Ernst & Young and the Federation of Indian Chambers of Commerce and Industry (FICCI) have issued a report on emerging trends in the financing of terrorism. The central argument of the study is that piracy, smuggling, and counterfeiting have been growth sectors for funding terror, and that India and the world need to establish more mechanisms to combat these methods.
The full report is available here, and a news article about it is here (h/t El Grillo).
There is a lot of value to the report, but one component that readers should take special note of is Ernst & Young’s distinction between the direct expenses for terrorism on things like bombs, materials, and attack plans versus indirect expenses for the bigger picture infrastructure of terrorism: recruitment, gathering intelligence, and public relations. This chart comes from their report:
This is the distinction that Money Jihad has tried to make over the last several months about the Tsarnaev brothers and the Boston marathon bombing. (See here and here.) The attack wasn’t just about the costs of the explosives purchased by Tamerlan, or even his travel expense s to Russia, although that certainly still needs to be explained more thoroughly.
The larger question is the indirect expenses that were made toward jihad in the North Caucasus long before the Tsarnaevs hatched their plot. These were expenditures made over several decades by the Saudis and Western-based Islamic front charities in spreading Salafism through the Caucasus. It took millions of dollars to create and support radical new mosques, fake “relief” programs, to pay and provision Chechen militants and their leaders, to buy loyalties and pay-off ambivalent politicians, and to create a mushroom patch of jihadist websites in the mother tongue of the Tsarnaev family.
It doesn’t do much good for the federal government and banks to scrutinize and report on every single financial transaction that we undertake if, at the same time, we ignore the millions of petrodollars and zakat donations that go toward paying the indirect expenses of terrorism and inculcating the next generation of jihadists.
Just four months after the Boston marathon bombing, two federal judges on a three-judge panel have overturned the conviction of the Oregon-based Islamic “charity leader” and terrorist fundraiser Pete Seda, who helped facilitate the transfer of $130,000 to Chechen terrorists in the early 2000s.
Activists like Seda have served as key conduits for funneling zakat donations from Western countries through Islamic front charities to jihadist causes around the world. The revenues supported the creation of websites and recruitment tools that helped radicalize North Caucasus diaspora like Tamerlan Tsarnaev.
Seda’s conviction was overturned by Judge Mary Schroeder, who was appointed by Jimmy Carter, and Judge Margaret McKeown, who was appointed by Bill Clinton and considered for a Supreme Court appointment by Barack Obama, on the grounds of alleged unfairness during the Seda investigation and trial.
The two judges claim that the Seda trial began as a white collar crime case but ended as a terrorism case, that some information about a witness named Barbara Cabral was not shared with defense attorneys, and that the scope of a warrant served against Seda before the trial was exceeded by law enforcement.
Meanwhile, Judge Robert Tallman, a Republican who was appointed by Bill Clinton, delivered a vigorous dissent from the liberal judges’ opinion. Oregon’s Daily Tidings summarizes Judge Tallman’s reasoning:
…In his dissenting opinion, Judge Richard Tallman wrote that the majority judges in the appeal improperly failed to take into consideration that [trial court judge] Hogan held a separate hearing on the Cabral issues before ruling the evidence would not have changed the jury’s verdict.
Tallman wrote that the appellate judges should not reverse Hogan’s ruling without it being “clearly erroneous,” which was not the case.
Moreover, Tallman’s minority opinion argued that the scope of the search warrant was not breached by agents searching Seda’s computers and that the other issues do not rise to the level necessary for overturning the jury’s guilty verdict.
Tallman also took issue with the majority opinion’s apparent dismissing of the key evidence in the actual tax fraud and conspiracy charges that were at the core of the case against Seda.
Seda and his codefendant, a Saudi national named Soliman Al-Buthe, went to great lengths and expenses to convert funds wired to Al-Haramain into $130,000 worth of hard-to-trace $1,000 cashier’s checks that Al-Buthe then carried from Ashland to Saudi Arabia in 2000, according to Tallman’s opinion.
Al-Buthe, also known as Al-Buthi, did so in violation of federal financial-reporting rules that he had complied with on nine other occasions, Tallman noted.
Also, Al-Buthe carried with him and failed to report that he was carrying a cashier’s check made out to him at an Ashland bank for $21,000, which Al-Buthe deposited in his personal bank account in Saudi Arabia.
