5 Algerians In Basque, in Spain Arrested for Supporting AQIM

In light of recent arrests of AQIM connected Algerians in  the Basque area of Spain, I am Wondering About connections between AQIM , ETA and the Basque Separatist movement. Any Comments?


-Shimron Issachar

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By CIARAN GILES, Associated Press – 9 hours ago
MADRID (AP) — Spanish police arrested five Algerians on Tuesday suspected of helping finance an al-Qaida-linked terror group in North Africa.

The arrests took place in four towns in the northern Basque and Navarra regions, the Interior Ministry said in a statement.

The five are suspected of giving logistical and financial support to members of the radical Islamist group al-Qaida in the Islamic Maghreb, or AQIM, which operates in Algeria.

AQIM grew out of the armed groups fighting the Algerian government in the 1990s after elections were canceled by the military in 1991 to stave off a victory for an Islamist political party. The group declared allegiance to al-Qaida in 2006 and changed its name, starting a renewed campaign of bombings and kidnappings across the Sahara.

The group currently holds four French hostages and French officials have called it the biggest terror threat to France and its interests.

The Spanish statement said the five arrested also maintained contacts with other radical Islamists in France, Italy and Switzerland and seized a large amount of documents and computer material.
They were named as Mohamed Talbi, Hakim Anniche, Mounir Aoudache, Abdelghaffour Bensaoula and Ahmed Benchohra, between 36 and 49 years old.
Dozens of suspected radical Islamic militants have been arrested in Spain since the Sept. 11, 2001, terror attacks in New York and Washington, and again after the 2004 commuter train bombings in Madrid.

The Rest @ AP

Money Laundering Networks Being Reestablished

TBDA suggests that visitors who have a history of interest in both Islamist Activity and Islamic finance systems may be attempting to rebuild financial distribution networks, post Usama Ben Laden.

Gadaffi's Libya was Stable if not Free.
It may be that his fall disrupted established Islamist money laundering networks that even he did not know about

The searches are characterized by:

• Avoidance of  Sanctioned countries, banks and businesses
• Interest in Banks who cooperate with Sanctions in principle but not in practice
• Searches are coming from Islamist friendly businesses, not banks

There seems to be special interest in:

• African Arabian Islamic Bank, 
• Monrovia. 
• Liechtenstein 
• Arinco Arab Investment Company
• Vaduz. Islamic Banking System Finance S.A. 

• Vaduz. Luxembourg 

• Bahamas Dar al Mal al Islami
• Nassau Islamic Investment Company Ltd
• Nassau, Masraf Faisal Islamic Bank & Trust
•  Bahamas Ltd. Bahrain  

• Albaraka Islamic Investment Bank, Manama, 
• Bahrain Islamic Bank, Manama, 
• Bahrain Islamic Investment Company, Manama, 
• Islamic Investment Company of the Gulf, Masraf 
• Faisal al Islami, Bahrain. 

• Islamic Bank of Bangladesh Ltd,

• Dhaka. Denmark Islamic Bank International of Denmark, Copenhagen

• Egypt Albaraka Nile Valley Company, Cairo, 
• Arab Investment Bank (Islamic Banking Operations), Cairo., 
• Bank Misr (Islamic Branches), Cairo, 
• Faisal Islamic Bank of Egypt, Cairo, 
• General Investment Company, Cairo, 
• Islamic International Bank for Investment and Development, Cairo, 
• Islamic Investment and Development Company, Cairo, 
• Nasir Social Bank, Cairo. 

• Guinea Islamic Investment Company of Guinea, Conakry, 

• Masraf Faisal al Islami of Guinea, Conakry. 

• India Baitun Nasr Urban Cooperative Society, Bombay. 

• Jordan Islamic Investment House Company Ltd Amman, Jordan 
• Finance House, Amman, Jordan 
• Islamic Bank for Finance and Investment, Amman.   Jordan

• Faisal Islamic Bank of Kibris, (Turkish Cyprus) 
• Lefkosa. Kuwait Al Tukhaim International Exchange Company, Safat.,
•  Kuwait Finance House, Safat. 

