Germany: Money laundering to finance crime, terrorism grows

German police and financial authorities have warned of an increase in money laundering. The numbers have more than tripled in recent years and the methods are becoming ever more sophisticated.

Authorities in Germany have warned of a steady increase in money laundering. Recorded cases went up by 23 percent in 2009 with a total number of 9,046, according to figures presented by the financial market watchdog BaFin and the BKA federal police agency on Wednesday. The number of cases has tripled since 1995.

BKA head Joerg Ziercke said one of the main reasons for the increase was the rising number of financial intermediaries who offer their private bank accounts for money laundering. For an often small fee, individuals agree to send money abroad or to other financial intermediaries who then channel the money to foreign accounts.

Fake Internet purchases

"These people are being approached through the Internet," Ziercke said at a press conference on Wednesday. "They are asked to offer their accounts for transferring money for products allegedly bought on the Internet."

"The products are then not being delivered, and the owner of the account gets a commission. That way the money that's been transferred is channelled … into accounts outside of Europe."

In almost one-third of investigations into organized crime, there are cases of money laundering, Ziercke said. Nearly 100 of the cases recorded in 2009 were linked to suspected financing of terrorism.

More international cooperation needed

The BKA said better international cooperation could help quell the problem.

Within Germany it's the job of financial market watchdog BaFin to be on the lookout for illegal transactions or money transfers that reek of money laundering. Increased international cooperation aside, BaFin also called for tougher fines and sentences.

"Compared to the authorities in the US or in London, it's almost a joke when you look at the fines that we can impose here in Germany," BaFin head Jochen Sanio said.

Fines in Germany are limited to a maximum of 100,000 euros ($128,000), while abroad, Sanio said, authorities can easily charge millions if they uncover a significant case.

Author: Andreas Illmer (AFP/AP/dpa)

Editor: Nancy Isenson

Source: Deutche Welle

Commission acts to enforce AML rules in Germany

The European Commission has today asked Germany to fully comply with EU laws regarding anti money-laundering (AML) and combating the financing of terrorism (CFT). The Commission is concerned that two German Bundesländer have not yet assigned competent supervisory authorities to all entities which are subject to AML/CFT requirements, and Germany has thus failed to prevent the misuse of the financial system for the purpose of money laundering and terrorist financing. The Commission’s request to Germany takes the form of a reasoned opinion. If Germany does not reply satisfactorily within two months, the Commission may refer the matter to the EU Court of Justice.

What is the aim of the EU rule in question?

The anti-money laundering (AML) legislation (Directive 2005/60/EC) aims to protect the integrity, reputation and stability of the financial system, all of which are integral to the proper functioning of the Internal Market. Each Member State in the EU was required to adopt this legislation by 15 December 2007. The legislation requires the financial sector and other designated bodies and professions, including lawyers, real estate agents, and casinos, to comply with a number of obligations. These could include taking measures to identify their customers and reporting suspicious transactions. To ensure these obligations are adhered to, Member States are required to appoint competent authorities to supervise the way these entities fulfil their tasks.

How is Germany not respecting these rules?

According to German Anti-money laundering law1 the federal states or Bundesländer in Germany are responsible for assigning supervisory authorities to certain designated entities. However, not all German Bundesländer have appointed such supervisory authorities. There are deficiencies with regard to real estate agents, insurance intermediaries and providers of goods, when payments are made in cash in excess of €15 000. Deficiencies have been found in the following Bundesländer: Mecklenburg-Vorpommern and Sachsen-Anhalt.

How are EU citizens and/or businesses suffering as a result?

Money laundering is a major international problem. Whether the perpetrators are corrupt dictators, drug barons, human traffickers, fraudsters or racketeers, they all have one thing in common: the need to disguise the flow and deposit of money so that it appears legitimate. The movement of large sums of illegal money threatens both the stability and reputation of the financial system, thereby jeopardising the proper functioning of the Single Market.

Failure to adequately implement the requirements of AML and CFT legislation means that criminals and terrorist organisations can detect and exploit loopholes in the system more easily. The supervision of designated entities is thus an important element towards ensuring a sound and comprehensive AML/CFT system.

More information

http://ec.europa.eu/internal_market/company/financial-crime/index_en.htm

Latest information on infringement proceedings concerning all Member States:

http://ec.europa.eu/community_law/index_en.htm

For more information on infringement procedures, see MEMO/11/45

Source: IEWY

Germany agrees to share information about secret bank accounts Read more: Germany agrees to share information about secret bank accounts

German has assured finance minister Pranab Mukhejee that it would pass on information about Indian citizens holding secret bank accounts.