“A reasonable jury could have concluded on this evidence that this was Al-Buthe’s ‘cut’ for serving as the courier,” Tallman wrote.
The jury also heard plenty of evidence on what Tallman calls the “deceitful manner” in which Seda hid the smuggled money by falsely declaring on a tax return that the money went toward the purchase of a prayer house in Missouri.
Had the men’s intent been not to smuggle the money to the Middle East, Seda simply could have wired the money directly to Al-Haramain’s main office in Saudi Arabia for about $15, Tallman wrote.
“The jury obviously thought the entire handling of the money reeked of criminal intent, as evidenced by its verdict,” Tallman wrote.
Hat tip to Rushette for alerting us to the appeals court decision.
We’ve known about Qatar’s funding of Al Qaeda-linked Syrian rebels from the outset of the uprising against Bashar al-Assad. The piece below from the Oriental Review puts Qatar’s role in even starker terms, pointing to a history of clandestine financing of militants by Qatar since at least the 1990s.
Like Saudi Arabia, Qatar is a state sponsor of terrorism all but in name, and should be legally designated as such. Keep in mind that Qatar isn’t just funding the rebels in Syria that the U.S. supports, but that Doha is also supporting the jihadists in Mali who are fighting America’s longtime ally, France.
Qatar Is Funding International Terrorism
Thu, May 23, 2013
By Alexander ORLOV (Russia)
A recent statement by Syria’s Information Minister that Qatar is violating all of the UN Security Council’s resolutions on fighting terrorism is being silenced in the West. The United States and its allies are keeping silent because Doha is providing funding to carry out their plans. Nor is there any word about an Arab role in settling the Syrian crisis, because it would be unrealistic for those who are arming one side in the conflict and sending terrorists into Syria to have a hand in resolving it. And for good reason, if we recall the recent major terrorist attack in Boston in which there is clear evidence of Saudi brainwashing with Wahhabi ideas. That is especially true if we look back in history a little ways — to when leading members of Qatar’s ruling Al Thani family were concealing Saudi terrorists who helped with preparations for the November 11, 2001 terrorist attacks in the United States that killed thousands of civilians.
And if we go back a few years further, we find that Qatar was on the US list of state sponsors of terrorism. It was only taken off the list because it offered to host a US naval base — the largest one in the region — which was used as a command post during the 2003 operation by forces of the United States and its allies to occupy Iraq. Huge amounts of money from natural gas sales enabled the Qataris get the “leader” of the global antiterrorist coalition to turn a blind eye on all of Doha’s transgressions in the sacred cause of assisting the “brothers” in sharing the Salafi faith everywhere — from Africa to Kashmir. If we can trust documents on the WikiLeaks site, in 2008 the former US ambassador to Doha, Joseph LeBaron, cabled the State Department that Qatar was still financing international terrorism. Leaks of his cables published by the Qatari newspaper Peninsula in 2010 generated an exchange of remarks between LeBaron and its chief editor. But the US ambassador left, and Washington simply hushed the matter up.
In the 1990s, Doha was among the most active “financiers” behind the separatist rebellion in Chechnya. It sent money to local militants and trained Arab terrorists who participated in attacks on the Russian Army in the North Caucasus. When the rebellion was put down and peace began returning to Chechnya and the Arab “mujahedin” were almost completely destroyed, Qatar’s Emir provided a refuge for Zelimkhan Yandarbiyev, “president” of the self-proclaimed Republic of Ichkeria and his many supporters, providing them with benefits and even government jobs.
Although Qatar has formally cut all government-level level financial ties with terrorist and Islamist groups at the state level, another mechanism for doing that has been put in motion — the so-called Islamic charities of Jamiat Qatar al-Khair, Sheikh Eid al-Khairiah, RAF, and the Qatari Red Crescent Society, which is also involved in allegedly charitable “international activities.” All are controlled by the Emir’s family or prominent representatives of it, as well as by the Ministry of Endowments and Islamic Affairs. And then there are their non-public activities. Money is seemingly collected by private individuals. Displays with signs indicating where donations are going can be seen in many of Doha’s large shopping malls: starving children in Somalia, aid for disaster victims in the poor Muslim countries of Asia and Africa, etc. The geographic scope is broad — stretching from the Western Sahara to the Philippines. As a rule, however, radical Islamist groups are always active in the countries concerned. And it is never possible to tell how much of the donations made to these funds by private individuals come out of the country’s natural gas revenues.
