ISIS makes as much from taxes as oil

The Financial Times has conducted an investigation of the finances of the Islamic State of Iraq and Syria (ISIS).  They concluded that ISIS makes “at least as much” money from taxation and extortion as they do from oil.  This is basically what Money Jihad has been pointing out about militant Islamist groups since the inception of this blog.  Jihadists that control territory tend to “live off the land.”  Traditional Islamic law gives them ample justification or cover for this behavior.

From FT on Dec. 14 (h/t El Grillo):

Even under jihadi rule, death and taxes remain the two great certainties of life. Some learn that the hard way.

As Isis officials announced a religious tithe known as zakat last summer, Mansour, a 26-year-old grocery storekeeper in eastern Syria, stalled payment while he tried to cook his books.

A week later, four Isis officials stormed into his shop, ordered him outside, and tallied the bill themselves — to his dismay they based their calculation on the retail price of his stock. There were no price tags on the tinned beef, so one tax collector rode around town on his motorbike comparing canned beef prices in other stores.

Five hours later, the audit was complete. The bill: 32,500 Syrian lira (about $108).

“They told me, ‘You liar . . . How will victory be achieved if you’re not paying zakat?’” Mansour told the Financial Times via an internet site. Like all those from Isis territory who were interviewed by the FT, Mansour requested that his real name be withheld for his safety.

Syria’s oil may ostensibly be the militant group’s most profitable resource but even if US, French and Russian planes succeed in trying to bring down its crude production, local revenues like taxes could keep the Isis economy churning. An FT investigation indicates Isis earns at least as much from taxation, extortion and confiscation as oil…

Read the rest of the FT article here which includes much more detail than the excerpt above.

Islamic charity pleads guilty to tax fraud

Al 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:

…On Tuesday, the charity pleaded guilty in U.S. District Court in Eugene to one count of filing a false tax return with the Internal Revenue Service. The group was placed on probation for three years, and it agreed during that time not to resume operating as a tax-exempt charity in the U.S., prosecutors said.

The charity failed to report to the Internal Revenue Service that a $150,000 donation in 2000 went overseas to Saudi Arabia and was meant to be sent to Chechnya, prosecutors said. The charity falsely reported on its tax return that the money was used partly to buy a building in the U.S.

The foundation was disbanded after the U.S. government declared it was a terrorist organization and froze its assets…

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.

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.”

Philippine jihad relies on Saudi zakat

The terrorist organization Abu Sayyaf Group relies mostly on kidnapping for ransom for its revenues. ASG also collects money from extortion and from the collection of zakat according to a March 2014 report from Thomson Reuters. The key point of origin of the zakat for the jihadist group is Saudi Arabia. An excerpt from the report follows:

…The ASG has also maintained the collection of Zakat, one of its traditional sources of funding, though not as profitable as its criminal activities. Zakat, which prescribes Muslims to donate 2.5% of their net revenue to charity, is legitimate under Shariah law. The ASG which claims to struggle for the establishment of an independent Islamic state in Mindanao, benefits from Zakat collected locally and abroad. Locals and those abroad who believe that militant groups are in pursuit of jihad donate substantially to support their operations and upkeep. Some donors however, are not aware that their donations end up in the treasury of militant groups.

Crucial to the collection of Zakat in the Middle East are a small number of sympathetic Filipino workers who help source donors and channel funds to the militant groups through the Overseas Filipino Workers (OFW) remittance system. The Philippines is one of the major exporters of labor to Saudi Arabia with more than a million Filipino workers in that country. Annual remittances amounting to more than a billion pesos have literally kept the Philippine economy afloat. Lack of regulations or monitoring of these remittances allows the flow of funds from supporters abroad to militant groups like the ASG. The ASG has not established a stable support group in any other country except for Saudi Arabia. They depend only on a few core supporters, mostly relatives and friends, both locally and abroad. In the past they collected donations during Friday congregational prayers and used the proceeds for the procurement of ammunition, medicines, and military supplies. It is estimated that from 1992 to 2007, the ASG collected almost ₱20 million from Zakat.

