Spain looks to close gaps on hawala

Almost alone among EU countries, the U.S. State Department singled out Spain as facing “significant gaps” in identifying unlicensed hawala dealers in its annual narco-trafficking report. Hawala has been used to finance numerous Islamic terrorist attacks globally. The State Department said the following about Spain’s money laundering and financial crimes enforcement capabilities:

Spain has long combated both domestic and foreign terrorist organizations, and Spanish law enforcement entities have identified various threat finance vulnerabilities, including donations to finance nonprofit organizations; establishment of publishing companies that print and distribute books or periodicals for propaganda purposes; fraudulent tax and financial assistance collections; the establishment of “cultural associations;” and alternative remittance system transfers. Other outlets such as small convenience stores and communication centers that often offer wire transfer services, are used to move money in and out of Spain by making small international transfers for members of the immigrant community. Spanish regulators also note the presence of hawala networks in the Muslim community. While AML/CFT supervision of banks appears to be robust, significant gaps regarding the identification of unlicensed operators, and the supervision of money or value transfer services operating under EU passporting rules remain. In May 2014, Spain approved regulations to implement its 2010 AML/CFT law.

The report seems a little vague on the culprits behind the publishing companies and “fraudulent tax and financial assistance collections.” One might think the report refers to the last gasp of the Basques, but the references to international transfers, the immigrant community, and the hawala network suggest that Spanish officials are more concerned about vulnerabilities within the Muslim community.

Hawala saturates 90% of Afghan financial market

The U.S. State Department has published its international narcotics report for 2015. The report notes that only 10 percent of financial transactions in Afghanistan are handled through the formal banking sector. The other 90 percent are handled through hawala, the traditional Islamic system of debt transfers. Hawala is a way of moving value without moving physical cash. Its untraceable nature is tailor made for terror financing and other illicit activities.

The State Department report indicates that the prevalence of hawala in Afghanistan facilitates the movement of proceeds from the Afghan drug trade. As crazy as it may sound to Western compliance officers, the thousands of hawala dealers in Afghanistan have yet to file any suspicious transaction reports to Afghanistan’s central financial regulator—not even a single one. And even their banks are using hawala! All this and we’ve been there for over 13 years…

The growth in Afghanistan’s banking sector has slowed considerably in recent years; and traditional payment systems, particularly hawala networks, remain significant in their reach and scale. Less than 10 percent of the Afghan population uses banks, depending instead on the traditional hawala system, which provides a range of financial and non-financial business services in local, regional, and international markets. Approximately 90 percent of financial transactions run through the hawala system, including foreign exchange transactions, funds transfers, trade and microfinance, as well as some deposit-taking activities. Official corruption and weaknesses in the banking sector incentivize the use of informal mechanisms and exacerbate the difficulty of developing a transparent formal financial sector in Afghanistan. The unlicensed and unregulated hawaladars in major drug areas such as Helmand likely account for a substantial portion of the illicit proceeds being moved in the financial system. Afghan business consortiums that control both hawaladars and banks allow criminal elements within these consortiums to manipulate domestic and international financial networks to send, receive, and launder illicitly-derived monies or funds intended for criminal, insurgent, or terrorism activities…

…There is no clear division between the hawala system and the formal financial sector [in Afghanistan]. Hawaladars often keep accounts at banks and use wire transfer services to settle their balances with other hawaladars abroad. Due to limited bank branch networks, banks occasionally use hawalas to transmit funds to hard-to-reach areas within Afghanistan. Afghanistan’s financial intelligence unit, FINTRACA, reports that no MSBs or hawaladars have ever submitted suspicious transaction reports (STRs)…

U.S. takes aim at Dawood Ibrahim’s brother

New sanctions have been slapped against underworld crime boss and terrorist mastermind Dawood Ibrahim’s network by U.S. Treasury Department. One of the targets of the sanctions is Dawood’s brother Anees, who has at various times been erroneously reported as dead. Dawood was the mastermind and financier of the 1993 Mumbai bombings that killed 257 people. The expansion of sanctions against his gang speaks to an improving diplomatic relationship between the U.S. and India, and to a souring relationship with Pakistan where Dawood is currently being sheltered.