Officially, members of the Al Thani clan and the Emir himself cannot contribute. They take money from the state treasury — as much as they need, considering that Qatar is an absolute monarchy in which the activities of the Emir are not subject to audit. And from there, the funds can be transferred to bank accounts in other countries, especially countries where learning the names of the account owners is difficult. Until recently, active use was made of Swiss banks and offshore financial institutions. It is easy to move funds out of them to specific “aid” recipients in, let us say, Istanbul, and after they are turned into cash they can be delivered by special courier to their final recipient. That could be a Wahhabi extremist groups in Dagestan or elsewhere in the North Caucasus; Jabhat al-Nusra terrorist cells fighting Syria’s legitimate government; or sleeper cells of extremists in France, the United States and other countries.
Sometimes, the money is simply handed over directly — for example, to Hamas leader Khaled Mashaal when he visits Doha, where he is received as a head of state. Palestinian sources say that the Emir personally gives him cash that then makes its way to its intended recipients through Arab countries neighboring on the Gaza Strip. Then homemade rockets that kill innocent civilians are sent flying towards Israel. However, it is obvious that large amounts of money go for other purposes, including undermining the Palestinian National Authority and for the personal “needs” of Hamas leaders.
The Qataris make no bones about the fact that since the Arab Revolutions began they have been directly funding militants and weapons for those fighting the ruling regimes in Arab countries. They did it in Libya, and they are doing it now in Syria. And after the recent Arab League summit in Doha, where Qatar’s political weight overcame even Egypt and Algeria to push through a decision allowing weapons to be delivered to Syrian opposition fighters, Doha no longer needs to hide its activities along those lines. But if we apply the international legal norms to Qatar’s activities, we find that they actually meet the legal definition of sponsoring international terrorism as spelled out in several UN Security Council resolutions and other international community documents.
Doha’s provision of money and weapons to terrorist groups like Jabhat al-Nusra qualifies as financing international terrorism…
Webpages operated by the Caucasus Emirate terrorist organization have played a key and growing role in financing their operations, according to a late-2011 report from the Center for Strategic & International Studies. The report revealed that while the Caucasus Emirate relied on centralized sites such as Qoqaz.net in the early 2000s, the Caucasus Emirate and Al Qaeda now follow a more decentralized approach of communicating through discussion forums, social media, and smaller websites.
What role, if any, such websites played in engaging Boston Marathon bombers Tamerlan and Dzhokar Tsarnaev is yet to be determined, but the 2011 article below from Reuters via Radio Free Europe about the CSIS findings now merits a second look.
The article also acknowledges the symbiotic relationship and financial ties between Al Qaeda and the North Caucasus guerrillas that Money Jihad profiled last Friday:
Think Tank Says Al-Qaeda Funding Caucasus Rebels
September 30, 2011
A leading Washington think tank says Al-Qaeda is providing growing support, including financial, to Islamic rebels in Russia’s restive North Caucasus.
In its report, the Center for Strategic and International Studies said Al-Qaeda has played a key role in “proselytizing jihadism” to the mujahideen in Chechnya and the Caucasus.
The report’s author, Gordon Hahn, pointed to a growing number of websites linked to the insurgency that are carrying statements of support from leading jihadists such as Abu Muhammad al-Maqdisi, who inspired Al-Qaeda in Iraq and is now in jail in Jordan.
Such websites, Hahn said, are also used to raise money.
Hahn pointed to the arrest by Czech police in May of eight individuals in Prague suspected of plotting attacks in the North Caucasus as possible proof of ties to Al-Qaeda.
The rebels goal is a state called the Caucasus Emirate, stretching from the Black Sea to the Caspian.
Russian President Dmitry Medvedev has labeled the insurgency Russia’s top security threat.
Hahn noted Chechen-born rebel leader Doku Umarov has called for the Caucasus Emirate to be incorporated into global jihad…
The full report can be accessed through CSIS’s website here.
