Two Lebanese currency traders deny U.S. charges of criminal links

Two firms designated by the U.S. Treasury for their alleged roles in an international drug trafficking and money laundering ring denied Thursday involvement in illegal activities.

The U.S. government took the decision Wednesday to label Ayman Joumaa, as well as nine people and 19 companies connected with him as Specially Designated Narcotics Traffickers in a racket which reportedly netted as much as $200 million a month.

Two Lebanese currency traders, Hassan Ayash Exchange and Elissa Exchange, which were both named in the Treasury’s designation, denied knowledge of Joumaa’s activities.

“We are terribly shocked by this news. I don’t know how our company’s name got involved in this work and the reports,” Iman Kharoubi, of Elissa Exchange, told The Daily Star.

“We work in Lebanon [and The Democratic Republic of] Congo and Benin in Africa. But we do not know who Ayman Joumaa is; we don’t have anything to do with him.”

Hassan Ayash, the owner of the exchange firm, denied any wrongdoing, but did admit to knowing Joumaa, who the U.S. designated under the Kingpin Act and will now struggle to access international financial transactions.

“For us it was a surprise today to hear about this story,” Ayash told The Daily Star. “We have no knowledge of where Ayman Joumaa is currently and we have no contact with him. But we know him in person.”

Beirut’s Caesar’s Park Hotel was also designated by the Treasury after it was alleged Joumaa, the manager and CEO, “uses [the hotel] as a location to broker drug trafficking and money laundering activities.” The hotel declined to comment on the accusation.

Both exchange companies have contacted Lebanon’s Central Bank for advice following financial sanctions, but Ayash was not unduly worried about the potential negative effect U.S. punitive measures could have on business.

“Actually there would be no consequences whatsoever on our work, since our work is transparent and we work with several banks in the U.S.,” he said.

Kharoubi was less optimistic. “Our transactions are clear and transparent, but our work would be terribly affected,” he said. “Our transactions go through several U.S. banks and car companies all over the United States. Under U.S. government supervision, our products and cargos are monitored within the United States.”

Washington has said it would reconsider its financial support for Lebanese institutions if a cabinet blessed by Hezbollah is formed by Prime Minister-designate Najib Mikati.

Both firms said the financial measures taken against them were unlikely to be linked to cabinet uncertainty.

“We are not affiliated with any party in the country. I do not think that this is related to regional politics,” Kharoubi said.

“It is too early yet, since the news just came in, to actually know if there are any political and economic indications in the American reports,” Ayash added. “We cannot say whether this action is related to the recent developments in Lebanon.”

The United States has already blacklisted several Lebanese companies for their suspected links to Hezbollah. – Additional reporting by Van Megeurditchian

Source: The Daily Star

US couple pleads guilty to funding Hezbollah

By JPOST.COM STAFF

Report: Married couple with dual Lebanese, US citizenship admits they planned to provide terrorist group with up to $1 million.

Hor and Amera Akl, a married couple from the United States, pleaded guilty pleaded guilty on Monday to charges of planning to courier money to Hezbollah, the Associated Press reported. The couple had been planning to send up to $1 million to the US-classified "terrorist organization" throughout the year, federal prosecutors said.

The plea deal was was meant to save Hor and Amera Akl, parents of three children and dual American and Lebanese citizens, from life sentences.

An FBI agent reportedly gave the couple their first $200,000 shipment that was to be hidden in an SUV prior to their arrests last June, the Associated Press reported the US government as saying. Hor Akl had traveled to Lebanon in 2010 to arrange the transport, and when he returned claimed he had met with Hezbollah officials.

The Akls, who were expected to earn $200,000 in fees to ship the funds, pleaded guilty to conspiracy to provide material to a foreign "terrorist organization," and Hor pleaded guilty to money laundering, bankruptcy fraud and perjury charges as well.

In return, prosecutors dropped an arson charge against both individuals that would have landed them an obligatory 10-year sentence and a money laundering charge against Amera Akl. The couple could have faced 30-year sentences if they had been convicted of all charges.

Instead, Hor Akl faces seven years in prison while Amera faces up to four.

Amera Akl is set to be sentenced June 20, while her husband still lacks a sentencing date, the Associated Press said. They remained free on bail after their pleas.