Here are the details from Treasury:

Treasury Sanctions Two Indian Nationals and a Company Based in Pakistan for Ties to the South Asian Criminal Network ‘D Company’

1/16/2015

Action Targets Long-Time Members of D Company and a Paper Mill Controlled by One of the Designated Individuals

WASHINGTON – The U.S. Department of the Treasury today announced the designation of two Indian nationals and one entity in Pakistan as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act) due to their ties to D Company, a South Asian criminal organization led by Dawood Ibrahim.  As a result of today’s action, all assets of those designated that are based in the United States or are in the control of U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them.

D Company is a transnational crime syndicate that principally operates in India, Pakistan, and the United Arab Emirates.  D Company is involved in a variety of criminal activities, including narcotics trafficking, extortion, smuggling, and contract killings.  Dawood Ibrahim and other leaders of D Company are the subjects of INTERPOL Red Notices for their suspected involvement in the 1993 terrorist bombings in Mumbai, India in which 257 people were killed.  In October 2003, the Treasury Department named Dawood Ibrahim as a Specially Designated Global Terrorist, and in June 2006, the United States named both Dawood Ibrahim and D Company as Significant Foreign Narcotics Traffickers pursuant to the Kingpin Act.  Additionally, in May 2012, Treasury designated two senior D Company lieutenants, Chhota Shakeel and Ibrahim “Tiger” Memon, under the Kingpin Act.

“Today, the United States is targeting D Company, a violent organization notorious for its drug trafficking activities and terrorism,” said Adam J. Szubin, Director of the Office of Foreign Assets Control.  “Combatting transnational organized crime is a top U.S. priority, and we will continue to expose the activities of D Company and the underpinnings of criminal financial networks worldwide.”

Today’s action targets two long-time members of D Company, Shaikh Anis Ibrahim Kaskar (Anis Ibrahim), the brother of Dawood Ibrahim, and Aziz Moosa Bilakhia (Bilakhia), both Indian nationals.  Anis Ibrahim is known to be involved in narcotics trafficking, extortion, contract killings, and money laundering on behalf of D Company.  Anis Ibrahim is also accused of involvement in the 1993 Mumbai blasts.  Today’s action also targets Mehran Paper Mill, a Kotri City, Pakistan-based paper company owned or controlled by Anis Ibrahim.

Bilakhia works directly for Anis and Dawood Ibrahim and manages extortion, enforcement, and debt collection activities for D Company.  Bilakhia has been involved with D Company since at least the 1993 Mumbai bombings, for which he is wanted by Indian authorities…

Crime, sport, and jihad: suggested news reading

• The feds have fined MoneyGram’s former chief compliance officer personally for $1 million for “willful” anti-money laundering failures… more>>

• U.S. blacklists soccer team due to drug trafficking by its owner… more>>

• Citing “extremist” links, Britain ends taxpayer grants to the Muslim Charities Forum… more>>

• Human trafficking has become a standard business practice for terrorist groups… more>>

Devil’s duo: FARC and Al Qaeda

New details have emerged on the long known transactions between South American drug cartels and Al Qaeda’s North African affiliate. Marxist FARC guerrillas have been named specifically again. From Magharebia earlier this month (h/t El Grillo):

AQIM partners with Colombian drug cartel

By Walid Ramzi in Algiers for Magharebia – 05/12/2014

Al-Qaeda in the Islamic Maghreb (AQIM) and other Sahel terrorist groups are working with Colombian drug cartels, according to figures released by the United Nations.

Leaders of AQIM have met several times in the Sahel region with representatives of the Revolutionary Armed Forces of Colombia (FARC), International Business Times reported on Sunday (November 30th).

“Narco-jihadists” transport cargo by road through a triangle that includes the west of Libya, Niger, southern Algeria, Mali, and eastern Mauritania, the report said.

The newspaper cited statistics from the United Nations indicating that the Maghreb branch of al-Qaeda had received huge sums of money from such gangs, amounting to 15% of each gramme of cocaine sold by smugglers.

Drug dealing and smuggling, together with ransoms from kidnapping, are key sources of terror financing in the Sahel, an Algerian security source told Tout sur l’Algerie on Sunday.