Deceased Chechen commander Ibn al-Khattab
In Money Jihad’s earlier post on the history of terror finance in Chechnya, one name came up again and again: Ibn al-Khattab. The terrorist leader was an early disciple of Osama bin Laden, and would benefit from bin Laden’s encouragement and financial support for years until al-Khattab’s death in 2002.
But al-Khattab was also a force unto himself, managing the flow of jihadist recruits and financing their operations in the Chechen guerrilla war against Russia. One of the better descriptions of al-Khattab’s activities comes from the book Chechen Jihad by Yossef Bodansky. Here’s an excerpt:
The Chechen jihadists received another injection of strength at this time with the arrival of an organized group of hardened Arab mujahedin from the Gulf states, including Saudis and Kuwaities, and the Maghreb region of north Africa, including Algerian, Moroccan, Tunisian, and other troops. These fighters were commanded by one Ibn al-Khattab, often referred to as Emir Khattab or simply Khattab. Khattab, whose real name was Samir bin Salakh al-Suwailim, was a Bedouin from the Suwailim tribe of northwest Saudi Arabia and southern Jordan; over the years he has identified himself with both nations, depending on the circumstances. Born in 1970 to a fairly wealthy and well-educated family, Khattab received both Western and Muslim education, including learning English. In 1987 he was accepted to a college in the United States, but before continuing with his education, he decided to visit Afghanistan and briefly participate in the jihad.
Arriving in Pakistan in the fall of 1987, Khattab met some of the key leaders of the Arab “Afghans,” including Sheikh Abdallah Azzam, Sheikh Tamim Adnani, and Osama bin Laden. Captivated by their call for jihad, he committed his life to the jihad. Khattab ccompleted his training in the international camp in Jalalabad, under Hassan al-Sarehi, the commander of the 1987 Lion’s Den operation in Jaji. Impressed with the zeal and skills of his young trainee, Sarehi invited Khattab to join his forces in Jaji. Between 1988 and 1993, Khattab participated in all the major operations in the Afghan jihad, including the capture of Jalalabad, Khowst, and Kabul. He also spent time expanding his knowledge of Islam and his military skills, while becoming conversant in both Pashto and Russian.
Khattab would later claim that he decided to join the Chechen jihad after seeing televised footage of Islamist mujahedin reciting takbirs (Koranic verses) before going into battle. But his status as a commander also played a role. By the early 1990s, Khattab had emerged as one of the most fierce and competent commanders, popular with both the Afghan and the Arab “Afghan” mujahedin. He also became one of bin Laden’s key protégés. Khattab spent the years between early 1993 and early 1995 commanding a small Arab elite force in support of the Tajik Islamist mujahedin, particularly in the Fergana Valley. He returned to Afghanistan to train and lead one of the first elite forces to go to Chechnya.
When bin Laden and the Islamist-Jihadist leadership decided to escalate the jihad in the Caucasus, they summoned Khattab back from Tajikistan and dispatched him to Chechnya. Ali Hammad, a senior al Qaeda commander in Bosnia-Herzegovina in the mid-1990s, knew Khattab as a senior commander under bin Laden and considered him “one of the more important personalities in Al Qaeda.” Ali Hammad confirmed that Khattab went to Chechnya on bin Laden’s orders, and that he and bin Laden personally managed the subsequent flow of jihadist volunteers into the area.
Khattab arrived in Chechnya in the spring of 1995 with eight veteran Arab “Afghan” commanders, followed by a few dozen combat veterans. He soon became one of the most important commanders in Chechnya, quickly forming a close relationship with Shamil Basayev. One of Basayev’s closest personal friends, Chechnya’s onetime foreign minister Shamil Beno, reported that Basayev underwent a profound change in 1995 under Khattab’s influence. Basayev “started moving from freedom for Chechnya to freedom for the whole Arab world,” Beno said. “He changed from a Chechen patriot into an Islamic globalist.”
But al-Khattab didn’t only receive funds from the Middle East and Al Qaeda. He was the recipient of zakat donations from U.S. Muslims. Benevolence International Foundation, a Saudi-created Islamic charity which relocated to Chicago in 1993, was shut down by the Bush administration after 9/11 for its role in financing jihad in Bosnia and Chechnya. The racketeering trial against BIF’s leader revealed that “[Al-Khattab] did have ties to Saudi Arabia: a fund-raising website listed the Benevolence International Foundation—originally a Saudi-based charity—as a vehicle for contributions.”