Source: The Jerusalem post

Lebanese bank denies U.S. charge of money laundering

A Lebanese bank has denied accusations by the U.S. Treasury Department that it is involved in laundering hundreds of millions of dollars on behalf of a drug kingpin -- and rejected claims it has links with Hezbollah, the Lebanon-based militia.

On Thursday the Treasury described the Lebanese Canadian Bank in Beirut as a "financial institution of primary money laundering concern." The Treasury said it had reason to believe that managers at the bank were complicit in money laundering by Ayman Joumaa, an alleged trafficker accused by U.S. authorities of shipping drugs from South America to Europe and the Middle East through west Africa.

The Treasury also said its action in designating the Lebanese Canadian Bank (LCB) exposed links between the bank and Hezbollah -- which is listed as a terrorist organization by the United States. Designation means that U.S. persons are prohibited from conducting financial or commercial transactions with individuals listed, whose assets under U.S. jurisdiction are frozen.

U.S. Under Secretary for Terrorism and Financial Intelligence Stuart Levey said: "Any financial institution that collaborates in illicit conduct on this scale risks losing its access to the United States."

The bank's chairman, Georges Zard Abou Jaoude, told CNN Friday that the bank had no relationship whatsoever with Hezbollah nor to the best of its knowledge with anyone designated by the U.S. Treasury Department. Jaoude said the bank had identified an account in Joumaa's name but it had not been used in four years. It had notified Lebanese regulators about the account, and the bank's books had been regularly inspected by the Special Investigation Commission, a Lebanese task force set up to counter money laundering.

The Treasury said Joumaa's network "launders hundreds of millions of dollars monthly through accounts held at LCB, as well as through trade-based money laundering involving consumer goods throughout the world." In its statement issued Thursday, the Treasury estimated that as much as $200 million was being laundered on a monthly basis. "At least one of the individuals involved in this global drug trafficking and money laundering network has worked directly with LCB managers to conduct his transactions," the Treasury said.

The U.S. Drug Enforcement Administration, which was also involved in the investigation, said: "The Lebanese Canadian Bank for years has participated in a sophisticated money laundering scheme involving used cars purchased in the United States and consumer goods overseas."

The Treasury said the bank's links to Hezbollah included a subsidiary in Gambia called Prime Bank, formed in 2009, which it said was "partially owned by a Lebanese individual known to be a supporter of Hezbollah. "

Jaoude told CNN the bank rigorously adhered to all blacklists published by financial authorities around the world. He said the bank had not been contacted in advance by the U.S. Treasury's Office of Foreign Assets Control before Thursday's announcement and he was urgently trying to contact U.S. authorities. "All our books are open to the American Treasury," Jaoude said. "We have to clear our name," he said.

In its most recent annual report, the bank said "it is fighting money laundering by complying with international and [Lebanese] Central Bank circulars."

The Lebanese Canadian bank has 35 branches in Lebanon, as well as its subsidiary in Gambia and an office in Canada. The bank has grown quickly in recent years, from assets of $2.83 billion in 2005 to $5.18 billion in 2009.

Ayman Joumaa was designated in January -- along with nine individuals and 19 entities connected to his drug trafficking and money laundering. A Treasury statement said he "coordinated the transportation, distribution, and sale of multi-ton shipments of cocaine from South America and has laundered the proceeds from the sale of cocaine in Europe and the Middle East, according to investigations led by the Drug Enforcement Administration." Joumaa's whereabouts are unknown. He is believed to hold Lebanese and Colombian passports.

One of the entities designated along with Joumaa was a company that runs a used car business in Benin and Congo out of southern Lebanon. Its manager, Iman Kharoubi, told Lebanon's Daily Star last month: "We work in Lebanon and Congo and Benin in Africa. But we do not know who Ayman Joumaa is; we don't have anything to do with him." CNN's attempts to reach Kharoubi were unsuccessful.

For several years, U.S. authorities have alleged that Hezbollah is profiting from drug trafficking from South America to Europe via west Africa. In June 2008, the U.S. Treasury Department designated two Venezuelans of Lebanese descent as Hezbollah financiers and supporters.