Propaganda is critical for the continuity of Zakat. There is no recent evidence that the ASG is publicly engaged in propaganda which suggests less reliance in Zakat. Previously, the ASG organized lectures and seminars to encourage people to take part in jihad by sharing their wealth through Zakat. The ASG is also known to compile video footages of militant training and actual combat operations. In October 2007, the ASG had appealed for funds and recruits on You Tube by featuring a video of two slain ASG leaders…

Accounting for Kuwaiti cash among Syrian rebels

How Kuwait came to be such a major regional player in the financing of radical rebels in Syria is the subject of a recent interview with Elizabeth Dickens of the Brookings Institute conducted by Syria Deeply, a website run by journalists. Dickens chalks Kuwait’s ascendance as a financier up to:

• Lax regulation (ie, the failure of Kuwait to criminalize terrorist financing until recently)
• Business ties between Kuwait and Syria
• Numerous, experienced NGOs operate in Kuwait

Here’s an excerpt of the interview, with thanks to Arye Leonid Glozman for sending over a link:

Syria Deeply: Why has Kuwait emerged as a financing and organizational hub for charities and individuals supporting Syria’s rebel groups?

Elizabeth Dickinson: It’s a perfect storm. Kuwait has all the things that one would need to set up such a financing hub. The most important thing it has, or that it had until very recently, was extremely lax regulation. So after Sept. 11, most of the Gulf states had these really strict counterterrorism financing laws that gave them the ability to stop any suspicious transactions very swiftly, and they were cooperating with Western intelligence to build their capacity to find any suspicious transactions in the banking system.

Kuwait, however, did not do that, and its counterterror financing law basically said nothing about terrorist financing being illegal. And its central bank just didn’t have any investigative capacity – so even if they did want to stop something from going on, they wouldn’t really have the ability to investigate and figure out how to stop it.

Factor number two is extremely deep ties between Kuwait and Syria. Before the conflict started, Kuwaiti investors were among the single largest direct foreign investor in Syria, so there’s a lot of really longstanding business ties. You have a lot of Kuwaitis with homes and businesses in Syria, with Syrian wives. So there’s a really close personal connection there. There’s also 120,000 Syrian expats in Kuwait, which is a lot considering the population of Kuwait is only 3 million people.

Then you have all the factors that have made the Gulf a hub for financing – you have a lot of money, and a lot of people who are personally affected by what’s going on in Syria. I’ve had lots of people start crying in meetings there. They had the willpower to start getting involved.

The last part of this perfect storm is that Kuwait has the longest history in the Gulf of charitable and humanitarian work. Because of its relatively open political system, people living in Kuwait are allowed to start NGOs, there are private charities that are private, not semi-state organizations like they would be in Saudi Arabia. The Kuwaitis have a lot of experience doing project finance, going into a country and building mosques, wells and schools. The infrastructure of charitable giving is really strong there, and it has allowed a lot of people with expertise to move into sectors of aid that are more geared towards the military side.

There’s a lot of overlap – sheikhs will do a fundraiser for the mujahideen and their weapons … and hospitals.

Kuwait’s ability to be a hub was recognized early in the conflict by other Gulf citizens who were interested in getting financially involved in Syria. If I’m a Saudi and I want to give money to the rebels in Syria, I’m probably aware that my government is not going to look favorably upon that, so individuals elsewhere in the Gulf rely on bundlers in Kuwait to accept their donations on their behalf, and then the donations go from Kuwait to Syria, rather than directly from Saudi to Syria.

SD: What’s the breakdown of where the money from Kuwait is going?

ED: We have rough ideas of how much it is and where it’s going. Among the pro-rebel groups, the vast majority of the money is going to groups that are in the Islamic Front, like Ahrar al-Sham and Jaish al-Islam. There’s evidence that funds are going to Jabhat al-Nusra…

Read the rest here.  Previous Money Jihad coverage of Kuwaiti financing of Syrian militants can be found here, here, and here.

