HSBC says bye to Islamic Relief

British bank HSBC has ended its relationship with the Islamic Relief Worldwide (IRW), the largest international Islamic charity in the world. In other words, HSBC has closed IRW’s account with the bank and has given them their money back. The bank’s decision was a risk-based determination probably based—not just on the locations of the world where IRW operates—on a review of IRW partners and what internal controls IRW has in place to ensure that its partner organizations and field staff have been adequately screened.

IRW has a pattern of working with Hamas-affiliated entities and then claiming afterward that it didn’t know. It is either purposeful or negligent. Either way HSBC is not obliged to serve as their bank.  After being excoriated for its slipshod compliance program a couple years ago, HSBC should now be applauded for applying solid standards.

From International Business Times last month:

HSBC snaps ties with Islamic Relief over ‘terror’ fears

• By Agamoni Ghosh

January 4, 2016

HSBC has snapped banking ties with UK’s largest government-funded Muslim charity, Islamic Relief, over alleged fears of terror funding. Although the bank has halted services for other Muslim groups in the past, the affected charity is one of the most high-profile ones with operations in over 40 countries.

Islamic Relief receives millions of pounds from the Department for International Development. It expressed surprise at the bank’s decision, but said that other partners are helping it maintain aid supplies in countries where it operates. The charity added that no other bank or financial institution had withdrawn facilities.

According to The Sunday Times, HSBC may have ended ties with Islamic Relief because of the charity’s work in the Middle East, including projects in Gaza and Syria. Earlier, the Israeli government had banned Islamic Relief from the West Bank in 2014. It accused the organisation of laundering money to Hamas, a claim categorically denied by the charity.

Around the same time, the United Arab Emirates (UAE) had also placed Islamic Relief on a list of forbidden organisations, a move the group is in the process of appealing against. Shortly after these bans, the bank took the decision to cut ties with the organisation, but it has only just become public knowledge.

Meanwhile, the UK Charity Commission ordered an independent investigation into the incident, and cleared Islamic Relief of terror funding allegations…

Seems the Charity Commission is the odd man out, no?

10 biggest terror finance news stories of 2014

1. The Islamic State of Iraq and Syria rebounded from a weaker financial position to amass $3 billion in annual income after taking over Fallujah in January and Mosul in June. Its diversified portfolio makes ISIS the world’s best funded terror group. Western allies are trying to cut off ISIS’s money, but admit that the best case scenario is that ISIS will run out of cash on its own.
2. Treasury undersecretary David Cohen announced in March that “Qatar, a longtime U.S. ally, has for many years openly financed Hamas,” and that it is financing terrorists in Syria. These comments were followed up by former MI6 spy chief Richard Dearlove’s statement in July that “substantial and sustained funding” for ISIS comes from Saudi Arabia and Qatar. At least 5 but probably dozens more prominent Qataris are involved in the financial pipeline to Al Qaeda affiliates.
3. The 4,500 rockets fired by Hamas toward Israel from July to August were financed and supplied by Iran and Qatar, further calling into question the wisdom of Iranian nuclear negotiations and periodic U.S. communications through Qatari diplomats for outreach to the Taliban.
4. A ban from Israel and a designation as a terrorist entity by the U.A.E. made 2014 an annus horribilus for Islamic Relief Worldwide (IRW). The world’s largest Islamic charity was also tarnished by revelations that its German subsidiary has worked with a Hamas-connected charity in Syria and that IRW’s U.S. subsidiary, IR-USA, was documented to have given $118,000 to terror-linked groups.
5. Turkey’s role in financing terrorism spilled out into public view after paying $800 million to ISIS for oil. Turkey’s 2014 corruption scandal also revealed the extent of their involvement in Iranian sanctions evasion. Turkish president Erdogan’s support for Al Qaeda financier Yasin al-Qadi led his removal from U.S. terror blacklists.
6. Arab Bank was found liable in Linde v. Arab Bank, PLC in September for funding 24 terrorist attacks by Hamas. The case sets a powerful legal precedent for victims’ families to seek justice against Middle Eastern banks involved in financing terror.
7. A bill to declassify 28 pages of a Congressional report into 9/11 gained 20 new co-sponsors in 2014. The redactions deal with money given by Saudi officials and agents to the hijackers.
8. Sharia banker and Islamist militant financier Mir Quasem Ali was sentenced to death by a war crimes tribunal in November for 8 torture sessions he oversaw against Bangladeshis in 1971. Ali’s involvement highlighted the intersection between Saudi money, violent Islamist groups, and sharia-compliant banking.
9. Boko Haram kidnapped 200 girls in April, possibly for financial reasons, as suggested by Boko Haram’s demands for a ransom from the Nigerian government and from the girls’ families. Other motives include sex and household work and the prospect of money and prisoner swaps.
10. An outspoken singer and fierce critic of terror finance, Saado Ali Warsame, was slain in Somalia in July. Warsame previously called upon fellow Somalis to refrain from using the remittance company Dahabshiil because of the firm’s role in funding terrorism. Warsame alleged before her death that the company offered a contract for her assassination.