Smugglers pay terrorist groups to provide secure passage of their drug convoys, from desert to coast, before the contraband is transported to Europe through organised crime networks…

Seven habits of highly effective kingpins

Criminal and terrorist groups are highly interconnected according to new analysis of data by West Point’s Combating Terrorism Center. The conventional wisdom was that criminals worry that working with terrorists may draw unwanted scrutiny from their governments, and they are only inclined to cooperate only in resource-poor environments where it is necessary to survive. But the CTC finds that transnational traffickers and criminals appear to be more than willing to partner with terrorists, and that they benefit from these relationships in a wide variety of environments.

The full report can be read here. It is very thorough (89 pages) and includes academic language and models. Here are a just a few of the salient points from the study about members of the global underworld that may be of interest to practitioners and analysts outside of academia:

1. Interconnected: 98 percent of the individuals in the global illicit marketplace are within two degrees of separation of each other.
2. International: One in three individuals in the network have international relationships.
3. Distributed power: Unlike typical hub-and-spoke networks where 80 percent of the connections rely on 20 percent of the actors involved, the global illicit network is somewhat less dependent on a small number of powerful actors/kingpins. Twenty percent of participants are responsible for only 65 percent of underworld connections. This diffuse hub-and-spoke model makes the network tougher for law enforcement to disrupt.
4. Willingness to work with terrorists: “Individuals involved in other illicit activities link to terrorists 35 percent of the time” (p. 43). Terrorists often serve as “boundary spanners,” that link and form introductions between disparate groups such as drug traffickers, arms dealers, and organized crime.
5. Frequent bilateral links with the United Arab Emirates: The top two bilateral connections in the criminal underworld–the U.S. and Colombia and the U.S. and Mexico–are probably unsurprising to Americans. The third most prevalent bilateral connections are between India and the U.A.E., and the sixth most common are between Pakistan and the U.A.E.
6. Organized crime, not just terrorism, benefits from state sponsorship. We know that state sponsorship of terrorism exists, but for some reason we erroneously assume that state sponsorship of crime does not. The evidence from North Korea, Russia, the Balkans, and Pakistan indicates that criminals can carry out national interests—a phenomenon deserving further study.
7. Convergence is not driven by poverty. Terrorists and criminals are drawn together in a variety of environments, not just in countries where there are little money or resources. The evidence indicates that the opposite is often true—that criminal masterminds prefer climates where there is some level of predictability and economic development, such as Monzer al-Kassar operating in Spain and Dawood Ibrahim in Dubai. Focusing only on failed states could be a red herring.

Acknowledgment: Thanks to Twitter user @El_Grillo1 for sending in a link to the CTC study.

This piece has also been published at Terror Finance Blog.

Egypt: Muslim Brotherhood growing poppies and cannabis in Sinai to fund their resurgence

Islamic terrorists argue that profiting from drugs is acceptable if done with the intent to damage infidels and apostates. We’ve seen Hezbollah, the Taliban, al-Shabaab, and Boko Haram embrace this approach, and now we learn that Egypt’s Muslim Brotherhood is doing it too. The Brotherhood is hopeful that they can use the illicit trade to finance the reestablishment of sharia law and their control over Egypt.

From Raymond Ibrahim (h/t to 1389blog.com):

Muslim Brotherhood Dealing Drugs to Fund Terrorism

The Muslim Brotherhood and its jihadi supporters are the latest terrorists to grow and cultivate illegal drugs in the hills of Sinai, in order to sell them and fund their terrorism campaign with the proceeds—not unlike Afghanistan’s Taliban earlier.

A security source from Egypt’s Interior Ministry who chose to remain anonymous recently made these revelations to reporters.

Among other things, he said the numbers of such drug plantations in the Sinai had dramatically grown since the January 25 Revolution, which brought the Muslim Brotherhood to power.

Since the June 30 Revolution, however, which saw the ousting of the Brotherhood, the military has found and destroyed dozens of acres where poppy and cannabis were being cultivated, plants from which opium, heroin, and hashish are extracted.