Source: CNN

The New UN Sanctions Resolution Against Iran

The UN Security Council approved a resolution on June 9th imposing a fourth round of sanctions on Iran in response to its continued nuclear enrichment program in violation of prior Security Council resolutions. The vote was 12 in favor, 2 against (Brazil and Turkey) and 1 abstention (Lebanon).

The new resolution imposes new financial restrictions on Iran, expands an existing arms embargo, and authorizes greater stop and search of Iranian cargo ships. Targeted sanctions on specific individuals and entities were expanded. The resolution also includes measures directed against Iran’s Revolutionary Guard.

While the United States, Great Britain and France were its strongest sponsors, China and Russia also expressed their verbal support along with their votes, although the Russian ambassador added a major caveat in his response to a reporter’s question about Russia’s prospective sale of a sophisticated anti-aircraft system to Iran.

Lebanon’s decision to abstain was a pleasant surprise, considering the influence of Iran-backed Hezbollah in the Lebanese government. However, Brazil and Turkey as expected opposed the new resolution on the grounds that it could undermine the proposed nuclear fuel swap agreed by the two countries with Iran last month. They seemed to forget that the European Union has been trying to negotiate with Iran since 2005 and the Obama administration waited 18 months while trying to engage Iran before seeking passage of this resolution. Only when new sanctions became a real possibility did Iran come around to the fuel swap concept that it had first agreed upon and then promptly reneged on last fall.

Rice’s Positive Spin

U.S. Ambassador Susan Rice told reporters after the vote that the “resolution is strong, it’s tough and it’s comprehensive. And it is something that Iran fought very hard to prevent passage today. The effort, the time, the money, and the poise that they employed, to try to prevent this resolution’s passage only underscores their understanding, that this is a major blow.”

Despite the ineffectiveness of the three prior resolutions, Ambassador Rice expressed confidence that the cumulative effect on Iran of all the resolutions is “harmful and hurtful.”

Iran’s Rebuke

Iran remains unbowed. Its representative told the Security Council after the vote that it had no intention of changing its present course. He accused the United States and Great Britain in particular of continuing a long pattern of interference in Iran’s affairs and displaying a double standard vis a vis Israel. Ambassador Rice told reporters that these comments were “reprehensible, offensive, and inaccurate.”

Stronger Resolution on Paper

On paper at least, the new resolution does appear to represent a significant move forward from the prior three. More specifically, the resolution prohibits Iran from investing in sensitive nuclear activities abroad, like uranium enrichment and reprocessing activities, as well as activities involving ballistic missiles capable of delivering nuclear weapons. The ban also applies to investment in uranium mining.

States are prohibited from selling or in any way transferring to Iran various categories of heavy weapons (battle tanks, armored combat vehicles, large caliber artillery systems, combat aircraft, attack helicopters, warships, and certain missiles or missile systems). States are similarly prohibited from providing technical or financial assistance for such systems, or spare parts.

The resolution also sets up a new cargo inspection framework. States are expected to inspect any vessel on their territory suspected of carrying prohibited cargo, including banned conventional arms or sensitive nuclear or missile items. States are also expected to cooperate in such inspections on the high seas.

States are called upon to prevent any financial service and freeze any asset that could contribute to Iran’s proliferation.

Resolution targets the Islamic Revolutionary Guard Corps

Most significantly, the resolution targets the Islamic Revolutionary Guard Corps (IRGC) for its role in proliferation and requires states to mandate that businesses exercise vigilance over all transactions involving the IRGC. Fifteen IRGC-related companies linked to proliferation will have their assets frozen. The IRGC is the major power center in Iran’s economic and military spheres as well as one of the government’s primary instruments for suppressing political dissent. Impairing the IRGC’s freedom of operations will be a significant accomplishment, if successful.

The Proof Will be in Enforcement

UN Security Council sanctions resolutions against Iraq, North Korea and Iran have had a bad track record in actual practice. The resolutions have been easy for the sanctioned countries to evade, through the use of multiple front entities, money laundering and trading partners unwilling to give up short term advantage for longer term peace and security.

Also, enforcement of the cargo inspection at sea will be a challenge if Iran, as expected, refuses to cooperate. When the French UN ambassador, for example, was asked what measures France would be willing to take in such a scenario, he refused to answer what he called a “hypothetical question.”