The Obama administration and its allies would later criticize George W. Bush for creating a “chilling effect” on Muslim charitable giving by closing down organizations such as BIF, and Pres. Obama personally promised to make it easier for American Muslims to donate zakat.
In addition to receiving money from BIF, al-Khattab secured funding from Osama bin Laden in 1999 to fund Chechen operations. The website History Commons has noted that Osama bin Laden and Ibn al-Khattab also shared the same wealthy Arab donor network. By October 2001, Khattab had an enough of a financial war chest to offer to pay salaries and death benefits to jihadists who went to fight in Afghanistan against the impending American and coalition invasion.
It’s a mistake to think that any single terrorist operation only cost the price of materials used to carry out the operation. It takes a lot of money to create a culture of indoctrination, training, and media messaging. A single attack is the result of sizable investments over a long period of time by men such as Ibn al-Khattab.
The seed money of major North Caucasus or Chechen terrorist groups such as the Caucasus Emirate, the Islamic International Peacekeeping Brigade (IIPB), the Special Purpose Islamic Regiment (SPIR) and the Riyadus-Salikhin Reconnaissance and Sabotage Battalion of Chechen Martyrs (RSRSBCM) can all be traced back to Al Qaeda and Osama bin Laden.
Although we don’t yet know to which groups the two Russian-born brothers of Chechen descent who were identified as suspects in the Boston Marathon bombings may belong, it’s important to take a look back at the origins of the money behind the North Caucasus jihadist network overall.
Islamic International Peacekeeping Brigade
The Council on Foreign Relations says that, “According to the U.S. State Department, the Islamic International Peacekeeping Brigade is the primary channel for Islamic funding of the Chechen guerillas, in part through links to al-Qaeda-related financiers on the Arabian Peninsula.”
The Middle East Forum has more on IIPB:
In October 1999, emissaries of [IIPB founder Shamil Basayev] and [mujahideen leader] Ibn al-Khattab traveled to Kandahar where bin Laden agreed to provide fighters, equipment, and money to conduct terrorism and aid the fight against Russia. Later that year, bin Laden reportedly sent substantial sums of money to Basayev, Ibn al-Khattab, and Chechen commander Arbi Barayev to train gunmen, recruit mercenaries, and buy ammunition.
The United Nations says that, “With Al‑Qaida’s financial support, Al-Khattab also mobilized fighters from Ingushetia, Ossetia, Georgia and Azerbaijan to fight in Chechnya and Dagestan.”
History Commons offers further details similarities between Ibn Khattab and Osama Bin Laden, and the U.S. and U.K.-based imams who have funded Chechen rebels:
They share fundraising and recruiting networks. For example, a Florida cell of radical Sunnis that is monitored by the FBI starting in 1993 is involved with both organizations (see (October 1993-November 2001). Radical London imam Abu Qatada raises money for jihad in Chechnya (see 1995-February 2001 and February 2001) and is a key figure in al-Qaeda-related terrorism who is in communication with al-Qaeda logistics manager Abu Zubaida. [BBC, 3/23/2004; Nasiri, 2006, pp. 273] The Finsbury Park mosque of fellow London imam Abu Hamza al-Masri is used as a conduit for funds for both jihad in Chechnya and bin Laden’s Darunta camp in Afghanistan (see March 1999 and March 2000-February 2001)…
Khattab repaid Bin Laden in kind: “In October 2001, Khattab sent additional fighters to Afghanistan and promised to pay the volunteers’ families a substantial monthly stipend or a large lump-sum payment in the event of their death.”
Special Purpose Islamic Regiment
In a 2003 study, the CDI found that, “Osama bin Laden and his al Qaeda network provided much ideological and financial support to the SPIR after the mid-1990’s. Read the rest of this entry ?
In a good, tough opinion piece in the Christian Science Monitor, Dr. Ariel Cohen of the Heritage Foundation explains how Russian policy toward Islamic terror needs to change. He also states that Northern Caucus jihad is funded by mosques from Dubai and Dearborn.
Jerusalem, Israel – Monday’s subway suicide bombings, which left 39 people dead and wounded 70 more in Moscow, was allegedly carried out by the Black Widows, a cell of female suicide bombers from the North Caucasus, has deep historic and religious roots. This is the time for the Russian government to review the failing counterinsurgency policies, rooting out corruption and inefficiency and countering the growth of radical Islam.
