups say banks closing accounts without explanation

  • Mark Hicks, June 13, 2013

Two groups are seeking answers to what they say is a growing practice of Muslim and Arab-American groups having their bank accounts closed without cause or explanation.

The Council on American-Islamic Relations–Michigan is asking the Office of the Comptroller of the Currency, part of the U.S. Department of the Treasury, to investigate the complaints and the Arab-American Civil Rights League in Dearborn is pursuing a lawsuit against major banks.

“We see a type of pattern taking place in the Muslim/Arab community,” Dawud Walid, executive director of CAIR–MI, said Wednesday. “Bank accounts are being closed with no real justification … so it appears on the surface that there could be some sort of bias involved.”

One of the latest reported incidents, according to CAIR–MI, involved Alif Arabic, a business described as teaching Arabic to American citizens online. Officials there were notified May 30 by JPMorgan Chase their bank account would be terminated within 10 days. JPMorgan Chase officials did not detail why, according to the letter.

When an Alif Arabic employee asked the bank for clarification, they were told an analytical tool “alerted them that Alif’s account could pose a possible risk,” the letter read.

Walid said such a move could suggest discrimination based on religion and ethnicity. “We need answers and the bank is not giving answers,” he said.

Emily Smith, a JPMorgan Chase spokeswoman, said privacy reasons prevent the company from discussing details of its customer relationships. However, “on occasion, Chase determines it can no longer maintain a customer’s account but those decisions are not based on the customer’s religion, ethnicity or any other similar basis.”

Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency, said: “We have just become aware of the letter and have not had a chance to review. We will look into these allegations.”

Meanwhile, the Arab-American Civil Rights League plans to file a lawsuit after nearly 50 incidents of individual and business accounts being closed.

The group earlier this year asked the U.S. Department of Justice to investigate and launched a hotline for complaints after some area residents were notified by Huntington National Bank and other institutions their accounts were terminated without explanation.

That affected professionals and others who believed they acted lawfully, said Nabih Ayad, the league’s board chairman.

“It’s just a shame this continues to happen. It’s not fair to the community,” he said. “These sort of circumstances, they’re basically telling Arab Americans: ‘You’re not at the same level or beneath the average American”…

H/t to Creeping Sharia for sending this over.