Most ominously, the Russian UN ambassador told reporters that Russia did not consider the sale of its sophisticated S-300 anti-aircraft system to Iran to be within the resolution’s scope. The S-300 missile defense system would no doubt be used by Iran to shield its nuclear sites against a potential air strike, should military force become necessary to stop Iran from producing nuclear bombs. The Russian ambassador is technically correct because the resolution’s ban on the transfer to Iran of certain missile systems is written in such a way that it creates a big loophole for Russia to walk through in delivering to Iran its ground-to-air missiles, including its S-300 anti-aircraft missiles and anti-missile interceptors.

The Obama administration will spin the latest sanctions resolution against Iran as a major diplomatic triumph and a significant obstacle in the way of Iran’s progress towards achieving a nuclear arms capability. I hope they are right. However, until the S-300 loophole is closed; until the U.S. and its allies figure out a way to effectively stop evasions of the sanctions; and until enough countries show that they are willing to enforce the cargo inspections, the Obama administration might want to wait before it celebrates.

Source: Canada Free Press

Brennan: Al-Qaeda Affiliates Turning To Crime For Funding

U.S. President Barack Obama's chief counterterrorism adviser says that with Al-Qaeda's core under financial strain, its affiliates are increasingly turning to crime to fund their operations. 

Deputy National Security Adviser John Brennan made the remarks in Washington at a Treasury Department symposium titled "Ten Years Later: Progress and Challenges in Combating the Financing of Terrorism Since 9/11."

"Reacting to Al-Qaeda's core financial difficulties, its affiliates in East Africa and on the Arabian Peninsula have come to rely less on support from the Al-Qaeda network as they plan and mount terrorist attacks," Brennan said. 

"While the Al-Qaeda core continues to provide strategic guidance, some affiliates now instead have turned to crime to generate funding -- particularly kidnapping for ransom, control of territory, extortion, and at times, drug trafficking." 

Brennan said that the trend is due to pressure exerted on the terror network by sanctions and other measures that have cut off Al-Qaeda from its financiers or disrupted the funneling of money within the organization. 

He also said the Arabian Peninsula "remains the most important source of financial support for Al-Qaeda and its affiliates and adherents worldwide," but praised Saudi Arabia and the United Arab Emirates for making progress. 

Brennan also singled out Iran for its support of Hamas and Hizballah. 

Source: RFERL

Paraguay called financial hub for terror and crime

Ralph Nieves, a wiry ex-NYPD narcotics detective, lived through the aftermath of Sept. 11, 2001, in Manhattan. That is why what he discovered about a particular part of Paraguay during a recent assignment there has so disturbed him.

Working under a U.S. government contract to carry out polygraph examinations of public officials in the country, Nieves said he discovered evidence of pervasive corruption among some police and military units.

It is a situation other law enforcement officials believe has contributed to parts of Paraguay being a terrorist haven where al-Qaida, Hezbollah and allied groups have been for years.

As a result, Paraguay's borders with Brazil and Argentina -- an area called the "tri-border" -- are being increasingly viewed by investigators, as well as American diplomats, as the vulnerable underbelly of the U.S. Ciudad del Este, Paraguay's second largest city,which is suspected of being a financial hub for terror and organized crime groups.

Some American investigators also believe the area's porous borders make it an ideal springboard for terrorists to make their way to the U.S. circuitously through Mexico and the Caribbean by using a variety of smuggling venues.

"Every major criminal organization in the world has a criminal representation in Ciudad del Este," Nieves, 63, said in a recent interview.

The lawlessness of the region makes it a threat for future terrorist financing and action in New York, Nieves said. He isn't alone in his concerns.

"It is being watched," Rep. Peter King, the ranking Republican on the House's Homeland Security Committee, told Newsday recently when asked about the tri-border zone.

Hezbollah, an umbrella organization for Shia Muslims, which started in Lebanon, is believed to have laundered $10 million annually through the area, King said.

Martin Ficke, former head of Immigration and Customs Enforcement in New York and now director of operations for the Jericho-based investigative firm SES Resources Ltd., said the tri-border is a continuing concern for money laundering. Ficke, who worked with the El Dorado money laundering task force, said agents were looking to see how readily terrorists could rely on narcotics networks in Paraguay to move cash to support terror operations. He wouldn't comment further.