• Vaduz, Islamic Banking System Finance S.A. 
• Vaduz. Luxembourg Islamic Finance House, Universal Holding S.A.

• Malaysia Bank Islam Malaysia Berhad, Kuala Lumpur, 
• Pilgrims Management and Fund Board, Kuala Lumpur. 

• Mauritania Albaraka Islamic Bank, Mauritania. 
• Niger Faisal Islamic Bank of Niger, Niamy. 

• Philippines Philippine Amanah Bank, Zamboanga. Qatar 
• Islamic Exchange and Investment Company, Doha, Qatar 
• Islamic Bank. Saudi Arabia 
• Albaraka Investment and Development Company, Jeddah, 
• Islamic Development Bank, Jeddah. 

• Senegal Faisal Islamic Bank of Senegal, Dakar, 
• Islamic Investment Company of Senegal, Dakar.

• South Africa JAAME Ltd, Durban.  

• Bank al Baraka al Sudani, Khartoum, 
• Faisal Islamic Bank of Sudan, Khartoum, 
• Islamic Bank of Western Sudan, Khartoum, 
• Islamic Cooperative Development Bank, Khartoum, 
• Islamic Investment Company of Sudan, Khartoum, 
• Sudan Islamic Bank, Khartoum, 
• Tadamun Islamic Bank, Khartoum, 
• Jersey - The Islamic Investment Company, St Helier,

he Bailiwick of Jersey ( /ˈdʒɜrzi/, French: [ʒɛʁzɛ]; Jèrriais: Jèrri) is a British Crown Dependency^[6] off the coast ofNormandy, France.^[7] As well as the island of Jersey itself, the bailiwick includes two groups of small islands that are no longer permanently inhabited, the Minquiers and Écréhous, and the Pierres de Lecq^[8] and other rocks and reefs.

Jersey and the Bailiwick of Guernsey are often referred to as 'the Channel Islands' but they are not a constitutional or political unit. The three Crown Dependencies of Jersey, Guernsey and the Isle of Man each has a separate relationship to the British Crown.^[9] They are not part of the United Kingdom.^[10] The United Kingdom is constitutionally responsible for the defence of Jersey.^[11] Jersey is not a part of the European Union but has a special relationship with it, being treated as part of the European Community for the purposes of free trade in goods.

• Masraf Faisal al Islami, St Helier. 

Switzerland

• Dar al Mal al Islami, Geneva., 
• Islamic Investment Company Ltd, Geneva, 
• Shariah Investment Services, PIG, Geneva. 

• Arabian Thai Investment Company Ltd, Bangkok.

•  Bank al Tamwil al Saudi al Tunisi. 

• Albaraka Turkish Finance House, Istanbul,
•  Faisal Finance Institution, Istanbul. 

• U.A.E. Dubai Islamic Bank, Dubai, 

• Islamic Investment Company Ltd, Sharjah. U.K. 
• Albaraka International Ltd, London, 
• Albaraka Investment Co. Ltd, London, 
• Al Rajhi Company for Islamic Investment Ltd, London, 
• Islamic Finance House Public Ltd Co., London. 

Alms Still Funding Jihad

Saudi Arabia implemented a number of financial controls by 2004 in response to 9-11.

Many of these measures would be against the law in the US, but the measures (See below) show ways that Salafist Mosque donations were being funneled to al Qaeda and other islamist groups.

Cash collections in Mosques were being taken to Hawalas in Saudi Arabia. The money was being picked up in places like Yemen, India, Pakistan, Iraq, Afghanistan Somalia, Sudan, Algeria. It was very simple to collect for one thing, and then pay for another in a Jihad Country. Many contributors may have know full well what the funds were collected for, with a wink and a nod.

It was even simpler to do this from Western Mosques. Though some Muslim Charities were put out of business since then, and it has become harder to create non-profits and transfer funds, it is not impossible. Suffice it to say that there are still loopholes.

