Posts Tagged ‘due diligence’

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Suggested reading: You can’t afford to play dumb

April 2, 2015
  • The financial crime chief at Istanbul P.D. says Erdogan sheltered an Al Qaeda financier… more>>
  • Pizza businessman Kamran Malik pleads guilty to shipping rifles and rifle parts to Pakistan without a license… more>>
  • Before a U.S. company acquires a foreign business, it should follow this helpful pre-acquisition due diligence checklist… more>>
  • If a country is always in the news along with phrases like “dragged through the street” or “human shield” you might want to do some screening before taking on business partners there… more>>
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10 tips for businesses to avoid financing terror

November 24, 2014

If you run or work for a medium or small business that can’t afford to have an entire compliance department, or even a compliance officer, here are a few tips that will help your business reduce its risk of inadvertently funding a terrorist organization, running afoul of federal authorities, or both:

  1. Conduct due diligence before taking on new accounts, and do not rely exclusively on Internet searches for due diligence.
  2. For international accounts it is doubly important to carry out thorough due diligence (including overseas business partners, banks, security providers, and charities) before signing agreements with them. You will probably have to contract out for investigation services, but it’s worth the expense.
  3. If your business promotes or authorizes employee payroll deductions to make charitable contributions, review the list of participating charities. Do not offer payroll deductions for donations to charities suspected of financing terrorism or charities known to have worked with designated terrorists. This would include Islamic Relief USA and the Zakat Foundation (see here and here).
  4. If your business requires or offers diversity or equal opportunity training, do not make payments to any organization or person to conduct the training who has been implicated in terrorist financing schemes such as members of the Council on American-Islamic Relations or the Islamic Society of North America, both of which were unindicted co-conspirators in the Holy Land Foundation Hamas-financing case.
  5. Think twice before offering sharia-compliant investment accounts to employees or allowing a conventional retirement brokers to offer sharia funds to your employees. These financial products are less transparent with respect to fund management by sharia advisory boards whose members often share close ties with the international Muslim Brotherhood and are not subject to disclosure requirements on where they channel their profits.
  6. Do not buy corporate fruit baskets or other gift baskets from Edible Arrangements. Their CEO operates a foundation out of his office at Edible Arrangements allegedly linked to Pakistani front charities that fund Islamist militants.
  7. Do not have business lunches, meetings, or conferences catered by halal food providers such as IFANCA and Crescent Foods, which have been endorsed by or have catered events for entities that are suspected to have financed terrorism.
  8. If you are asked by an importer whether your business can ship to or “enter an Arab Port?” do not answer the question. That is code language used to ascertain your business’s willingness to participate in the Arab League’s boycott against Israel. Answering the question helps those who oppose the existence of Israel and will lead to fines by the U.S. Office of Antiboycott Compliance.
  9. Don’t let your data or your employees be held for ransom. Ask your IT department or technology provider about their security protocols against ransomware. Make adequate plans to protect your employees from abduction during overseas travel. Paying ransoms will serve to enrich criminal or terrorist groups which will be costlier and less secure for your industry in the long run.
  10. Bookmark and read blogs such as Money Jihad, Kenneth Rijock’s Financial Crime Blog, and Shariah Finance Watch for the latest threat trends in terror finance risk management. These websites are free unlike some of the other specialized news sites which are informative but fee-based.
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Nunn’s validation of Islamic Relief USA reveals system-wide failure

July 30, 2014

While she ran the Points of Light Foundation, U.S. Senate candidate Michelle Nunn (D-Ga.), authorized MissionFish, a Points of Light donation processor, to pass contributions from eBay customers to charities of their choice, including Islamic Relief USA (IR-USA). The Nunn campaign refers to this authorization as “validation;” in other words, Points of Light had researched the charity and validated it for inclusion on MissionFish’s list of eligible charities.

The Nunn campaign argues that $33,000 donated by eBay shoppers passed through Points of Light to IR-USA does not constitute a donation by Points of Light to IR-USA. That is disingenuous because what actually happened is that Points of Light received these ear-marked donations and then cut a check themselves to IR-USA. Points of Light benefits from the transaction because it increases the appearance of their overall charitable volume. The eBay customers would not have been able to donate funds to IR-USA while completing their purchases online if MissionFish had excluded the organization on their menu of options.