Officially, the U.S. Department of State says southern Paraguay has yet to sustain an "operational" presence for al-Qaida, Hezbollah and Hamas. King also doesn't believe al-Qaida is present in the area. But there are documented cases where members and sympathizers of Hamas, a militant Palestinian organization, and Hezbollah have engaged in money laundering, extortion, bombings and other crimes inside Ciudad del Este and surrounding areas. Back in the 1990s, suspects in the bombings of South America's Jewish communities were traced to the area.

Some U.S. officials also believe an al-Qaida ally, a shadowy terrorist group known as Lashkar-e-Taiba, which became active in Kashmir in the 1990s, is now operating in the region. Earlier this year, a Manhattan federal judge sentenced a Baltimore man to 15 years in prison for traveling to Pakistan for terrorism training at one of the group's camps.

A report prepared by the U.S. Embassy in Paraguay in April said the country doesn't have effective ways to deal with money laundering and terrorist financing but does try to cooperate in counterterrorism efforts. Judicial and police corruption were concerns, said the report.

In May, MSNBC ran a brief interview by correspondent Pablo Gato with a young Arab Muslim sympathizer of Hezbollah in Ciudad del Este who threatened to attack the U.S. if Iran was targeted.

"In two minutes, Bush is dead," the man told MSNBC of the threatened consequences of a U.S attack.

While those remarks seem like braggadocio, some U.S. officials have been wary of Hezbollah members infiltrating the United States through Mexico to carry out acts of terror. Washington has been pouring millions into Paraguay to try to strengthen its legal institutions, which is why Nieves, who is a private investigator in the Bronx, was working there.

Nieves took polygraph exams of nearly 80 cops, customs officials and military officers. They were applicants for positions in a special customs task force aimed at improving border controls in Paraguay that was to be funded by American aid dollars.

According to Nieves, one of a few U.S.-based Spanish-language polygraphers active in the business, the officials easily opened up to him. After Nieves assured them that admissions of participating in routine graft -- known locally as "la coima" -- wouldn't get them in trouble, the applicants said they believed criminals were tipped off to investigations by law enforcement officials. In some cases, local prosecutors warned smugglers of raids so they could dispose of contraband, Nieves said.

One customs officer said that some higher-ranked customs officials knew all of the organized crime leaders and provided them with information. Some national police also took part in executions on the border with Brazil near the town of Pedro Juan Caballero, said the official, adding that the killings involved disputes over smuggled goods.

The applicants painted a picture of a wild-west atmosphere where legitimate law enforcement was intimidated by criminals and corrupt higher officials.

"They mentioned terrorists, every organized crime group, al-Qaida, the Chinese," recalled Nieves of his debriefings.

One American law enforcement consultant who didn't want to be identified because he does a lot of business in Paraguay said the country's customs service is prone to corruption because of the low wages officials are paid. But even higher pay won't bring speedy reform, he said.

"They don't look at it as corruption. It is part of the culture," he said. "Everybody takes a piece of the government income."

"Most of those people who were coming forward were decent people. Unfortunately, the circumstances are overwhelming for them," Nieves said about the corruption.

Nieves thinks the United States could benefit by developing its own network of paid informants within Paraguay's customs and border police as an early warning system against terrorism.

"Everyone I met were people we could flip," he said.

http://www.newsday.com/news/nationworld/ny-nypara0101,0,7656260.story

Toronto non-profit raised millions for Tamil Tigers

Stewart Bell, National Post

A Toronto non-profit group wired more than $3-million to overseas bank accounts, some of them linked to the Tamil Tigers, before it was shut down by the government in June for alleged terrorist financing, says an RCMP report released yesterday.

The report, marked "Secret" but unsealed by order of a Federal Court judge, provides the first detailed look at the banking activities of the World Tamil Movement (WTM), a Toronto-based group accused of bankrolling Sri Lanka's Tamil Tigers guerrillas.

Most of the money, $1.9-million, went to an account at the Bumiputra Commerce Bank in Kuala Lumpur, Malaysia, that the RCMP report says "is utilized as a vehicle to forward money to the LTTE [Liberation Tigers of Tamil Eelam] from Canada."