Things to watch:

• cash gift card purchases
• Visa cards issued by jihad friendly banks, especially in South East Asia
• Planned captures of ships off the Somali coast
• Legal Hawalas
• Hawala house accounts in Banks in places like San Marino, Lichtenstein, the Bahamas etc.
• Multi-national Jihad-Friendly Muslim businesses in a variety of ways

There are a long list jihad-friendly multi-national Muslim NGOs who provide funding. While a volunteer travels for that Muslim NGO, they legally can use hawalas to transfer in large amounts of cash that they can use anyway they choose.

-Shimron Issachar

'Department of the Treasury official have listed various recent measures

taken by Saudi Arabia to put a stop to terrorist financing. Most of these measures

have been designed to improve oversight of charitable collections, and include:

• A law adopted in August 2003 making money laundering and terrorist financing criminal offenses.
• A ban on cash collections at mosques and on transfers abroad of charitable funds collected in Saudi Arabia, except with Foreign Ministry approval and subject to stringent reporting requirements.
• A requirement for charitable organizations to have single disbursement bank accounts and an approved official with signatory authority to facilitate tighter controls over such accounts.
• Closure of unlicensed money exchange houses and closer supervision of informal money transfer houses used to send funds abroad, known as hawalas.
• New rules governing the insurance sector and capital markets, and establishment of a financial intelligence unit (the SAFCU) to collect and share information on suspicious financial transactions.

• Vetting of religious clerics and supervision of money given to them by their congregations. The government suspended more than 1,000 clerics in 2003 and 900 clerics so far in 2004 supposedly “on the grounds of negligence.”
• Announcement in early December 2003 of a rewards program, ranging from $270,000 to $1.87 million, for information leading to the arrest of suspects or disruption of terrorist attacks.
• Announcement in late November 2004 that Saudi Arabia will participate in the newly established Middle East and North Africa Financial Action Task Force (MENAFATF).
• Membership in the regional body commits Saudi Arabia to implementing the internationally recognized anti-money laundering and counterterrorist financing standards designed by FATF."

-Congressional Research Service Report, 2004

Islamist Jihad Financiers Being Found in Osama Papers

Terrorist financiers must be under tremendous stress since news broke that U.S. Navy SEALs killed Osama bin Laden and seized hard drives and other electronic media from his safe house.

Intelligence analysts and document exploitation ("Doc X") specialists are reportedly already sifting through this intelligence treasure trove and have found evidence of notional al Qaeda plots, including aspirational plans to attack the U.S. train system, and more. In all likelihood, the files will include clues pointing to bin Laden's money trail as well.

This puts people like Abd al-Hamid al-Mujil in an uncomfortable position. Described by fellow jihadists as the "million-dollar man" for his successful fundraising on behalf of al Qaeda and other jihadi groups, Mujil directed the office of the International Islamic Relief Organization (IIRO), a charity in the Eastern Province of Saudi Arabia. Both he and the IIRO office he headed were designated as terrorist entities by the U.S. Treasury Department in 2006.

But even if being "named and shamed" forced Mujil out of the terror-finance business, there are many others just like him. Just this week,

David Cohen, the head of the Treasury Department's Terrorism and Financial Intelligence branch, told CNN that major donors from the Gulf states remain the key sources of funding for the al Qaeda core. There are no doubt dozens of radical funders now worrying that their names, bank accounts, or addresses will comes up in bin Laden's spreadsheets—or "pocket litter"—and for good reason.

It would not be the first time authorities have recovered revealing documents about al Qaeda's finances in a raid.

• In March 2002, Bosnian authorities raided the Sarajevo offices of the Benevolence International Foundation, a charity designated by the Treasury Department as an al Qaeda front. Among the material found on the seized computers was an al Qaeda memorandum from 1988 or 1989 listing 20 Saudi financial backers described by bin Laden as the "Golden Chain," so named because they were a reliable source of funding for his organization. According to the 9/11 Commission report, the Golden Chain was put together mainly by bin Laden's financial backers in Saudi Arabia and other Gulf states.