Newer Money Jihad readers may also want to look back at our biggest stories of 2013, 2012, and 2011 to see how the threats are evolving over time.

Islamic charity’s terrorism denial falls short

In response to the UAE’s designation of Islamic Relief Worldwide (IRW) as a terrorist entity, IRW has denied any link to terrorism.  Unfortunately, the global Islamic charity’s denial doesn’t go nearly far enough to clear the air.  The real follow-up questions to IRW should include:  what policies does the charity have in place, for example, with their Gaza and West Bank programs to vet partner charities on the ground and to conduct background screening on volunteers? What actual steps does IRW take to ensure that joint activities with terrorist groups such as Hamas does not happen, cannot happen, or to minimize the likelihood of it happening?

Any British-based company understands the risks of doing business internationally. They conduct due diligence on prospective clients, business partners, and customers to make sure that they are not violating international sanctions and that their partners doe not expose them to any undue risk for laundering money. But several Islamic charities in Britain have failed to take the same standards to heart. Again, what sort of due diligence is IRW carrying out on their charitable partners, employees, and volunteers?  What type of background screening do they do? What terms are in the contracts of the businesses and partner charities that they work with?

It’s not enough to merely assert that nothing untoward is occuring.  Even basic public relations skills would tell you that some type explanation of the standards IRW has in place would boost donor and regulator confidence.  So far IRW’s explanations have also failed to impress Israel either, which banned IRW from operating in the Palestinian territories earlier this year over concerns that the charity works with Hamas.

World’s biggest Islamic charity branded as terrorist group by 2nd Middle East country

Islamic Relief Worldwide (IRW) has been designated as a terrorist group by the United Arab Emirates, the second Middle Eastern country to do so within the past five months. In June, IRW was declared illegal by Israel for being a financial conduit to Hamas, and it was banned from operating in Israel and the West Bank.

The Birmingham, England-based IRW is the largest international Islamic charity in the world with a £155 million (240 million USD) budget in 2013.  IRW has over 280 employees and is active in more than 30 countries.  IRW maintains over a dozen affiliates throughout the world, each with multi-million dollar operating budgets of their own including Islamic Relief USA, which is the largest Islamic charity in America.

IRW accepted a $50,000 check from Osama Bin Laden in 1999, had a Gaza program coordinator who aided Hamas from 2005-06, received over £60K from an Al Qaeda front group from 2003-08, has leaders who are closely aligned with the global Muslim Brotherhood, and had programs staffed by Hamas personnel in the Palestinian territories as recently as this year.  Supporters of IRW have noted that the UK’s charitable regulator has not confirmed the evidence against IRW; however, a 2013 audit found that the Charity Commission is understaffed, too passive in its investigations, and is generally unfit for its regulatory duties.