The 83-page financial report is the fruit of two years of analysis of banking records seized by Canadian anti-terrorism police who are investigating a financial network run by supporters of the Tamil Tigers that allegedly raised money in Canada to buy arms for the guerrillas.

"The bank records seized ... demonstrate that the World Tamil Movement has developed an elaborate machine like entity that moves throughout the Greater Toronto Area collecting funds with extreme proficiency," the police report says.

Stockwell Day, the Public Safety Minister, announced on June 16 that his government had added the WTM to Ottawa's official list of terrorist groups, alongside the likes of Al-Qaeda, Hamas and Hezbollah. The WTM is the first Canadian community group to be listed.

The WTM has denied any involvement in terrorist fundraising and vowed to challenge the government's decision, and at a large outdoor rally in Toronto on July 5, Tamils waved Tamil Tigers flags and endorsed a statement condemning Ottawa's decision to ban the WTM.

The Minister has accused the WTM of transferring money to LTTE bank accounts in Sri Lanka, but the RCMP's Feb. 1, 2008, financial report paints a more detailed picture of a complex network made up of 20 Canadian bank accounts.

Five banks held the accounts: Toronto Dominion, Bank of Nova Scotia, Royal Bank, CIBC and the National Bank of Canada. The Canadian account holders wired money regularly to accounts in Malaysia, Singapore, the United Kingdom and Tamil Tigers-controlled areas of Sri Lanka.

RCMP Corporal Deanna Hill, the author of the police report, wrote that the WTM's financial set-up was "congruent with the money laundering techniques often employed by organized crime groups.

"I also believe that the number of accounts alone demonstrate that the World Tamil Movement has utilized the Canadian banking system to raise funds in a manner that is best suited to financing the terrorist activities of the LTTE."

The Tamil Tigers have been fighting for 25 years for an independent homeland for Sri Lanka's ethnic Tamil minority, which has faced discrimination under the island's Sinhalese majority.

In addition to fighting a conventional guerrilla war, however, the Tigers also employ terrorist tactics, such as suicide bombings and political assassinations, which has landed them on international terrorist lists, Canada's included.

The RCMP began investigating the Tamil Tigers' Canadian fundraising network in 2002, focusing on the WTM's large head office in Toronto and its smaller branch offices in Montreal and Vancouver. Police raided the Toronto and Montreal offices in 2006.

Police seized letters from the Tamil Tigers leadership thanking Canada for its donations, explaining how the money had been used to purchase weapons, and asking for more. But much of the police evidence appears to have come from a study of bank accounts held by the WTM and its officers.

The Project Osaluki financial report claims the WTM's most lucrative fundraising method was a pre-authorized payment program, in which the group persuaded hundreds of its supporters to sign forms allowing money to be withdrawn from their bank accounts each month.

The WTM took in up to $763,000 a year using the payment scheme. On a single day in 2005, the WTM withdrew $63,528 from 1,582 bank accounts. "It is obvious from the amounts collected with this method that the pre-authorized payment scheme is effective, timely and spares valued resources," says the RCMP report.

Most of the forms had been signed in Canada but police also interviewed witnesses who said they had signed them at Tamil Tigers checkpoints in Sri Lanka. "Upon their return to Canada, these persons were visited by representatives of the World Tamil Movement to exact the collection of the monthly stipend," Cpl. Hill wrote.

In addition, the WTM made money through bake sales, car washes, newspaper sales, merchandise sales and festivals, the report says. "To date, the total amount of Canadian dollars that have been forwarded to accounts internationally from accounts controlled by the World Tamil Movement in Canada is $3,101,803.33."

Source: National Post

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

Analysts: al-Qaida awash in funds despite meltdown

The meltdown in the global financial system may spare al-Qaida.

Buoyed by years of record oil revenues in the Gulf and Afghanistan's booming drug trade, al-Qaida and other Islamic terrorist groups are thought to have access to strong potential funding sources — and thus might dodge fallout from the global crunch devastating others.

Yet all is not lost in the effort to rein in money for terror groups. One principal reason the groups may avoid fallout now is because they've been forced to pull away from banks, relying instead on less-efficient ways to move money.

Those methods — including hand-carrying money and using informal money-transfer networks called hawalas — likely will shield extremists from the current banking system turmoil.