The assurance came at a bilateral meeting between Mukherjee and German finance minister Wolfgang Schaeuble on the sidelines of the meeting of the G20 finance ministers and central bank governors that concluded here on Saturday.

Mukherjee appreciated the role of Germany in providing information about Indian citizens having secret bank accounts in the LGT bank of Liechtenstein.

Germany has earlier provided names of some Indians having secret accounts in the Liechtenstein Bank.

"German finance minister ... assured him (Mukherjee) that as and when they have such information, they will pass it on to the Indian government", said a release.

Germany, it added, has also agreed to revise Double Taxation Avoidance Agreement (DTAA) and incorporate clauses to facilitate exchange of information between the law enforcement agencies of the two countries.

The negotiations to amend the DTAA will start soon, the release said, adding Mukherjee has requested for early amendments to the tax treaty.

Under the existing treaty, Germany cannot share information for non tax purposes.

German tax authorities, Mukherjee added, need to share information with India's Enforcement Directorate, a body that deals with offences relating to violation of foreign exchange laws.

Raising similar issues with French minister for economy, industry and employment Christine Lagarde, Mukherjee said there was need to put pressure on tax havens to share information to prevent money laundering.

Mukherjee also recalled the commitment of the French minister to share information on Indian monies in Swiss banks, the release said.

The finance minister asked his French counterpart to initiate early negotiations for amending the DTAA between the two countries.

Lagarde said the French team was working on the amendment proposed by India on the DTAA and the issue of providing information for tax purposes would be discussed shortly with Indian administration.

The two leaders also discussed a number of bilateral and multilateral issues and underlined the need for greater engagement between the two countries in the fields of energy, nuclear power, water treatment etc.

Source: The Times of India

Spanish Police Bust Bank-Card Fraud Ring

An international organization engaged in duplicating bank cards has been dismantled in an operation involving the arrest of 178 people in 14 countries, Spanish police said Tuesday. The ring, which made off with more than 20 million euros ($24.5 million), also committed other crimes including robbery, extortion, sexual trafficking and money laundering.

The investigation, directed by Spain’s National Court, was launched two years ago in the Mediterranean city of Valencia, where police detected several people forging bank cards to withdraw money from automatic teller machines or to make purchases.

Police discovered that the ring had subgroups based in 14 different countries, each led by an individual who alone had contact with the kingpins.

In Spain, 76 people have been arrested, 120,000 card numbers were made inoperative and 5,000 duplicated cards were seized, while police dismantled six workshops where cards were being copied.

In Romania, 23 searches resulted in 16 arrests, while in France the operation was carried out in three phases that led to 30 arrests and nine searches.

In Italy, two searches ended with seven people under arrest and 3,100 duplicated cards seized.

Another 16 people were taken into custody in Germany, including a man suspected of being one of the most important technicians for creating card-duplicating devices.

Three members of the gang were nabbed in a three-step operation in Ireland, while in the United States another eight people were arrested.

And thanks to information provided by the Spanish police, two suspects were arrested in Australia, another two in Sweden and Greece, three in Finland and four in Hungary.

Source: Latin American Herald Tribune

India arrests hawala money laundering suspect Naresh Jain

British police suspect Naresh Kumar Jain, also wanted in Dubai, US and Europe, laundered millions for organised crime gangs

A multimillionaire suspected of being one of the world's leading underworld bankers is under arrest in India after a global manhunt involving British police.

The Serious and Organised Crime Agency (Soca) believes that Naresh Kumar Jain is responsible for laundering millions of pounds of profits from organised crime gangs in the UK over several years. His organisation has been under investigation in Britain since 2006, after inquiries into the cash flows of drug gangs and other criminal networks repeatedly identified his alleged network at the end of money transactions.

Jain, 50, was seized in New Delhi on Sunday, a year after he jumped bail on money laundering charges in Dubai, from where he allegedly ran his operations. Soca is now liaising with both Indian and Dubai police.

Labelled a criminal mastermind by alleged victims, Jain is suspected of laundering money for Albanian and Italian heroin dealers, and narcotics cartels in America, the United Arab Emirates, Pakistan and Britain, according to inquiries in Italy and the US. German and US police say Jain's operation has tentacles in all of the major drug and terrorism hotspots across the globe. He was also wanted by police in Spain and the Netherlands.

According to Soca and other international agencies, Jain is suspected of controlling a laundering system capable of moving $2.2bn (£1.35bn) a year. From Dubai he allegedly provided customers with funds in a country of their choice. It is claimed his network was so extensive and lucrative that he often did not have to physically move money, a fact that made his detection all the more difficult, according to an investigative source.