Al Qaeda extorts businessmen in Iraq

Al Qaeda shakes down businessmen as a form of zakat, the traditional Islamic tax on wealth.  Other jihadist groups, such as the Taliban in Afghanistan and Pakistan, have taken the same tack.  Years ago, Osama Bin Laden admonished businessmen to give their money to jihad, and Ayman al-Zawahiri has continued making similar statements since he took over Al Qaeda.  They use the money to pay salaries and to buy explosive devices.

Under classical sharia jurisprudence, zakat is not optional or voluntary in the sense of Western charity or alms.  Zakat is enforceable by the caliph under penalty of death, and Abu Bakr waged Islam’s first war against Muslims who refused to pay zakat.

It is little wonder then that Al Qaeda and the Taliban feel justified in taking money by force from Muslims for the furtherance of Islam.

Thanks to El Grillo for sending this in about Al Qaeda’s extortion of businessmen in Nineveh, Iraq, from Al-Shorfa on Jan. 27:

Al-Qaeda financiers arrested in Ninawa

Police have arrested four members of an armed group involved in collecting money for al-Qaeda by way of threats and extortion, Iraqi police in Ninawa province said Monday (January 27th).

“The police arrested four al-Qaeda-affiliated gunmen involved in collecting money for al-Qaeda by threatening citizens, so they could use it to finance terrorist operations,” Ninawa police spokesman Col. Khalid al-Hamdani told Al-Shorfa.

“The police arrested the group in an ambush set up in al-Sahel al-Aysar, southern Mosul, as they tried to extort a businessman, threatening him with death in order to take money from him,” he said.

“The gunmen admitted to belonging to al-Qaeda during the investigation, after being confronted with evidence collected by police,” al-Hamdani said. “They confirmed that the money was collected for al-Qaeda to buy cars and rig them with explosives.”

Financial mischief: recommended reading

• Yemen admits that, left to their own devices, donors’ zakat will fund terrorism… more>>

• Financial crime expert Kenneth Rijock affirms the decision by Barclays to stop doing wiring money to Somalia… more>>

• After Goldman Sachs, GoDaddy, and NASDAQ snafus, maybe it’s time to acknowledge the threat of economic warfare… more>>

• Will bitcoin be embraced beyond the anarchist fringe? Laundreymen author Jeffrey Robinson has his doubts… more>>

Audit reveals ISNA funded militants

The Canadian affiliate of the Islamic Society of North America has come under the scrutiny of Canada Revenue Agency for violating rules governing ISNA’s tax-exempt status by failing to demonstrate that its overseas philanthropy is genuine.  The CRA found that ISNA’s only “evidence” to justify how its money was spent in Kashmir is a doctored photograph.

Hizbul Mujahideen, a terrorist group in Kashmir and the recipient of ISNA’s largesse, has a wide-ranging revenue strategy including zakat and hawala from Pakistan, animal skin smuggling, and counterfeiting.  Its ability to access Western relief money through North American charities suggests an even broader international reach than previously understood.

ISNA’s U.S. affiliate was previously named as an unindicted co-conspirator in the trial against the Holy Land Foundation for funding Hamas.  ISNA-USA claims that it is a legally separate entity from ISNA Canada despite maintaining an ISNA-Canada representative, Dr. Mohamed Bekkari, on its executive council.

Thanks to Gisele for sending in links on the subject including this article from The Star, which serves as yet another example of zakat-financed terrorism:

Star Investigation: Federal audit raises concern that Canadian charity funded terror

Ottawa fears several thousands of dollars went to supporting the Hizbul Mujahideen — a militant group that seeks the secession of Kashmir from India.

By: Jesse McLean Investigative News reporter, Published on Thu Jul 25 2013

Money raised by an Islamic charity created to help Canada’s poor and needy instead went overseas, potentially into the hands of violent militants, a government audit has found.

The federal charity watchdog is now threatening to revoke the charity status of Mississauga’s ISNA (Islamic Society of North America) Development Foundation.