But the methods also are slower and less efficient ways to move money — and thus could hamper efforts to finance attacks, analysts say.

"It would be inconceivable that large amounts of (terror-linked) money would transit through the formal financial system, because of all the controls," said Ibrahim Warde, an expert on terrorist financing at The Fletcher School at Tufts University.

The question of where al-Qaida and sympathizers get their money has long been crucial to efforts to prevent terror attacks. A 2004 U.S. investigation found that banks in the United Arab Emirates had unwittingly handled most of the $400,000 spent on the Sept. 11 attacks.

After the attacks, the U.S. made an aggressive push to use law enforcement techniques to disrupt terrorist financing networks and worked with allies to improve their own financial and regulatory institutions.

Despite those efforts, wealthy donors and Islamic charities in the oil-rich Gulf, especially in Saudi Arabia, continue to be "one of the most significant sources of illicit financing for terrorism," said Matthew Levitt, a former U.S. Treasury Department terrorism expert now with The Washington Institute for Near East Policy.

The Saudis have long insisted they are doing all they can to rein in terror financing, and U.S. officials have praised their efforts.

But, under a system known as zakat, wealthy Muslims are required to give a portion of their money to the poor. Much of that is given to Islamic charities, and U.S. officials say at least some of the charities money continues to be channeled to al-Qaida and other terror groups.

Saudi Arabia and other Gulf countries have benefited over the last two years from a surge in oil prices from about US$60 per barrel at the beginning of 2007 to more than US$145 per barrel in the middle of this year.

Oil prices have fallen almost 50 percent in the last few months in response to the global financial crisis, but not before the run-up generated hundreds of billions of dollars.

Levitt said the covert nature of terrorist financing makes it difficult to determine a direct correlation between rising oil revenues over the last few years and the amount of cash al-Qaida has on hand.

But "it stands to reason that if there is more oil revenue, there will be more revenue for all kinds of things licit and illicit," he said.

Al-Qaida and the Taliban have also benefited from the drug trade's growth in Afghanistan after the U.S.-led invasion in 2001 — a booming business that likely won't be affected by the global slowdown.

Opium cultivation has fallen slightly this year but is still about 20 times higher than in 2001, according to the U.N. Office on Drugs and Crime.

Former U.S. drug czar Gen. Barry McCaffrey, who now works with NATO, issued a report on Afghanistan in July saying al-Qaida and the Taliban "are principally funded by what some estimate as $800 million dollars a year derived from the huge $4 billion annual illegal production and export of opium/heroin and cannabis."

Al-Qaida and other extremist groups have gloated in recent weeks about the West's financial woes, painting the crisis as either divine punishment for supposed wrongs or the last gasps of a dying empire.

An American al-Qaida member, Adam Gadahn, said in a video released this month that "the enemies of Islam are facing a crushing defeat, which is beginning to manifest itself in the expanding crisis their economy is experiencing."

Members of the militant Palestinian group Hamas and hard-liners in Iran also cheered the economic turmoil.

Iran is thought to be the last major government supporter of terror groups. The majority Shiite country is not believed to finance al-Qaida, a Sunni group, but does support the militant Hezbollah faction in Lebanon, which engaged in war with Israel in 2006.

Iran denies the financial crisis is hurting its economy, but falling oil prices will cut into its crude sales, which make up 80 percent of the government budget. It is unclear how that will affect support to Hezbollah.

Despite the apparent glut in potential money for terror groups, Levitt believes anti-terrorism efforts have hampered the groups' ability to transfer money where they want.

Levitt points to several messages from senior al-Qaida leaders in Pakistan and Afghanistan intercepted by the U.S. or released by the terrorist group itself, asking Gulf supporters for more help because of funding shortfalls. Most recently, the al-Qaida leader in Afghanistan, Mustafa Abu al-Yazid, appeared in a May 2007 video saying "the mujahideen of the Taliban number in the thousands, but they lack funds."

But Warde and other analysts are not convinced al-Qaida is really hurting.

"Anybody who is involved in fundraising of any sort is never going to say we have enough money, so I think it is a silly argument to say that because there is this intercept ... it is proof that everything we've done has succeeded brilliantly," said Warde.

Source: Ohio.com