Citizens' Issues
How terrorists finance their operations
Groups like al Qaeda, al-Shabaab and ISIS use front companies, global trade and bank accounts of religious charities to finance their operations. Detecting this is one of the biggest challenges for anti-money laundering teams across the world
 
To understand how the terrorist organisations finance their operations, Loretta Napoleoni, the Italian bestselling author, economist and journalist studied and interviewed a wide range of terrorist groups globally. This includes the Italian “Red Brigades”, a Marxist organisation to members of Al Arqawi in the Middle East, and the Islamic State of Iraq and Syria (ISIS), a rapidly growing Sunni militant group that is consolidating power throughout Iraq and Syria, and is currently thought to be the richest insurgent group in the world.
 
Terrorism can be a very expensive business, says Loretta.  She has thrown light on how the business model of terrorist organisations has evolved, and how the legitimate global financial system becomes unwittingly complicit as a channel for terrorist financing. 
 
In the course of her research study, Loretta found that there was a link between terrorist organisations with political/ religious ideologies and the business operations needed to finance them. Terrorist organisations operate like any other organisation. They need money to operate. And it is the ideology that defines and determines what these terrorist organisations want to achieve.
 
For instance, we have Islamist/ jihadist armed organisations that want to bring back the Sharia law. They are very expensive to run because they are illegal and therefore, have to constantly operate underground. To fund their activities they have developed predominantly two-fold strategies: one is using illegal activities in order to fund themselves and the other is to use legal activities such as money offered by sponsors, which is clean money until it is used for a terrorist attack.
 
Ideology plays into the ambition of terrorist groups to finance their projects. One can’t have a terrorist organisation without the ideology. It is more than a criminal organisation. A criminal organisation just wants to make money; the terrorist organisation wants to change the political landscape and establish its ideological extremism. They have a political goal to achieve. ISIS and other extremist Islamic groups are successfully raising money for weapons and other nefarious activities/ operations.
 
Organisations like ISIS and most armed organisations in the Islamic world today operate predominantly in cash and the cash comes from different activities, which of course can be robbery, armed smuggling, among other things. ISIS is making a lot of money with that. Then there is ransom for kidnapping, “today’s most significant source of terrorist financing". 
 
The US Patriot Act has made it virtually impossible to move funds from A to B through banks to fund terrorist activities in dollars, though they can still do transactions in other currencies. But illegal economy is based upon the dollar. The US Patriot Act did stop flow of money through banking system. The Act has more or less blocked terrorist access to international banking system and made everything much more expensive and difficult for illegal activities. How do we stop a cash economy like the one ISIS has developed?  It seems almost impossible.
 
Terrorist organisations are certain to continue operating. They are using more and more social media in all of this to recruit sponsors. That is a big problem because social media is a lot more difficult to control. After 9/11 most of the activity took place through web pages and it was easy to shut them down and track them down. Now, you don’t only have web pages, you have Facebook and private to private conversations, you have Twitter. It’s really much bigger as far as communications go. The proliferation of social media makes it harder to control. The following is an extract from Wall Street Journal about the use of Social media.
 
Terrorist financiers take to social media, raising risks for banks – Appeals for donations and fund-raising campaigns for organisations linked to terrorism are appearing on social media tools with increasing frequency. The trend may force financial institutions to look more closely at whether they are analysing and monitoring social media outlets as part of their anti-money laundering/ combating financing of terrorism (AML/CFT) controls, says risk management advisory firm the Castell Group. In some cases, fund-raising appeals posted to social media sites will include explicit listings of banks and account numbers accepting funds transfers. Larger institutions may find themselves at risk due to potential correspondent relationships with regional banks used to collect donations. US Treasury Undersecretary David Cohen highlighted the rise of social networks as a fund-raising tool in recent months, saying they “allow anyone with an Internet connection to set himself up as an international terrorist financier” in a speech in March”.  (Source: The Wall Street Journal).
 
Traditional criminal activities that terrorists may engage in, and that can expose them to potential detection include among many others:
• The drug trade
• Smuggling weapons and other goods
• Bank robberies
• Fraud (e.g. Cheque or credit card, insurance or securities fraud)
 
Groups like Al Qaeda, Al Shabaab and ISIS use front companies, global trade and bank accounts of religious charities to fund their terrorist acts. Detecting this is one of the biggest challenges of AML teams around the world. There is a need to understand current types of terrorist financing threats to financial institutions.
 