But even if the files seized in bin Laden's Abbottabad safe house do not include explicit references to the next "million-dollar man" or "golden chain," they will likely contain information that could help expose the money trail sustaining the al Qaeda core.

1. First, they may point to who covered bin Laden's personal expenses, which could have added up quickly. Think of the 500 euros sown into his clothes, the costs of feeding his 18-person entourage, the salaries of his bodyguards and couriers, the expense of building and renovating his compound, and the cash that may have been needed to bribe Pakistani authorities not to look too closely at his fortified three-story villa.
2. The files may even reveal information about the current balance sheets of al Qaeda, which, as of October 2009, was said to be "in its weakest financial condition in several years."

Even then, though, U.S. authorities were quick to add they were not "taking any victory laps," because there were still likely new donors willing to step in. At the time, Cohen warned that the international community's success in disrupting al Qaeda's finances might only be temporary, because "we have not yet dissuaded nearly enough donors from wanting to give in the first place."

News of the Abbottabad raid alone may dissuade many of those donors in the near term, and the intelligence windfall from the raid may lead to more tangible disruptions of some donor channels. That could place the al Qaeda core under still further financial strain, but it would have little if any impact on the funding of key al Qaeda franchises such as al Qaeda in the Arabian Peninsula (AQAP), affiliated groups like Lashkar-e-Taiba, foreign-directed al Qaeda networks like those recently arrested in Germany, or the homegrown violent extremists like Maj. Nidal Hassan, who present the most immediate terrorist threats to the United States and its allies.

Whereas al Qaeda directly funded and controlled operations from its base in Afghanistan before the 9/11 attacks, today al Qaeda franchises and homegrown extremists are self-financed. We know that al Qaeda provided funding for the East Africa embassy bombings in 1998, the 2000 attack on the USS Cole in Yemen, and the 2001 World Trade Center attacks. Even after 9/11, al Qaeda continued to provide money for operations, such as the $20,000 it furnished for the 2002 Bali bombings.

The terrorist threat is far more decentralized today, and al Qaeda's central command is not funding operations as it once did.

• To help finance the Bali bombings, Jemaah Islamiyah operatives had to resort to robbing jewelry stores because the al Qaeda core's contribution was not enough to foot the bill.
• Al Qaeda in the Islamic Maghreb (AQIM), the group's North African branch, raises significant funds through kidnapping and other types of organized crime.
• AQAP, now based in Yemen, has worked hard to develop its own network of major donors. For example, in September 2009, Saudi security forces found a video clip of AQAP leader and former Guantanamo detainee Saeed al-Shihri making a pitch for money to help "jihad to keep going," calling the need for funding "the core of life and the core jihad."
• a unifying figurehead, Zawahiri is a divisive figure whose presumed accession to the top spot in the al Qaeda hierarchy may well rekindle simmering tensions between the organization's Egyptian and Yemeni factions. Moreover, the al Qaeda core—lacking the power of the purse and stripped of its founding icon—may find itself less able to exert authority over its self-financed franchises. The death of bin Laden does not mark the end of al Qaeda, but it may mark the beginning of the end of its core—and the rise of al Qaeda affiliates and homegrown violent extremists.

Matthew Levitt is director of the Stein Program on Counterterrorism and Intelligence at The Washington Institute, from where this article is adapted.