UAE calls 15 Muslim groups in the West “terrorists”

In addition to the IRW designation, the UAE named 15 other Islamic charities and advocacy groups in the U.S. and Europe as terrorist entities:

• Islamic Relief UK (the British affiliate of IRW)
• Muslim Association of Britain (part of the U.K. Muslim Brotherhood)
• Cordoba Foundation in Britain (once described by David Cameron as a Muslim Brotherhood front group)
• Council on American-Islamic Relations (the self-described civil rights group which was an unindicted co-conspirator in the Holy Land Foundation Hamas-financing trial)
• Muslim American Society (which was created by the U.S. Muslim Brotherhood)
• Union of Islamic Organizations of France (a French Muslim group tied to the Muslim Brotherhood that profits from halal certification)
• Federation of Islamic Organizations in Europe (an alliance financed by Gulf sources with ties to Hamas)
• Islamische Gemeinschaft in Deutschland (the “main representative” of the Muslim Brotherhood in Germany)
• Associazione Musulmani Italiani (Italian Muslim Association)
• League of Muslims in Belgium (La Ligue des Musulmans de Belgique)
• Muslim Association of Sweden (Sveriges muslimska förbund)
• Islamic Society in Denmark (Islamsk Trossamfund)
• Islamic Council Norway (Islamsk Rad Norge)
• Finnish Islamic Association (Suomen Islam-seurakunta)
• CANVAS in Belgrade, Serbia

The UAE designated over 80 groups overall, most of which are located in the Middle East.  The practical effect of the designations are limited, designed for “transparency” and to “raise awareness.”  In other words, the designations include not asset freezes, travel bans, or prohibitions on transacting business with the designated groups.

Islamic Relief gave $118K to terror-linked groups

New tax documents reveal that Islamic Relief USA (IR-USA), the largest Islamic charity in the United States, gave over $118,000 in grants in 2013 to entities with previous connections to terrorism.

IR-USA’s 2013 tax return, which was filed in July 2014, showed that the charity gave $45,495 in grants to the Florida branch of the Council on American-Islamic Relations (CAIR). CAIR was listed as an unindicted co-conspirator in the successful 2007 prosecution of the Holy Land Foundation for financing the terrorist organization Hamas.

Their form 990 also shows that IR-USA gave $40,000 to the radical mosque Dar Al-Hijrah in Falls Church, Virginia, for a “zakat partner program.” Deceased terrorist Anwar al-Awlaki served as the mosque’s imam leading up to and immediately following the 9/11 attacks.

The tax schedule also documented almost $32,909 in grants to Services for Human Advancement and Resource Enhancement (SHARE) affiliates in Atlanta and Indianapolis of the Muslim Alliance of North America (MANA), a group which was founded by an unindicted co-conspirator of the 1993 World Trade Center bombing.

IR-USA has been involved in several scandals in recent years: Money Jihad previously reported that IR-USA gives about $5 to $10 million per year to its parent charity Islamic Relief Worldwide (IRW), which has recently been banned from Israel for funding Hamas. IR-USA was also implicated in fraudulent multi-million dollar valuations of its drug stockpiles. More recently, Islamic Relief affiliates have described their own partnerships with the pro-Hamas front charity IHH to conduct operations in rebel-controlled territory in Syria.

3 Islamic Relief affiliates reliant on Turkey’s IHH

The Turkish front charity IHH partnered with either Islamic Relief UK or its parent organization, Islamic Relief Worldwide (IRW), during earthquake recovery operations in early 2013. IHH said its work was carried out, “in cooperation with Islamic Relief from Britain,” where IRW is headquartered.

The Australian affiliate of IRW has also partnered with IHH to conduct activities in Syria in 2013 according to a report on Syrian aid issued by IR-Australia. IHH was responsible for the procurement and delivery of supplies into Syria on behalf of IR-Australia.

In addition to previous evidence of cooperation between IR-Deutschland and IHH, these finding indicate consistent international collaboration between Islamic Relief affiliates and IHH. IHH was behind the violent, blockade-running flotilla against Israel in 2010, and has also worked with terrorist groups including al-Shabaab in Somalia.

All developed countries and their charitable regulators advise their charities against working with IHH overseas, particularly in jurisdictions such as Syria where the risks of aid falling into the wrong hands are so high. Islamic Relief USA would do well to note the red flags raised by IHH. According to U.S. Treasury publications, charities should exercise due diligence over the charities with which they partner, and should refrain from working with any charities suspected of financing terrorism.