Although such drugs are generally banned in Islam, the Brotherhood and its supporters, explained the security source, grow them under the Islamic maxim “Necessity makes the prohibited permissible”…

Neighbors say Kosovo smuggles drugs and organs

The president of the Czech Republic says that Kosovo, a self-declared independent state that is 95 percent Muslim, is funding terrorism from drug smuggling. President Zeman’s comments dovetail with longstanding accusations from Serbia that Kosovo profits from harvesting human organs.

Funding jihad from such activities wouldn’t be unprecedented. Elsewhere in the world, Hamas makes money from the illicit organ trade, and terrorist groups including the Taliban and Hezbollah make hundreds of millions of dollars annually from drug trafficking. Profiting from drugs is often justified by Islamists on the basis of ushr, the classical Islamic tax on crop harvests.

Thanks to Twitter user El Grillo for sending in this report from CTK, the Czech news agency, via the Prague Post:

Czech president is critical of Kosovo during his trip to Serbia

Belgrade, April 1 (ČTK) — Terrorism should not be underestimated, mainly because it is comfortably financed from drug sales, Czech President Miloš Zeman said at the beginning of his two-day official visit to Serbia today, and he indirectly mentioned Kosovo in connection with terrorism.

At the opening of an exhibition on Czech-Serbian military cooperation in Belgrade, Zeman said Islamic fundamentalism is the most visible form of terrorism.

“The Taliban enjoys strong economic support in the areas it controls because the production of opium in these areas has risen 10 times. Let alone the fact of some regimes are being financed via dealings with human organs,” Zeman said.

Serbia accuses Kosovo leaders of dealings with human bodies in the late 1990s.

In 2011, Belgrade submitted a draft resolution demanding an independent international enquiry into the suspicious cases to the OSCE Parliamentary Assembly.

Accusations of human organ trafficking in Kosovo appeared in 2008 for the first time.

In 2010, investigator Dick Marty mentioned them in his report for the Council of Europe. He accused the Kosovo rebels’ army (UCK) of having taken organs away from Serbian war prisoners and from Kosovo Albanians who disagreed with UCK’s practices.

The present Kosovo prime pinister, Hashim Thaci, was allegedly involved in the dealings.

Kosovo, former Serbian province, unilaterally declared its independence, which Belgrade has never recognized.

Zeman, too, is against the recognition of independent Kosovo, though the Czech Republic recognized it under the then right-wing Cabinet and president Václav Klaus in 2008.

Zeman previously labeled the Kosovo regime “a terrorist dictatorship financed by drug mafias.”

In Belgrade today, Zeman said the biggest enemy of the Euro-Atlantic civilization is international terrorism.

“Let’s not underestimate the danger, if for the fact alone that it is comfortably financed from drug sales,” Zeman said…

Heroin is funding Hizbul Mujahideen

A Kuwaiti drug kingpin has been orchestrating an international operation to send narcotics through Kashmir into India.  A Pakistan-based “launch commander” of the jihadist organization Hizbul Mujahideen is a key middleman and beneficiary of the drug profits.  Khurshid Alam, a high-ranking police officer in Kashmir, has been arrested along with two other policemen for their involvement in the drug smuggling scheme.

CNN-IBN has the report:

PTI news service has additional details here.  Thanks to El Grillo for alerting Money Jihad to the story.

Drug money bust reveals Hezbollah’s control

The Australian Crime Commission has foiled an international narco-trafficking and money laundering scheme involving 18 organized groups and 40 separate money laundering operations.  “Project Eligo” has resulted in 105 arrests, 190 criminal charges, and over $500 million in assets seized so far.

Agence France Presse (hat tips to Willauer Prosky and El Grillo) has the highlights of the story:

Australian police crack global money-laundering racket

Sydney — Australian police revealed Thursday they had cracked a major global money-laundering ring with operatives in more than 20 countries and funds syphoned off to groups reported to include Hezbollah.

The Australian Crime Commission said more than Aus$580 million (US$512 million) of drugs and assets had been seized, including Aus$26 million in cash, in a year-long sting codenamed Eligo targeting the offshore laundering of funds generated by outlaw motorcycle gangs, people-smugglers and others.