The Rest @ Security Brief

Matthew Levitt

Al Rashid Trust ( ART) Has a South African Network

Al-Rashid Trust (ART) is a logistics and funding organization posing as a Charity. It works mostly in Pakiistan and Afghanistan. It is one of the significant funders of al Qaeda networks, and possibly the Haggani Network as well. The Interesting note is that it has a South African Network. -Shimron Issachar The Karachi based Al-Rashid Trust (ART) is one of the 27 groups and organisations listed by the US State Department on September 22, 2001, for involvement in financing and supporting a network of international Islamist terrorist groups. In response, the trust, on October 4, 2001, said that it would challenge the US decision in the International Court of Justice (ICJ) at the Hague. Formation Mufti Mohammed Rashid founded the Al-Rashid Trust (ART) on February 13, 1996, in Karachi. The Trust gradually grew to operate 21 branches across Pakistan. A day after the US announcement of the ban on the outfit, the State Bank of Pakistan issued a circular asking banks to freeze the accounts of Al-Rashid Trust. Objectives Described as a ‘welfare organisation’, one of its original charters was to carry out welfare projects within Pakistan, with financial resources provided by public donations. Overtime, the ART expanded its mandate to carry out ‘relief activities’ for Muslims in Chechnya, Kosovo and Afghanistan. The ART perceives the various non-governmental organisations (NGOs) currently working in Afghanistan as ‘enemies of the Muslims’ and media reports have indicated that one of the other significant objectives of the ART is to reportedly push Western NGOs out of Afghanistan. The ART subscribes to the Deobandi school of thought, a trait it shares with the Taliban. The trust also promotes the concept of Jehad among Muslims, especially at times and in places where it perceives the community of faithful is being ‘oppressed’. One of the numerous ART booklets states, "the holy war is an essential element of Islam." "Any Moslem must carry the weapons, even with the mosque, if the need would be felt to make fire on a not-Moslem", states another work written by Mufti Rashid Ahmed. ART literature also denounces the United States for its policies toward Israel, Iraq and Saudi Arabia and praises Islamist terrorists. Among the other ART objectives is providing assistance to ‘illegally jailed’ Muslim prisoners, ‘cleansing’ the media of pornography and creating books "to promote in the people and the elite the fear of the Last [Judgment] Day." Leadership and Structure Headquartered at Karachi, the ART has 21 branches in Pakistan. Mufti (religious leader) Mohammed Rashid is the amir (leader) of the trust. Rashid Ahmed teaches at a madrassa (religious seminary) – Darul Ifta-e-Wal Irshad - that he also runs. Maulvi Suleyman, an important functionary, is reported to be actually managing the ART affairs. Mufti Abu Lubaba is the ideologue, while Maulvi Sibghatullah of the Dar-ul-Uloom (religious school) in Karachi is the Director of ART in Kandahar, the southern Afghan city that served as the headquarters for the erstwhile Taliban regime. Only Mufti Rashid and Lubaba are reported to have had direct access to Osama bin Laden in Afghanistan. Abdul Hadi Mullakhel is the ART representative in Kabul. It publishes an Urdu newspaper Zarb-e-Momin as well as an English paper, Dharb-e-Momin, and also runs a radio station out of Kabul. They carry reports on the Jehadi activities of the Taliban and the Pakistan-based terrorist outfit Jaish-e-Mohammed (JeM). Considered as one of the sectarian publications in Pakistan, Dharb-e-Momin is reported to contain anti-American and anti-Western propaganda. The newspaper has a web-site, which specifically endorses the Taliban’s style of governance and is widely considered to be the mouthpiece of the Taliban. During his detention in Jammu and Kashmir (J&K), JeM chief Maulana Masood Azhar is reported to have sent articles clandestinely to the Al Rashid Trust and these were published in the Dharb-e-Momin. In one of these articles published on October 31,1999, Azhar praised the services of Mufti Rashid Ahmed, opining that due to his services, "the Taliban gained strength and the long porous border of Pakistan became so safe that not a single army guard is needed there. If instead of the Taliban, Ahmad Shah Masood who is the enemy of Pakistan and ally of India had been the ruler of Afghanistan, Pakistan would have been surrounded by enemies on all four sides." Among others, its offices in Pakistan are located at Lahore, Mansehra, Peshawar, Rawalpindi, and Mingora. ART operations in Afghanistan are located at Jalalabad, Kabul, Kandahar and Mazar-e-Sharif. Al-Rashid documents indicate that the Trust secures most of its finances from zakat (annual alms) and overseas donations. However, the sources of donation are kept secret. Linkages The Al-Rashid Trust is reported to be one of Osama bin Laden’s many sources of income. It is closely linked with the Taliban as also with Jaish-e-Mohammed (JeM) and other terrorist outfits active in India’s J&K. The trust’s formation coincided with the Taliban capture of Afghanistan in 1996. Some of its members are alleged to have secured military training in Afghanistan. The ART and JeM are reported to share office spaces across Pakistan with a certain overlapping of cadre strength. Maulana Masood Azhar, JeM chief is a regular writer in the Zarb-e-Momin. The trust is reportedly incharge of the foreign funds of JeM. Mufti Rashid Ahmed is also reported to have appointed Masood Azhar as the Amir of Taliban in Jammu and Kashmir. Mufti Rashid was also instrumental in setting up JeM’s office near Usmani Masjid in Lahore and other places in Pakistan occupied Kashmir (PoK). The ART was initially linked with the Harkat-ul-Ansar (HuA) before the formation of JeM. It is also reported to be linked to the Pakistan-based Lashkar-e-Toiba (LeT). Al-Rashid is also suspected to have provided logistical support to the Taliban and