Ian Cruxton, deputy director of Soca, said: "This operation is part of Soca's long-term strategy targeting specialist money launderers based overseas. These networks pay no attention to cultural or geographical barriers and launder money for organised crime groups from any ethnic background or criminal businesses, particularly UK, Pakistani and Turkish nationals based in the UK and mainland Europe involved in drugs trafficking."

Jain, also known as Naresh Patel, was arrested in April 2007 by Dubai police after a year-long international investigation. Much of the money he allegedly moved was by hawala, an informal honour-based money transfer system primarily based in the Middle East, east Africa and southern Asia.

According to the US department of justice's drug enforcement agency, police in Dubai made a number of searches of his property after his arrest and recovered banking and wire transfer records demonstrating that he was directing money transfers through banks and exchange houses in Dubai, into bank accounts at a finance company in Manhattan. The accounts of the company showed he was involved in "layering," a money laundering technique designed to disguise the origin of sham commodities trades.

The US government obtained a seizure warrant for the funds in the accounts as property involved in money laundering and this year a district judge ordered the forfeiture to the US of more than $4.3m. A further £1.5m in cash from Naresh's business dealings has been held around the world.

A two-year investigation in Italy revealed an alleged trail that suggested Naresh was laundering $4m a day, with heroin and terrorism cash coming in through a beauty parlour in Italy. The Italians and Americans say he was at the centre of a sprawling terror network that was taking in money for the Taliban as well as other criminal cartels.

While inquiries were being made into his activities, Naresh was bailed in Dubai – where he faces trial for breaking foreign exchange laws – and fled his business headquarters. He resurfaced in his native India, where authorities raided several properties owned by him and issued an all ports alert.

Two months ago he denied any involvement in money laundering and claimed he was a businessman who was being trapped. Speaking in New Delhi, Naresh said: "I have a factory in South Africa. I supply ready-made garments in Afghanistan and Nepal. I talked to people in Pakistan in relation with purchasing rice."

British authorities have secured an exclusion order preventing Naresh from entering the UK.

Source: The Guardian

Indian Govt signs MoUs with three countries to fight terror financing

The MoUs will enable the country’s Financial Intelligence Unit to share information with foreign FIUs and to obtain information from them on money-laundering activities

The government has signed memoranda of understanding with Russia, Malaysia and Brazil this year for combating money laundering and terror financing.

Negotiations with more than 30 other countries is under process for enhancing international cooperation in fighting illegal routing of money for terror and Hawala like operations, a senior finance ministry official has said.

India has also signed MoUs in this regard with Mauritius and the Philippines in 2008.

The MoUs will enable the country’s Financial Intelligence Unit (FIU) — a government agency to investigate and disseminate information between financial and law enforcement agencies for identification of suspicious money laundering — to share information with foreign FIUs wherever considered necessary and reciprocally to obtain information from them on money-laundering activities, the official said.

The government, in the same context this year, received 69 requests of information from foreign financial intelligence units while it sent 17 such requests to other countries.

The Union government has also established Joint Working Groups (JWG) — comprising senior officials from enforcement agencies — with a number of countries like the US, Germany, the UK and Russia on various operational issues relating to terrorism and other crimes including money laundering and drug trafficking.

A joint meet was held with Russia this year, the finance ministry official added.

The FIU-IND in relation to foreign FIUs screens and processes requests from foreign FIUs, disseminates information to foreign FIUs, establishes and maintains relationship with foreign FIUs, and facilitates, administers and negotiates Memoranda of Understanding (MoUs) with foreign FIUs.

According to established government guidelines, the MoU envisages that the information or documents obtained from the respective authorities will not be disseminated to any third party, nor be used for administrative, prosecutorial or judicial purposes without prior consent of the disclosing Authority.

The information acquired will be treated as confidential and will be subject to official secrecy. The MoU also provides that authorities will jointly arrange, consistent with the legislation of their respective countries, for acceptable procedures of communication and will consult each other with the purpose of implementing the Memorandum, the guidelines state.

The guidelines further add that the authorities would not be under any obligation to give assistance if judicial proceedings have already been initiated concerning the same facts to which the request is related. Further, the MoU may be amended or revoked at any time.

Source: Live Mint

India warned of suspicious transactions

29 Sep 2007, 0058 hrs IST,Pradeep Thakur,TNN

NEW DELHI: The Financial Intelligence Unit (FIU) has forwarded a list of suspicious transactions, including hundreds of cases of suspected terror financing and doubtful foreign remittances, to Intelligence Bureau and other investigating agencies.

In its first annual report released recently, the FIU identified several accounts having a common beneficiary with huge and unexplained money transfers made to them.

Tasked to keep an eye on money laundering and combating terror financing, the FIU report said many of these foreign remittances were doubtful with scant information on the source of funds and actual beneficiaries. Some such account holders were even found to be on the Interpol's watch list and were known criminals.