IRW is currently investigating its own activities after being banned from the West Bank by Israel for funding Hamas.  The Charities Aid Foundation, which provides services to charities, and Islamic Relief UK have ceased working together in the wake of Israel’s ban.

Exclusive: Islamic Relief Deutschland partners with Hamas-funding charity in Syria

Islamic Relief Deutschland, the German chapter of Islamic Relief Worldwide (IRW), listed the Islamic front charity IHH as an “implementation partner” for a €150,000 aid project within Syria in a 2013 press release, raising serious questions about IR-Deutschland’s willingness or competence to vet partner charities abroad.

The partnership is striking considering that the German interior ministry previously banned IHH from operating in Germany because it had contributed money to Hamas. A German federal court upheld that ban in 2012 although an agreement was later reach that allowed IHH to operate under certain conditions.

IHH instigated the violent, blockade-running, anti-Israeli Mavi Marmara flotilla in 2010, and it has worked in concert with the terrorist group al-Shabaab in Somalia. IHH’s accounts in the Netherlands were frozen by Dutch authorities in 2011. IHH was reported to have smuggled weapons to the Syrian Muslim Brotherhood as early as 2012.

IRW itself has been banned from Israel because of its support for Hamas. The behaviors of IRW’s German affiliate may help to explain why Israel regards IRW as a threat.

Meanwhile, Al Qaeda has capitalized on the flow of international aid of all kinds to Syrian fighters. That aid includes significant support from Turkey, which has provided ongoing assistance to militants fighting Bashar al-Assad in Syria, and has allowed fighters to cross its border with Iraq to join ISIS. Western charities have a responsibility to carefully examine any partner charities in Turkey, Iraq, or Syria prior to sharing money and supplies with them, but this German revelation casts further doubt on the thoroughness of the due diligence conducted for these international relief efforts.

Islamic Relief USA, the American affiliate of IRW, has conducted several humanitarian relief operations in Syria over the last few years. From December 2012 to May 2013, IR-USA conducted a project which, according to their own website, “provided emergency aid to Syrians in need inside of Syria through Islamic Relief partner offices in Turkey” (emphasis mine). The national affiliation of those “partner offices” in Turkey is unclear since Turkey does not appear to have its own, permanent Islamic Relief chapter.

IRW’s official and current affiliates are located in the U.S., Australia, Belgium, Canada, Germany, Italy, Malaysia, Mauritius, the Netherlands, South Africa, Sweden, Switzerland, and the U.K. IRW says it has field offices in Syria, Lebanon, and Iraq, but that its presence in Turkey is limited to “seasonal and emergency campaigns.”

Germany’s sizable Turkish immigrant community gives IR-Deutschland better connections and access than most international Islamic charities to the Turkish border.

Islamic Relief Worldwide programs staffed by Hamas

Islamic Relief Worldwide (IRW) activities in the Palestinian territories are run by Hamas operatives, according to Israeli officials.

The way it works is that IRW, a British-based charity, raises substantial funds from institutional donors, government funding, and zakat from individual Muslim donors. IRW also receives money from its affiliates around the world, including millions of dollars in gifts from Islamic Relief USA (IR-USA).

IRW then sends money to field offices and partnering organizations in the Palestinian territories. Israel’s Shin Bet security service says that several of the offices and projects that are carried out with IRW funding are being conducted by Hamas personnel.

IR-USA, a charity publicly cited by Obama appointees as a valued and trusted aid group, is privately tagged by Justice Department sources as the successor to the Holy Land Foundation, which was shuttered during the Bush administration for funding Hamas. The Clarion Project (h/t to Rushette) notes that IR-USA receives support from bigtime donors and enjoys close ties to the Obama administration.

Israel should share what information it can with the UK in order for the British to 1) strip IRW of its charity status and, 2) shut down IRW. There is no time to waste with the useless UK Charity Commission. This case should be dealt with at higher levels.

Canada Revenue Agency, which has been extremely successful in taking prompt action to remove the tax-exempt status from terror financing charities, should also review Islamic Relief Canada’s projects.