the foreign mercenaries in Afghanistan. The biggest source of funds for the Al-Rashid Trust is the Middle East and Pakistan. It also has a network in South Africa. Pakistani banks – consequent to the September 22, US State Department listing of ART as being involved in financing and supporting a network of international Islamist terrorist groups – froze Al-Rashid's bank accounts. In response, the Al Rashid Trust has said that that its activities, which include providing financial and legal support to jailed Muslim militants around the world, are purely humanitarian. In year 2000, according to Pakistani media reports, Al-Rashid sent US $750,000 in cash to Chechnya after alleging that aid sent to Chechnya through the UN never reached the Chechen Muslims. The amount was reportedly handed over to the head of an unidentified religious party of Chechnya, headed by Sheikh Omer Bin Ismail Dawood and Zelim Khan, the former Chechen President. Al-Rashid is also reported to have sent Rs 20 million in cash to the Taliban and Rs 2.1 million to Kosovo. Activities With charity and relief work as its professed goals, the Al-Rashid Trust says that its activities include providing financial and legal support to jailed Muslim militants around the world, and that all of its actions are purely humanitarian. Its most recent project was one to provide food for the poor in Afghanistan. The project was conceived following a conflict between the United Nations and the Taliban over the running of bakeries. Consequently, the ART set up its own bakeries in Kabul, Herat, Jalalabad, Kandahar and Mazar-e-Sharif. The trust also took over 155 bakeries vacated by the UN's World Food Program (WFP) when it pulled out following the September 11 terrorist attacks in the US. The annual budget for this program is approximately US$4 million. The ART plans to provide bread to 25,000 people, and it aims to set up bakeries in another 14 provinces in the near future. ART’s Afghanistan operations became prominent when it began to operate a subsidised bakery project in Kabul, after that project was abandoned by the United Nations World Food Programme (UNWFP) over differences with the Taliban on employment of women for a survey. The ART is reported to have many other functioning projects in Afghanistan. It reportedly sent 1,000 sewing machines to the country in June 2001 to help the ‘widows of war’, and it is scheduled to send another 1,000 for the same purpose. According to ART sources, it sends more than US$1 million worth of goods, food, medicine and other relief items into Afghanistan on a weekly basis. It is reported to have sent more than 70 truckloads of relief goods up to November 2001. Al-Rashid also recently opened clinics in Kandahar, Kabul and Ghazni. Al-Rashid Trust has been involved in the establishment of a network of madrassas in Afghanistan. It has also built many mosques across the country. Media reports indicated that prior to the US bombing of Afghanistan, it was building 20 mosques along the Kabul-Kandahar highway, and five mosques on the Kandahar-Chaman highway. The trust runs many madrassas and mosques in Pakistan including the largest Arabia-Islamia, on the Karakoram Highway in Mansehra. The network of ART aided Deobandi madrassas in Pakistan reportedly act as recruiting centres for Jehadis. It also runs a hospital in Muzaffarabad in Pakistan occupied Kashmir (PoK) for the treatment of injured terrorists. In Afghanistan, the Al-Rashid Trust coordinates its activities with an Arab NGO, Wafa Khairia, which was formed by Osama bin Laden and other Arab-Afghans as a reciprocal gesture for being provided hospitality in Afghanistan. The Wafa Khairia is reported to be largely funded by bin Laden. The Al-Rashid Trust claims to be the first Muslim organisation in the world to send aid to the refugees and war-hit people of Chechnya. Furthermore, it is also reported to be carrying out ‘welfare work’ in Kashmir, Kosovo and the Central Asian states besides Afghanistan. It also accepts ‘donations’ for Kashmir Jehad and the mujahideen of Kashmir. It publishes advertisements in the Pakistani press soliciting funds for ‘welfare work' in Kashmir, Chechnya, Kosovo etc, and also informs prospective donors that it will decide on the means of spending the money. Its advertisements reportedly list all its accounts with Karachi's Habib Bank, providing separate account numbers for donations received in dollars or pounds sterling. The Al Rashid Trust said on October 4, 2001 that it would challenge the US decision in the International Court of Justice (ICJ) at Hague. Claiming that it has "no links with any sort of terrorism," the ART in-charge in Islamabad, Mohammed Arshad, said that his organisation has appealed to the Pakistan government to de-freeze its accounts and added that it planned to go to the ICJ to contest the US proscription. Despite the ban, media reports have indicated that it was still operating in Pakistan and all its offices were open. Pakistan's Foreign Office Spokesman Riaz Mohammad Khan said on October 3 that Islamabad would ask the US government to furnish details of the Trust's involvement in terrorist activities. Note: April 15: The United States Treasury said it had imposed sanctions on two "high-profile" Pakistani trust fund chiefs allegedly linked to terrorism. The Treasury identified the trust fund chiefs as Muhammed Mazhar, director of Al-Akhtar Trust, and Mufti Abdul Rahim, leader of Al-Rashid Trust, and said both Pakistani charities’ assets under US jurisdiction were frozen. Americans have also been prohibited from engaging in any transactions with them. Mazhar was accused of supporting al Qaeda and the Taliban, while Rahim was charged with funding the Taliban. "Today’s designation of these two high-profile financiers of al Qaeda and the Taliban, who are also leaders of Al-Akhtar Trust and Al-Rashid Trust, further exposes those organisations’ continuing support for terrorism under the guise of charitable activity," said the Treasury. The Rest @ SATP