These suspicious transactions included "cash deposits in bank accounts at multiple locations, off-market transactions in demat accounts, fraudulent use of ATM and credit cards and unexplained activity in accounts inconsistent with what would be expected from declared business."

Banks reported the highest number (437) of suspicious transactions in the last one year while financial institutions and intermediaries accounted for 380 such reports up to March 2007.

The ease with which terrorists and their fronts have laundered money in India through formal channels of transaction raises serious doubts on the efficacy of the strict due diligence regimen imposed by the government on banks and financial institutions a few years ago.

With reports of terror outfits gaining access to stock and commodity markets and evolving ways to evade checks put in place to scan their transactions, it seems money launderers and terrorists have perfected some device to go under the radar of the due diligence mechanism.

In light of the IPO scam, the government had begun harsh punitive action and barred some multinational banks from expanding in India and opening new branches. The punitive measures included sacking dozens of employees of at least two banks. But it seems these measures had only a momentary effect.

The FIU report said India received at least 14 enquiries from abroad related to terror financing and other suspicious transactions. In two cases, some countries, including the US, Canada, Russia and Germany, assisted India in disseminating information.

FIU officials were also sent to the US, Australia, Canada and Thailand to train with the anti-money laundering mechanism put in place by these countries. In the last one year, FIU officials also attended nine joint-working groups on counter-terrorism with the US, Germany, China, Russia, Italy, Canada, Singapore and Israel.

http://timesofindia.indiatimes.com/India_warned_of_dubious_transactions/articleshow/2412984.cms

Sri Lanka: International Conference on Countering Terrorism

Sri Lanka: International Conference on Countering Terrorism draws international terrorism experts to Colombo

20th October 2007

The three-day International Conference on Countering Terrorism is now on in Colombo on the theme 'Terrorism: A Challenge to Democratically Elected Governments.' The Conference, brought together renowned terrorism experts, including from the academia and the media, from 23 countries including Australia, China, Czech Republic, France, Germany, India, Indonesia, Russia, Singapore, South Africa, the United States and Vietnam. It was also widely attended by the Diplomatic Community .

Delivering the Inaugural Address, Foreign Minister Rohitha Bogollagama, highlighted that "Sri Lanka had been a foot soldier in the battle against terrorism over a long period of time and notwithstanding some impediments and setbacks, can in several aspects count itself as having been a success story in the battle against terrorism." Sri Lanka's refusal to compromise or condone terrorism while constantly seeking to resolve the conflict through political means, to persuade other states to proscribe the LTTE, prevent money flows and apprehend those conniving with terrorists, has been significant. Successive governments and the people of Sri Lanka have also shown considerable resilience in the face of terror, whilst also ensuring that economic growth was not compromised. The Minister hoped that the deliberations of this Conference would, among other matters focus on the need for states to go beyond merely adopting conventions, to convert these into tangible action by developing enabling legislation and taking concrete action against those including terrorist front organizations operating from their soil. Noting that a bulk of maritime traffic passes through the Indian Ocean region and that in recent times many acts of terrorism had taken place in these waters, the Minister emphasized the urgent necessity to develop robust modalities to arrest the growing threat that faces Indian Ocean states from terrorists.

The former Director of the European Center for the Study of Conflicts in France, and one of the earliest writers in the field of terrorism, Dr. Gerard Chaliand traced the evolution of terrorism over the years. Referring to the LTTE, he said "the independence they ask cannot be granted and should not be granted, not only because no State is willing to accept such a blow to its sovereignity but also because, like the Shining Path or the Khmer Rouges, the LTTE under the leadership of V. Prabhakaran is a totalitarian movement, which has transformed its groups into a killing machine." He said "the most important thing about the LTTE is that it is a totalitarian movement fighting in a country which is democratic." He said the "LTTE has brutally eliminated all other parties or groups willing to represent the Tamils". "An absolutely intolerant sect, no peace seems possible with V. Prabhakaran as we have seen from the peace process of 2002-2005, which was but a tactical truce", Dr. Chaliand added.

Secretary of Foreign Affairs, Dr. Palitha Kohona delivering the vote-of-thanks repeated the unprecedented challenge Sri Lanka faces in combating terrorism and Sri Lanka. He said the world had focused on international terrorism only after 9/11 but terrorism had affected countries long before then. He emphasized that "the international rule of law against terrorism is being strong themed each year," adding that "there are 13 UN Conventions addressing different dimensions of the global terrorist threat and a comprehensive convention is being negotiated." The Foreign Secretary pointed out that "terrorism will never be eradicated solely by cooperation among law enforcement officials. It requires a concerted political effort and policy coordination among countries. Further it also requires an ability to understand and minimize the motivation and impetus that inspire terrorist acts."