According to the ACC, the operation had disrupted 18 serious and organised crime groups and singled out 128 individuals of interest in more than 20 countries, tapping information from agencies including the United States Drug Enforcement Administration.

The full details of which countries had been involved were not revealed but acting ACC chief Paul Jevtovic said “the reality is that the Middle East and Southeast Asia have featured prominently”…

The Sydney Morning Herald noted that, “It is believed at least one of the ‘exchange houses’ used in the Australian laundering operation delivers a cut from every dollar it launders to Lebanese militant group Hezbollah, whose military wing has been proscribed in Australia as a terrorist group.”

Jihad: now powered by amphetamines

Unlike poppies in Afghanistan, which the Taliban simply taxes on the basis of traditional Islamic law, terrorist organizations in Syria and Lebanon are taking things a step further by taking control the amphetamine trade lock, stock, and barrel.  All’s fair in love and war, especially when the war is against heretics, which is how the Sunnis regard the Alawites in Syria.  And smuggling “Captagon” is netting them $300 million, which is no chump change—it’s 10 times Al Qaeda’s budget at the time of 9/11.  That means plenty of firepower for the revolutionists.  The only upside for Assad is that his Shia sponsors from Hezbollah are in on the trade too.  What a mess.

The information comes from a Time article that was recently republished by AINA (h/t El Grillo):

Are Drugs Funding the Syrian Rebels?

Fifteen days into his job as Lebanon’s top drug-enforcement official, Colonel Ghassan Chams Eddine got a tip-off that something big was going down at the Beirut shipping port this summer. How big? Nearly 5.5 million tablets of a locally produced amphetamine expertly hidden inside an industrial water heater destined for Dubai. His men had to use acetylene torches to remove the white tablets, each embossed with an off-kilter yin-yang symbol and packed into 1,000-piece units in heat-sealed plastic bags. “The boiler was made in Syria, and the way the tablets were hidden, it was clear that they hadn’t been just stuffed inside,” says Chams Eddine. “That unit was formed around the drugs, at the factory.”

A week later, on Aug. 21, Chams Eddine got another tip-off. Six Syrian-made cargo trucks destined for Saudi Arabia from Lebanon were stopped just as they were about to cross the border. Each of the containers’ steel reinforcing ribs concealed a cleverly designed drawer packed with loose pills — 6 million of them in total. A few days later, a Syrian was caught at Beirut’s international airport with 11,000 tablets hidden in pastries. Then two more Syrians destined for Saudi Arabia were stopped at the airport with 8 kg of the stuff in their luggage.

In one month, Lebanese authorities confiscated more than $200 million worth of a potent amphetamine that is almost entirely unheard of in the West. But in the Persian Gulf, Captagon, as the amphetamine is known, is the most sought-after drug on the street, and the conflict in Syria, with its attendant lawlessness, is making it even easier to obtain.

As the war drags on, it is all the more likely that Captagon will take on a significant role funding warring parties in the conflict. The captured cargo trucks were owned by a Sunni Syrian clan long linked to the drug trade that fled the besieged city of Homs last year to set up shop in Lebanon, says Chams Eddine, who suspects that the proceeds may have been used in part to fund anti–Bashar Assad rebels. “They run two or three operations like that, and they can easily get $300 million. That would buy a lot of guns.”

But it’s not just Syrian Sunnis who are involved. Hizballah, the Iranian-funded and Lebanon-based militia that is fighting in Syria on behalf of President Assad, also has a hand in the trade, according to former U.S. Treasury official Matthew Levitt, a fellow at the Washington Institute and author of Hezbollah: The Global Footprint of Lebanon’s Party of God. “Hizballah has a long history of dabbling in the drug trade to help with funding, and Captagon, with its high profit margins, is to them just another business opportunity,” Levitt says. It’s not yet clear if Captagon finances the war effort directly, he adds, but profits from the trade, like Hizballah’s other criminal activities, help fund the organization, freeing up capacity for efforts elsewhere. A Hizballah security official tells TIME that the organization does not engage in drug trafficking, as the practice is considered sinful in Islam. However, he admits, Hizballah has worked with drug mafias for what he called security operations. “It was never to benefit or fund Hizballah, it was more to collect information. After all, the end justifies the means.”…