IR-USA donates millions of dollars each year to Islamic Relief Worldwide, a UK-based organization that has been banned by Israel for aiding Hamas, and whose leadership is linked to the Muslim Brotherhood. A Department of Justice official has implicated IR-USA for being a conduit for the flow of money from America to terrorist groups abroad. Russian intelligence indicates that IR-USA funds militants in the North Caucasus—the region where the family of the Boston marathon bombers originate. Nunn and Points of Light could have discovered several of the red flags about IR-USA, many of which had already cropped up before validation occurred, by conducting due diligence research or even a basic Internet search.

Unfortunately, Points of Light isn’t the first organization to legitimize IR-USA. IR-USA work has been acknowledged by Hillary Clinton’s State Department, the Obamas, the U.S. Department of Agriculture, and it maintains 501(c)(3) status with the IRS.

These politicians and agencies have been willing to overlook questionable practices by IR-USA because of their eagerness to demonstrate cooperation with Muslim Americans and Islamic charitable sector. The embrace of IR-USA was exacerbated by IR-USA’s fraudulent representation of itself as a larger charity than it actually was by hyper-inflating the valuation of their deworming drug stockpiles. Although the value of deworming drugs may sound like a technical, minor point, it is not. IR-USA basically perpetrated a fraud for several years by overstating the value of the drugs which made up 75 percent of their assets. Bigger institutions like USDA and Points of Light are likelier to partner with bigger charities, which IR-USA seemed to be. If IR-USA had reported a truthful value of its donations and assets, it may not have been viewed as a big enough charity to attract institutional partners like these.

A major charitable bundler like Points of Light had the resources to discover the disturbing truths about IR-USA’s connections to Hamas and its fraudulent financial statements prior to validation. It’s time that federal agencies and institutional donors started paying less attention to warm-and-fuzzy statements by politicians about what a great partner a certain charity is, and pay more attention to the results of basic due diligence research. Until then, and until there are changes at the highest levels of the IRS and the Department of Justice, and a willingness to confront IR-USA for its history of misrepresentations, we will probably see decisions like Nunn’s repeated again.

This piece has also been published at Terror Finance Blog.

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News roundup: recommended reading

July 24, 2014
  • Congressman appearing on Al Jazeera declares “The owners of this TV network help fund Hamas,” and the interviewer doesn’t dispute him… more>>
  • World Net Daily interviews Money Jihad blogger A.D. Kendall on the funding of al-Shabaab and other jihadist groups in Africa… more>>
  • ISIS is looting antiquities, liquidating the history of mankind, and funding its own operations from the profits… more>>
  • The Washington Post declares, “U.S. should aid those who fight terror, not abet human rights abuses.” Are you listening, Saudi Arabia?  More>>
  • You find what you think is a great new international partner for your growing business. Before signing that contract with a foreign firm, hire a professional investigator with a physical presence in that country to conduct due diligencemore>>

 

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Recommended reading: financing terror right under our noses

June 5, 2014
  • Gotten an email saying something like “I solicit your assistance in transferring trapped funds in Nigeria into your bank account”?  Turns out the old email fraud could be enriching Boko Harammore>>
  • After leaving Britain, a Syrian-born imam involved “in every aspect in supporting terrorism” has been arrested in Lebanon… more>>
  • The Sabadia Family Foundation funneled over $1 million to Muslim Brotherhood affiliates and Hamas financiers over a ten year period while Mr. Sabadia himself maintained a security clearance and federal contracts… more>>
  • If you’re using the Internet to do due diligence, there are a few techniques that can help you get past tricks used by online reputation defendersmore>>
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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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Money jihad news: recommended reading

June 6, 2013
  • Al Qaeda and kidnapping kingpin Mokhtar Belmokhtar part ways.  Like most divorces, it’s about money… more>>
  • Ever noticed while doing Internet searches that several dubious entities yield page after page of strictly positive search results, with no negative coverage?  This isn’t just misleading—it’s a threat to the banking systemmore>>
  • Nidal Hasan has been paid $278,000 of your tax dollars since he killed 13 soldiers… more>>
  • Don’t want to help fuel the conflict in Syria? Then don’t buy Roman and Byzantine artifacts stolen from Syrian cemeteries and churches… more>>