Renowned Chairman of the French Anti-Terrorist Judges, Judge Jean Louis Bruguiere, who was the Guest of Honour of the Conference, and addressing the first panel of the day focused on the international responses to terrorism, traced the manner in which international efforts at responding to terrorism have evolved over the years, stating that if the fight against terrorism is an inescapable requirement, "we owe it to ourselves to reinforce our international cooperation at every level, notably by adopting multilateral or bilateral conventions in the field of judicial cooperation as well as extradition." He said the French Government considers "that an organization like the LTTE is a terrorist organization like any other and that its activities even in the area of logistics, have to be repressed with the same vigour as for terrorist networks operating on our [French] soil and threatening us directly" and that on this basis "that in April this year the French Government had dismantled a vast network of Tamil militants who actively supported the LTTE, notably at the financial level."

This session, which was chaired by the Dean of the Faculty of Arts of the University of Colombo, Prof. Amal Jayawardena,while the discussants were the Executive Director of the Regional Centre for Strategic Studies, Dr. Rifaat Hussain and the Senior Terrorism Prevention Officer of the United Nations Office on Drugs and Crime, Vienna, Dr. Ms. Irka Kuleshnyk.

Addressing the panel on regional responses to terrorism, former Commander of the Indian Army, Gen. V. P. Malik emphasized the need to combat and defeat terrorism in all its manifestations. He said "terrorist activities anywhere will stop only when their fuel runs out." Gen. Malik who traced the important steps taken to counter terrorism in South Asia, emphasized the need for a regional strategy and cooperation, but essentially local operatives and doctrines.

Former Secretary General of SAARC, Ambassador Nihal Rodrigo, chaired this session, while the discussants comprised the Associate Research Fellow of the China Institute of International Studies, Prof. Zhang Lijun, the Deputy Director of the Russian Foreign Ministry, Mr. Vladimir Titokerni as well as the Pro-Chancellor and Director of the School of Science and Forensic Science, National Law University Rajastan, India, Prof. P. Chandra Sekharan.

The third thematic session focused on the domestic dimensions of terrorism where the head of the International Centre for Political Violence and Terrorism Research in Singapore, Dr. Rohan Gunaratna, who was the principal speaker, who joining the deliberations on a video link, highlighted the recent successes of the security forces in combating LTTE terrorism. He noted that within the year the Sri Lanka Navy destroyed eight merchant vessels. In order to defeat the LTTE, Dr. Gunaratna articulated the need for strengthening and building capacity in the intelligence field, with a high degree of professionalism, and also stressed the necessity for special forces and elite units that could target the leadership of the LTTE.

Former Inspector General of Police, Mr. Chandra Fernando chaired the discussion at which intervention were made by Deputy Solicitor General, Mr. Dappula de Livera and Prof. Karunaratne Hangawatte of the University of Nevada.

The final panel discussion of the day focused of the critical area of combating terrorist financing, where the Founder and CEO of World-Check, Mr. David Leppan spoke extensively on the manner in which terror groups collect funds and their illegal activities.

Researcher of the Centre for Policing, Intelligence and Counter Terrorism of the Macquarie University of Australia, Mr. Shanaka Jayasekera the co-speaker at this session noted that the LTTE's supply chain capability has been significantly disrupted, estimated at between 65% to 70%. This would result in the need for the LTTE to aggressively campaign for fund raising activities in the 12 top level resource mobilization countries. In order to maintain the advantage the Government has achieved, it is imperative that the fund-raising be curbed with international cooperation in the next few months. Therefore it is suggested that a contact group be established as a prelude to the commencement of a political process."

The Deputy Governor of the Central Bank, Dr. Ms. Ranee Jayamaha chaired the sessions, at which the discussants were Mrs. Joan De Zilva Moonesinghe formerly of the Financial Investigation Unit and the Advisor of the Financial Investigation Unit of the Central Bank, Mr. Eric Stonecipher.

Ministry of Foreign Affairs
Colombo

20 October 2007

Another tack in terror-financier lawsuit

By Chris Mondics
Inquirer Staff Writer

Only days after suffering a significant setback in their lawsuit against Saudi Arabia, lawyers at Cozen O'Connor and other plaintiffs' lawyers have opened a new front in their battle to hold terrorism financiers accountable for the Sept. 11, 2001, attacks.

In court papers filed in federal district court in Manhattan, Cozen O'Connor, based in Center City, and the others are asking for additional discovery against the Saudi-owned National Commercial Bank, the largest bank in the Arab world.

Cozen represents three dozen insurers in its attempt to hold Saudi Arabia, several Islamist charities, banks, and financiers liable for more than $5 billion in damages.