Saleh Kamel Moves to Strengthen Ikhwan ( Muslim Brotherhood ) in Egypt

Saleh Kamel, non-warrior but still an Islamist who lives and integrated life. His busines, religion and politics are united in pricniple. He is Muslim Brotherhood business supporter, and he is opening a 100 Million Euro bank in Egyp. This venture will significantly strengethen the Muslim Brotherhood in Egypt.

Saleh Kamel is a well established supporter of Ikhwan business ventures world wide, including Islamic Banking.

• He supports the spread of Sharia world wide, and is the most worlds' most powerful Islamist banker.
• He does not overtly fund jihad, but as a supporter of Sharia, he has been instrumental in building an Islamic global financial structure, which enables Jihadsts to move outside Western Finanacial structures more and more often.
• He was the first proponent and catalyst behind the emerging Certified Islamic Public Accountant credential.
• When effective Generally Acceptable Accounting Pracitices (GAAP) are established for the CIPA, a new and separate finanacial accountability standard will be established.

This new Sharia standard will institutionalize a sharia tax called Zakat tax. Zakat is an admirable benevolence system that uses the tax for a number of good purposes. Unfortunately, it also can provide for funding Jihad. The giver can be separated from the receiver making the use of the tax less than trasparent.

The Zakat is collected, and Islamic banks have accounts set up for the collectors of Zakat. Some accounts are co-mingled, or dedicated to Jihad, like Account 98.

Therefore, if an Islamic Student group in the US collects donations to support Tsunami Victims in Indonesia, when the funds arrive in country it is perfectly ethical under Islamic Law and tradition to use the funds to equip and Pay Jihadists defneding of expanding the Ummah.