A Canada Revenue Agency audit revealed the foundation shipped more than $280,000 to a Pakistan-based agency, cash the government fears went to supporting the Hizbul Mujahideen — a militant group that seeks the secession of Kashmir from India.

The foundation “facilitated the transfer of resources that may have been used to support the efforts of a political organization . . . and its armed wing,” the CRA said in a letter to the charity outlining its findings, obtained by the Star.

“Canada’s commitment to combating terrorism extends to preventing organizations with ties to terrorism from benefiting from the tax advantages of charitable registration,” the CRA letter said…

Banker supports taxes for jihad

The former chairman of Islami Bank Bangladesh, Limited (IBBL), Shah Abdul Hannan, explained his support for collecting taxes beyond zakat for the purposes of waging jihad in an article posted online around 2003 (available here and here).  Hannan based this argument on the writings of Yusuf al-Qaradawi, the notorious Muslim Brotherhood leader, Hamas charity front financier, and sharia finance proponent.

Referring to Qaradawi’s Fiqh al Zakah, Hannan wrote:

…Allah has made it obligatory to carry out Jihad (defence of Islam and Islamic territory and to put an end to oppression anywhere in this world) through employing one’s life and wealth. This is a duty beyond Zakat. To carry out a major Jihad in this age, if needed, there is no other way but to raise resources through taxes…

Hannan has also condemned peaceful Shahbag dissidents who are calling for justice against war criminals in Bangladesh.  Hannan calls the student demonstrators fascists.  Well, Mr. Hannan—it takes one to know one.

Money Jihad has been documenting the terrorist financing activities of IBBL, one of the biggest banks in Bangladesh and its largest sharia financial institution, ever since Bangladeshi authorities revealed in 2011 that Islami Bank has been diverting eight percent of its corporate zakat to jihadi militants.  A member of IBBL’s sharia advisory board was also detained and questioned for possible involvement in an attack against police.

IBBL fell under international scrutiny in 2012 after the U.S. Senate reported that HSBC continued to maintain a business relationship with IBBL despite evidence of its role in funding terrorism.

More recently, U.S. garment importers including Wal-mart and J.C. Penny have severed ties with IBBL due to the Islamic bank’s role in supporting militants.  Nonetheless, Western Union continues to do business with IBBL.

Covert finance: recommended reading

• Egyptian imam says that zakat is being used to fund fighters… more>>

• With prepaid cards and fraud, the sky’s the limit… more>>

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• Sanctions violation:  the president of Panama’s private trading company is shipping 20 containers a month to Iran… more>>

Hamas defines ‘Jihad with Money’

And it’s exactly what we’ve always told you…

From IDF Blog on May 23 (h/t Justice4Israel):

Last week, the Izz ad-Din al-Qassam Brigades, Hamas’ military wing, published an article on their website entitled ‘Jihad with Money’ (link in Arabic).

The term ‘Jihad with Money’ has two different meanings, the article’s author suggests.

“The general meaning [of the term] is to give money to charitable causes for the pleasure of God Almighty: to help the poor and needy, construct hospitals, mosques, schools, colleges and universities, [to assist] orphans and students, and help the unemployed.”

That sounds like a respectable concept – until you read on for the ‘special’ meaning.

“The special meaning: to make money for combat, such as the purchase of weapons, gear and clothing, and to develop the means to build factories for weapons and to support the families of the Mujahideen [terror fighters] and their families.”

For Hamas, charity and Jihad are one and the same. Hamas built their power base and gained the support of ordinary Gazans thanks to their extensive charity network. They also collect money around the world, ostensibly for the benefit of the Gazan people. But much of that money never gets to the people for whom Hamas claims it is intended.

Izz ad-Din al-Qassam Brigades’ website calls on its readers to give ‘zakat’, or charity, generously, and suggests that the Hamas government spends that money on a wide range of charity projects, in addition to its military activities. By associating its military activities with its charity work, Hamas attempts to justify its spending. But do not be fooled: Hamas’ priority number one is terror – and helping ordinary Gazans in need comes a distant second…