While the lawyers have yet to generate evidence showing that any senior Saudi official conspired with al-Qaeda to attack the United States, they allege that Saudi money, some of it from the government, fueled al-Qaeda's rise from ragtag regional terrorists into global threat.

To support their claim for more discovery against the National Commercial Bank, the plaintiffs have filed new evidence they say suggests the bank was a conduit for funds to Osama bin Laden before the 9/11 attacks, including previously unreleased French diplomatic cables and a report by German intelligence.

The primary vehicle for the money-laundering scheme, the plaintiffs' lawyers allege, was a now-defunct Islamic charity called Muwafaq Foundation, which was established by two former senior officials of the bank. "NCB's sponsorship of al-Qaeda flowed largely, although not exclusively, through Muwafaq Foundation," said Cozen O'Connor lawyer Sean Carter, in a letter to U.S. Magistrate Judge Frank Maas, who is managing discovery in the sprawling case.

A lawyer for National Commercial Bank did not return phone calls for comment. But in a July 22 motion to dismiss the case, Mitchell Berger, the bank's attorney, argued that the plaintiffs had failed to produce facts showing that NCB "played a knowing role in financing terrorist activities."

"Plaintiffs offer only speculation and hearsay in their effort to link NCB to al-Qaeda terrorists who committed the Sept. 11 attacks," he said.

The request for additional discovery against NCB and two of its former executives, Yassin al-Kadi, designated by the U.S. Treasury Department as a terrorism financier, and Khalid bin Mahfouz, a wealthy Saudi businessman who once had an ownership interest in NCB, is the latest front in a long-running litigation battle that began within days of the Sept. 11 attacks.

Al-Kadi's attorney could not be located; bin Mahfouz's attorney in Washington did not return a call for comment.

On Thursday, Cozen and other plaintiffs' lawyers suffered a serious reversal when the U.S. Court of Appeals for the Second Circuit, ruling in Manhattan, said Saudi Arabia could not be sued because such lawsuits are barred unless the State Department had officially designated a government as a supporter of terror.

There has been no such finding in the case of Saudi Arabia.

Lawyers for Cozen and other firmssay they likely will appeal that ruling to the Supreme Court. Such efforts usually are long shots; the Supreme Court typically accepts only about 1 percent of the cases submitted to it on appeal.

But quite apart from Saudi Arabia, the Second Circuit ruling leaves untouched, for the moment at least, scores of other defendants with ties to the Saudi government such as the charities and the National Commercial Bank.

The lower court overseeing the litigation already has authorized limited discovery - the process by which lawyers for both sides get to question witnesses and request documents that they believe will prove their main assertions.

It was in response to a motion by lawyers for National Commercial Bank that discovery be halted and the case dismissed that lawyers for Cozen, which is representing dozens of U.S. and global insurers, and other firms representing victims and survivors of the attacks filed their discovery motion.

They charge that al-Kadi, himself a wealthy Saudi businessman who has had investments throughout the world, including in the United States, and bin Mahfouz founded the Muwafaq or Blessed Relief Foundation while they were affiliated with NCB in the early 1990s and used it to funnel money to al-Qaeda.

The plaintiffs' lawyers cite as evidence a U.S. Treasury Department finding in 2001 that al-Kadi had helped bankroll various terrorist organizations including Hamas and that he maintained a close relationship with Wa'el Julaidan, also designated, who allegedly helped bin Laden found al-Qaeda and who allegedly helped bankroll terror cells around the world.

In a related letter to Swiss authorities in 2001, then Treasury general counsel David D. Aufhauser said, "Mr. Kadi's actions and those of his Muwafaq Foundation and businesses . . . give rise to a reasonable basis to believe that they have facilitated terrorist activities."

The plaintiffs also filed what they said were reports by the Bundesamt fuer Verfassungsschutz, a German intelligence service, asserting that the NCB was used to launder money into al-Qaeda. Also filed was what plaintiffs' lawyers said was a cable from the former French ambassador to Saudi Arabia from 1998 to 2004, Bernard Poletti, to the French foreign ministry.

In the cable, Poletti says Saudi authorities had unearthed information that bin Mahfouz had been involved in fund transfers from NCB to an Islamic charity that in turn directed the money to bin Laden.

Bin Mahfouz has never been designated by U.S. authorities as a terrorism supporter. The National Commercial Bank, of which he was chief executive officer, was described as a conduit for money to Islamic terrorist groups in congressional testimony by Vincent Cannistraro, former chief of counterterrorism operations at the CIA

"There is little doubt that a financial conduit to bin Laden was handled through the National Commercial Bank," Cannistraro said in testimony before the House Committee on International Relations on Oct. 3, 2001.