The U.S. should follow suit, and should strip IR-USA of its tax-exempt status, since IR-USA money is ultimately going toward Hamas projects, and not toward the charitable purposes for which 501(c)(3) status is intended.

Any banks providing services to IRW and IR-USA should take note of these developments, and minimize their own risks and exposure to terrorist financing by closing their accounts (as UBS already did in 2012) with these “charities.”

Spotlight: terror finance in the Netherlands

A reader recently asked Money Jihad for information on terrorist financing based in the Netherlands.  An examination of Dutch charities, the banking sector, and crime rings is necessary to begin understanding how terrorists have used the Netherlands to fund their activities.

Dutch zakat

The majority of terrorist financing problems in the Netherlands over the past decade have originated from the Islamic charitable sector, particularly from Dutch Muslim groups purporting to provide “relief” in the Palestinian territories.

In 2003, the Dutch blocked Al-Aqsa Foundation assets in the Netherlands after discovering that Al-Aqsa funded terrorism in the Middle East.  A previous manager of Al-Aqsa in the Netherlands, Amin Abu Rashed, was recently described by a financial crimes expert as, “the principal representative of Hamas in Holland.”  Al Haramain Islamic Foundation, the Saudi-based terror front charity, was once active in the Netherlands as well.

Palestinian terror funding probably shifted after the Al-Aqsa closure to Internationale Steun Rechtstreeks Aan Armen (ISRAA).  ISRAA remains active in the Palestinian territories and Syria, and maintains tax-exempt status in the Netherlands.

In April 2011, the Netherlands froze the assets of the Dutch branch of the Turkish, pro-Hamas charity IHH.  A court later overturned the freeze, and IHH Nederland continues to operate in Holland.

Islamic Relief Nederland, a chapter of Islamic Relief Worldwide, is involved at least indirectly in the financing of terrorism through its parent organization. IRW has previously funded Hamas and Al Qaeda operatives.  Like ISRAA, IR Nederland is currently active in Syria.

Groups linked with the Muslim Brotherhood in the Netherlands have used domestic and foreign funds to finance their projects.  Dutch intelligence revealed in 2010 that Salafi networks exploit generous Dutch public benefit programs to fund their own activities.  Europe Trust Netherlands (ETN), a leading Dutch-Muslim group, has worked with Muslim Brotherhood leaders last year to arrange Gulf-based financing for the controversial Blue Mosque project in Amsterdam.

Banking sector threats

The large Dutch banking sector, which includes internationally known firms such as ING (which settled with U.S. authorities in 2012 over Cuban and Iranian sanctions violations), has probably been a factor in drawing some terrorist financiers and interlocutors to have a presence in the Netherlands.  After 9/11, it was reported that the Al Rajhi banking family, whose patriarch was named in the Golden Chain document for funding Osama Bin Laden, reportedly maintained “a large portion of their funding from the Netherlands. The family owns an investment company in Amsterdam, which has funded ‘islamic investments’ for well over a billion dollars.”

The Islamic finance sector in the Netherlands is also a source of concern.  Islamic finance has been documented as a sector marred by a lack of transparency and an increased risk of diverting profits toward terrorism as a form of corporate zakat.

Financial crimes and smuggling

Illicit transfers for terrorism based in the Netherlands have also taken place among criminal rings of various sizes.  Tamil Tiger terrorists have used the Netherlands as a funding base with front organizations operating there.  The trade in khat, a stimulant that is legal to import in the Netherlands, has been known for several years to fund the al-Shabaab terrorist organization in Somalia.  More recently, Sunni donors have transferred funds from the Netherlands for jihad in Yemen.  Meanwhile, a Dutch fugitive from Panamanian justice, Okke Ornstein, is subject to an INTERPOL red notice and is probably involved with laundering money for Hamas.