Note: A substantial part of this article is based on ideas of Loretta Napoleoni the Italian bestselling author and economist.
 
(Saiyid (SSA) Zaidi is a training and development consultant as well as external subject matter expert at the Educom Group Banker's Academy in New York.) 

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CBI report expose links between Mamata, Saradha group and IRCTC?
A CBI inquiry has revealed links between IRCTC and Saradha Group during the time when Mamata Banerjee was the Railway Minister
 
West Bengal Chief Minister Mamata Banerjee's name has now allegedly got dragged into the multi-crore Saradha chit fund scam, says a report by Zee News.  
 
An inquiry by Central Bureau of Investigation (CBI) into the scam has revealed links between the Indian Railway Catering and Tourism Corp Ltd (IRCTC) and the Saradha Group at the time when Mamata Banerjee was the Railway Minister, the report adds. The IRCTC and a Saradha Group company in 2010, had signed a contract for a tourism project.
 
Saradha Tours and Travels officially organised South India package tours for the IRCTC, as part of the Bharat Tirth scheme launched in the 2010-11 Rail Budget by Mamata Banerjee. The Bharat Tirth scheme envisaged launching 16 special trains connecting popular tourist sites and pilgrimage centres in different parts of the country.
 
Meanwhile, Trinamool Congress on Tuesday claimed that CBI, which is probing the multi-crore chit fund scam, is being used as a political weapon by the Centre. "Earlier CBI was known as the Congress Bureau of Investigation. CBI has not changed its character," Trinamool Congress all-India general secretary Mukul Roy told reporters at the party headquarters in Kollata.
 
While the Left party has demanded a probe into the revelations, union minister of state for Railways Manoj Sinha has ruled out any such inquiry.
 
"When CBI is probing, there is no need for any inquiry by the Railways. Whoever is found guilty in CBI probe, the government will take strict action," Sinha told Zee News.
 
Asked if those at the helm of affairs of the department then would be under the scanner, the MoS said: "I an not taking any names. CBI is inquiring. Whoever is found guilty in the probe, whosoever he may be or she may be, the law will take its own course,” Zee News added.

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COMMENTS

Dev

2 years ago

I happened to read an article written in http://www.haribhakt.com. The article makes serious allegation against her religion. I think it is just a slander job to portray her as anti-Hindu.

Coal supply concerns need quick redressal
Rapid action needed to sort the mess of coal shortage and power generation shut down
 
Recent newsreports indicate the deteriorating conditions in supply of coal leading to shut down of several power generating plants in the country. Apart from this, these reports also indicate specific names of Adani Power, Reliance Power, MahaGenco NTPC and Lanco are on the brink of shut down due to coal shortage.
 
About 38 million tonnes of excavated coal is lying, here and there, and is not being moved to places of need. This huge quantity did not pile up in one day; day after day, because of poor management and terrible planning the coal did not move. The usual excuse of non-availability of rakes would be heard, if an investigation takes place!
 
According to the press, major utilities also appear to have switched off several units due to payment default and technical snags, in addition to the major factor of shortage of coal. Out of the installed capacity of 11,520 MW reports indicate that 7,713 MW cannot generate power due to the reasons stated above, but, primarily, due to coal shortages!
 
This is a sorry state of affairs in managing the coal supplies in the country, though, some of them have been able to obtain imported coal, which are much more costly to use. Reports further indicate that the dry spell has also caused states like UP and Haryana to shut down their power stations, as they were unable to buy from outside to meet their own increasing demands.
 
Under the circumstances, what steps can the government take to overcome the impasse, in the interim?
 
First is the hope that Coal India is fully aware of the actual location of the 38 million tonnes of coal stocks lying in various locations. Second is to have emergency consultations, on a war footing, with the  Railways to make available all the needed rakes at the pile-up points of coal. Third is to have priority movement of these "coal specials" to move these stocks to various power generation points at night - by cancelling most of the passenger traffic, if needed, so that these large coal mountains can be moved to where they are needed.
 
Punitive measures like cutting off power supplies for non-payment of dues may be prudent and needed, but not on a scale that would grind the power system in the country into a halt!
 
Government must hold the officials responsible for this mess by a proper investigation, in due course. This sort of nonsense must stop.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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