Bin Mahfouz has bitterly rejected assertions that he helped support terrorists. On the bin Mahfouz family Web site he has posted a history of challenges to publications and individuals he says have unfairly accused him of supporting terrorism.

In this regard, he has had considerable success.

In one notable example in 2007, bin Mahfouz and his attorneys successfully pressured Cambridge University Press to apologize for the April 2006 publication of Alms for Jihad, which accused bin Mahfouz and members of his family of supporting terrorism. The publisher also promised to destroy unsold copies of the book that at the time still were in warehouses or accessible through the distribution chain.

In another example, bin Mahfouz successfully sued terrorism author Rachel Ehrenfeld in British courts for falsely accusing him of terrorism ties, an allegation she bitterly denies. She was ordered to pay $225,000 in damages and to destroy copies of her book.

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Read an Inquirer series on the 9/11 lawsuit, plus court documents, at http://go.philly.com/cozen

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Contact staff writer Chris Mondics at 215-854-5957 or cmondics@phillynews.com .

Source: The Philadelphia Inquirer

Netherlands Concerned about Al Qaida in North Africa

The Netherlands is concerned about the increasing influence of Al Qaida in North Africa. The Hague wants to step up its partnership with Algeria against terrorism, Foreign Minister Maxime Verhagen told the Lower House on Friday.

As far as international terrorism is concerned, "the most important threat unabatedly comes from Islamic terrorist groupings including Al Qaida," according to Verhagen. "Al Qaida's influence has unfortunately increased in the border area of Afghanistan and Pakistan in the past year." However, "the threat has increased specifically in the North Africa/Sahel region," Verhagen adds.

Elementary for success in Afghanistan "is a clear approach by Pakistan". Media and experts say that the Pakistani government is too conciliatory and negotiates from a position of weakness, according to the minister. "The fear exists that a safe haven for terrorists will thereby again be permitted in the tribal areas. The Dutch government shares this concern."

In North Africa, the linking up of the Groupe Salafiste pour la Predication et le Combat (GSPC) with Al Qaida has led to the emergence of the AQIM terrorist group. This has drawn attention to itself recently via some bloody attacks. "Organisations like AQIM also have network contacts in countries in Western Europe, and recent arrests in Austria and Germany show they also form a potential threat to the Netherlands."

Due to the regional mutual links between North African countries, Verhagen considers it "important to work closely with countries like Morocco and Algeria to reduce terrorism in the region and the influence of AQIM." Cooperation with Morocco has been stepped up in the past year. "The Netherlands is now in talks with Algeria to arrive at a similar partnership arrangement." This focuses on tackling radicalisation via the Internet and in prisons, and tackling the financing of terrorism, document fraud and detection of explosives.

In general, Verhagen places "great value on tackling the underlying factors" that contribute to extremism and terrorism. For this, he has three policy goals. These are "fostering the dialogue between cultures, encouraging reforms in Islamic/Arabic countries and removing the negative perceptions of the West in the Islamic/Arabic world, among other means by using public diplomacy." In combating terrorism, "respect for human rights is paramount."

Meanwhile, Verhagen is working on an anti-terrorism institute to be based in the Netherlands. CDA MP Coruz requested this in a Lower House motion in April. According to Verhagen, "the government will carry out further research to achieve this. I hope to be able to tell you more about this within a few months," he wrote to the House.

Source: NISNEWS

Liechtenstein bank data expose Indian tax evaders

John Samuel Raja D / New Delhi August 18, 2008

The Indian government has received sensitive information from its German counterpart regarding tax evaders, who have channelled money in a tax haven bank in Liechtenstein, a small European country known for hosting such banks, and it is unwilling to make these details public.

It is not known at this point of time whether the information exchanged between the two countries contain details of account holders from India.

It all started in February this year, when a former employee of LGT Bank in Liechtenstein sold data on about 1,400 people to tax authorities across the world. This was followed by investigations by Germany, the US, the UK, Australia, Italy and others. After receiving the stolen data, the German government initiated action against around 600 taxpayers for possible tax evasion. It has reportedly offered to provide data to any country that seeks information.

Subsequently, India’s finance ministry wrote its first letter to German authorities in February 2008 seeking information on Indian account holders and followed it up with another letter in June 2008, the government disclosed in a reply to a Right to Information (RTI) application filed by the Indian-chapter of Transparency International.

When Transparency International asked for copies of correspondence between the two governments and the list of account holders in LGT Bank, the finance ministry replied saying that the exchange of information between India and Germany is covered under Double Taxation Avoidance Agreement (DTAA), which prohibits countries from sharing information.

“It’s not acceptable that the government is not disclosing the correspondence with the German government,” said Anupama Jha, executive director of Transparency International India.