Lastly, it should be noted that former Dutch dependencies which have relaxed regulatory climates may also be susceptible to abuse for financial crimes.  Hezbollah allegedly maintains bank accounts in the Dutch Antilles.  Khalid Bin Mahfouz (the Saudi billionaire who sued Rachel Ehrenfeld for reporting that he funded terrorism), once parked money in the Dutch Antilles in a company called Pathfinder Investments, according to the Wall Street Journal.  Pathfinder funds were subsequently transferred to the Success Foundation, a Virginia-based front charity for the International Islamic Relief Organization, a Saudi-backed office which was closed after 9/11 for its role in financing Al Qaeda.

FATF’s terrorist charity typologies

The Financial Action Task Force, an international financial watchdog, has updated its “Recommendation 8” pertaining to government oversight of nonprofit organizations.  (Thanks to Arye Glozman who sent in a link to the report).

Overall, the revised recommendations show greater deference to the nonprofit sector and urge restraint by governments in regulating charities than the 2002 version.  This deference is a bit strange considering that using charities as vessels for funding terrorism has not decreased since 2002 then, neither in the West as illustrated by organizations such as the Holy Land Foundation and WAMY Canada, nor in the Middle East and Northern Africa where Gulf-based charities have played a central role in funding and arming Islamist rebels of the Arab Spring.

That being said, the FATF report does present a useful set of typologies to categorize four different types of terrorist “misuse” of nonprofit groups:

1. Front charities, where everybody from the donors to the charity workers to the beneficiaries knows that the charity is a sham designed to fund terrorism.
2. Organizations defrauding donors by telling them the money is going toward legitimate programs but then redirect the proceeds to terrorism.
3. Branch offices of charities defrauding headquarters by misleading the leadership about the branch’s actual programs.
4. Charity workers abusing their positions to distribute aid to militants.

The “charities” used by Osama bin Laden to funnel money from wealthy Saudi donors to Al Qaeda in the 1990s are a good example of type #1.  Jamaat-ud-Dawa in Pakistan is a good example of a front charity today, with donors and recipients understanding that the money is really for the Lashkar-e-Taiba terrorist group.  Many analysts would probably say that the Holy Land Foundation fell into type #2, with donors unwittingly funding Hamas (although some donors knew that their zakat was funding “resistance” against Israel).  Islamic Relief Worldwide can be associated with types #3 and #4 by having a branch office in Gaza that passed money along to Hamas, allegedly without the knowledge of headquarters in England.

Islamic Relief accepted £60K from Al Qaeda front

Financial statements show that Islamic Relief Worldwide has received over £62,000 (nearly 100,000 U.S. dollars) from the Al Qaeda-linked, Yemen-based Charitable Society for Social Welfare (CSSW) over the past 10 years.

CSSW donated funds to Islamic Relief in 2003, 2004, 2007, and 2008, mostly for “Palestinian relief” activities.  The 2004 funds transfer was recently discovered by Stand for Peace (with a h/t to Money Jihad reader and IMED research fellow Jacob Campbell for alerting us).  A review of Islamic Relief’s annual statements by Money Jihad revealed the subsequent donations:

CSSW donations to Islamic Relief

Year	Amount given	Project
2008	£13,060	Gaza Strip Emergency
2007	£9,999	Lebanon Water and Sanitation Programme
2004	£11,265	Palestine Relief
2003	£28,100	Palestine Relief and Emergency Projects
Total	£62,424

The CSSW came under FBI surveillance in 1999.  In 2004, CSSW’s Brooklyn branch chief Numan Maflahi was convicted for obstructing the FBI investigation into the charity’s fundraising.  In 2008, the Washington Post revisited the matter, writing that “federal prosecutors in [the Maflahi] New York terrorism-financing case described the charity [CSSW] as ‘a front organization’ that was ‘used to support al-Qaeda and Osama bin Laden’.”

In 2010, IntelWire revealed that the U.S. Department of Labor awarded a $3.5 million grant for a partnership that included CSSW.

CSSW has previously denied terrorist connections by claiming mistaken identity, despite evidence to the contrary from the Maflahi prosecutors and IntelWire.

Islamic Relief itself has previously been under fire for receiving $50,000 from a Bin Laden front in 1999, for financing Hamas in 2005-06, for cooperating with pro-Hamas Union of Good charities on an ongoing basis, and for its leadership being dominated by Muslim Brotherhood officials.