Russia occupied the Northern Caucasus in the 18th century, sparking a gazawat – a “holy war” or jihad – in Dagestan and Chechnya that continued until the 1860s. The Chechens rebelled again in the 1920s and ’30s, only to be crushed by the Soviets.
Stalin loaded the Chechens and the Ingush in cattle cars and shipped them to Siberia in 1944. Hundreds of thousands perished. After they returned from the exile in 1956, things were relatively calm until the collapse of the Soviet Union in 1991. The Chechens declared independence. The Russians, fearing disintegration of their Federation, attacked in 1994. But the Chechen insurgency – known for its hostage-taking tactics – ultimately defeated the Russian Army, which withdrew in 1996.
By 1999 the original, secular Chechen leadership had been replaced by jihadist thugs supported by Al Qaeda. The Taliban was the only foreign power to recognize independent “Ichkeriya.” Slave markets and weapons bazaars flourished. Arab emissaries financed, trained, and equipped the Chechen mujahedeen. Reports of kidnappings and decapitations became common news headlines.
When the Chechens invaded neighboring Dagestan, Vladimir Putin, then the newly appointed prime minister, retaliated with overwhelming force. The bloody counterinsurgency lasted until 2005, led by Islamists Shamil Basaev and an Al Qaeda-affiliated Jordanian known as Khattab. Mr. Basaev proclaimed his goal was to create a North Caucasus emirate from the Black Sea to the Caspian that would become part of the global caliphate. Had he succeeded, the newly created emirate would have disrupted the flow of oil from the Caspian to Western markets and become a chronic threat to Russia and Europe.
Basaev and Khattab were eventually killed by the Russian Federal Security Service (the successor to the Soviet-era KGB). The mujahedeen assassinated the pro-Moscow strongman Hajj Ahmad Kadyrov, who had switched sides, abandoning the rebel cause. Mr. Kadyrov’s son Ramzan took over, ruling with an iron hand. His political enemies – guerrillas and human rights activists alike – “disappear.” His walled compound, which I visited in 2008, boasts a petting zoo with lions and tigers, a mosque, and a conference hall.
Kadyrov killed many terrorists in the past three years. Only about 500 rebels are thought to remain in their mountain lairs. However, hundreds more are spread throughout the region’s towns in underground cells, and there are support networks throughout Russia’s largest cities, based in the North Caucasus diaspora.
Ethnic Russian Orthodox people are converting to Salafi Islam and becoming leaders in the terrorist movement. Sayyid Buriatsky, instigator of the November 2009 train attack that killed 27 and alleged spiritual guide of the Black Widows suicide bomber organization, was one such convert. In addition to the most recent atrocity, the Black Widows are reportedly responsible for 600 of the 900 deaths from terror attacks perpetrated in Russia since 2000.
“Jihad” in the North Caucasus is one of the favorite causes for zakat (alms) in mosques from Dubai, United Arab Emirates, to Dearborn, Mich. Islamist leader Doku Umarov has managed to reactivate the violent Riad us-Salihin (Garden of the Pious), of which the Black Widows are in a suicide vanguard. Mr. Umarov has threatened not only to create a North Caucasus emirate, but also to detach large swaths of southern Russia, from Astrakhan to Rostov.
Money Jihad 
Islamic charity pleads guilty to tax fraud
August 17, 2014Al Haramain, a Saudi-based international charity which once maintained its U.S. branch in Oregon, has pleaded guilty to tax fraud 14 years after filing a false return designed to conceal a $150,000 check issued to Chechen jihadists.
The Associated Press reported on July 29:
Far from being a lawless series of raids in the early- to mid-2000s against innocent Islamic charities that CAIR and the ACLU have depicted, the successful convictions against the Holy Land Foundation and guilty pleas such a this illustrate that the Bush-era crackdowns on front charities was legitimate.
As part of the plea deal, Al Haramain’s former U.S. director, Pete Seda, who was previously convicted for his involvement in the case, is getting charges dropped against him.
Posted in News commentary | Tagged Al Haramain Islamic Foundation, charity, Chechnya, Oregon, Pete Seda, Saudi Arabia, tax fraud, zakat | 2 Comments »