In an e-mail response to a questionnaire sent to them, LGT Group said Indian authorities have not contacted them so far. “Due to client confidentiality laws, we are unable to disclose any client names. Also, with regard to stolen client data, we do not provide any nationality break-downs”, LGT spokesperson Christof Buri said. The German government did not respond to the questionnaire.

If the German government had given details of Indian account holders in LGT Bank, which is owned by the princely house of Liechtenstein, it will help domestic tax authorities to investigate tax evasion for money deposited in tax haven destinations. Tax haven locations thrive mainly because of difference in tax rates, often levying nil or very low taxation. Banks that operate in these locations are alleged to create complex offshore structures that will enable their clients to hide the assets from tax authorities.

This sort of tax evasion, according to a report prepared by the US senate sub-committee last month, had estimated that it cost US taxpayers $100 billion every year. LGT Group was one of the two entities named in the report.

But LGT denied the charges, saying, “Liechtenstein has very strict money laundering and KYC (Know Your Customer) regulations in place, and clients of LGT Group (as of any other Liechtenstein bank) are obliged to disclose the beneficial owner and have to give detailed information regarding the source of their assets”. But it said LGT is neither responsible for nor in control of the tax compliance of its customers.

LGT Group is a wealth and asset management group with or $91.5 billion of assets under its management.

Source: Business Standard

EU to tighten screw on Tehran bank

By Daniel Dombey in Washington, Financial Times, 15 May 2008

Bank Melli, Iran's biggest commercial bank, is set to be banned from operating in the European Union under proposals in the final stages of discussion in Brussels.

At present, the bank operates branches in the City of London, France and Germany, so blunting American calls for other jurisdictions to break off ties with Iranian institutions, particularly in the Gulf.

"It is important for the EU to come to agreement on stepping up financial pressure on Iranian banks as a means of demonstrating to the Iranian regime how seriously we take their nuclear proliferation," said a European diplomat.

But the time and effort it has taken to get agreement on the move, which comes after a year-long push by the US and its allies, highlight the problems Washington may face in its quest to win international support for tougher sanctions and so convince Tehran to rein in its nuclear programme.

"Many people around the world are looking to Europe on this issue," Stuart Levey, US treasury undersecretary, told the FT. "What Europe does is quite important."

The US effort dates back to last summer, when negotiations began on a UN Security Council resolution that Washington and its allies wanted to prevent Melli and another Iranian bank, Bank Saderat, from doing business internationally.

In October, the Bush administration intensified its effort with unilateral sanctions against a number of Iranian institutions – including both Melli and Saderat – measures that Washington pushed other jurisdictions to emulate.

"We call on responsible banks and companies around the world to terminate any business with Bank Melli, Bank Mellat [another Iranian bank], Bank Saderat, and all companies and entities of [Iran's] Islamic Revolutionary Guards Corps," Hank Paulson, treasury secretary, said on that occasion.

However, Washington found itself caught in a "catch-22" when it pushed the UK, its closest ally, to close Melli and Saderat's operations in London. Britain said it could act only as part of a general EU decision and, within the EU, countries such as Germany, Austria, Spain and Italy called for a UN decision before they would proceed.

Seeking to break the impasse, the US, Britain and France finally won agreement on a UN Security Council resolution in March that merely called on member states to exercise "vigilance" over Iranian banks, especially Bank Melli and Bank Saderat, due to what it said was their link to proliferation and Iran's nuclear programme.

"It's pretty clear that the US had hoped that this would happen more quickly and perhaps be a little bit more robust," said Mr Levey.

Diplomats said the UN resolution was designed to "open the door" to an outright EU ban on the banks' subsidiaries in Europe. However, the EU has been reluctant to take action against Bank Saderat, which is principally faulted by the US for funnelling funds to Hizbollah, the Lebanese Shia movement. The Islamist organisation is not on the EU's list of proscribed terrorist organisations.

Throughout the past year, Iran has continued to expand its nuclear programme, announcing plans last month to install 6,000 new centrifuges to enrich uranium – although many western diplomats and analysts question their efficiency.

While Iran insists its programme is purely peaceful, the US and its allies accuse it of seeking to develop nuclear weapons.

US diplomats add that at present they are reluctant to embark on an attempt to pass another UN Security Council resolution because of the risk that it will provide meagre returns while highlighting differences with Russia and China, which are sceptical about further sanctions.

But Mr Levey said the financial sanctions, international warnings about the risk of money laundering and terror-financing in Iran, and related moves by international banks to scale down business with Tehran had had a big impact.

"It certainly has made the cost of financing [in Iran] to the extent that anyone has offered it at all, much more expensive," he said.

http://money.ninemsn.com.au/article.aspx?id=563862