In this context, read the following news story -

Saleh Kamel, non-warrior but still an Islamist and Muslim Brotherhood business supporter, opens 100 Million Euro bank in Egyp. This venture will signficantly strengethern the Muslim Brotherhhod in Egypt.

-Shimron

*********

1 billion EGP Bank to be established in Egypt, Saleh Kamel says

H.E Sheikh Saleh Kamel, President of Islamic Chamber of Commerce& Industry (ICCI) and Head of Saudi Council of Chambers of Commerce& Industry unveiled his plans of the initiative to establish the first Bank for Development and direct investment in Egypt, with registered capital of 100 billion pounds ($170 million) with the participation of Saudi and Egyptian businessmen.

Kamel announced during a meeting held by the Egyptian Businessmen's Association headed by Hussien Sabour said the bank "would be the first of its kind in the Arab unity and that it targets high-risk development projects and elimination of unemployment in Egypt."He added that businessmen have the chance to participate in the establishment of this bank.

He did not exclude the contribution of the government funds from two sides, pointing out that the Bank’s establishment depends on the completion of the governmental measures. Kamel outlined that the Saudi investment assets in Egypt have not been affected thanks to the staff, while the investment operating losses increased as a result of a slump in tourism and sales.For his part, Abdullah bin Sadek Dahlan, a Jeddah Chamber of Commerce board member and president of the Saudi-Egyptian Business Council said that the investment climate in Egypt is still in the forefront of the Arab markets in spite of the current conditions, pointing out that the Saudi investment in Egypt still exist seeks to achieve further development.

Osama Saleh, Chairman of General Authority for Investments and Free Zones said that Saudi investments comes on top of Arab countries investing in Egypt and the second largest investor in the world, pointing out that the General Investment Authority is seeking in the coming period to focus on supporting the policy of free economy.

The Rest @ ICCOnline

Money Laundering Update

A review of FATF news shows that Argentina has not made adequate progress in preventing money laundiering from known sources, and new payment methods (NPM) are being abused more frequently as traditional measures close up.

The full report of FATF’s third mutual evaluation of Argentina (and second joint FATF/GAFISUD evaluation of Argentina) is now available for download, the executive summary was published on 5 November 2010. Since the last evaluation, finalised in June 2004, Argentina has not made adequate progress in addressing a number of deficiencies identified at that time, and the legal and preventive AML/CFT measures that are in place lack effectiveness.

Download the report (2.3Mb)

This report is builds on the 2006 Typologies report on New Payment Methods (NPMs). Since 2006, there has been a significant rise in the number of transactions and the volume of funds moving through NPMs. Consequently, the number of discovered cases where such payment systems were misused for ML/TF purposes has also increased.


This report compares the "potential risks" described in the 2006 report to the "actual risks" based on new case studies and typologies. The report also describes a number of indicators of suspicious activity. These red flag indicators will help NPM service providers and other financial institutions to detect ML/TF activities. The report describes the challenges presented in developing appropriate legislation and regulations for NPMs and the different approaches taken by national legislators and regulators.


The New Payment Methods report is the result of analysis of questionnaire responses and publications about NPMs as well as input by relevant private sector representatives such as NPM service providers, including the

• Internet payment sector,


• the mobile payment sector


• prepaid card technology providers.

The report will be made available on the FATF website within the next few weeks.

The Rest @ FATF

Financing Jihad

This is the second half of testimony by Victor Comras before Congress, September 30th 2010. The First half reviewed successes against the Financing of terror.

What follows suggests issues for the next steps toward reducing the options available to Islamist financiers of jihad against the west; However, I was hoping for some newer innovative ideas.

-Shimron Issachar

*******************
Well, Mr. Chairman,

the fact is that US Banks are intricately networked into an international banking system that has not yet fully come to terms with halting terrorism financing.

And, while we have made great strides in cutting off the flow of money for terrorism from the United States,

1. Our banks remain awkwardly vulnerable to getting caught up in handling terrorist group-related transactions that originate overseas. This is because US banks must so heavily rely on the veracity and accuracy of the transactional information provided to them by their overseas clients and associates.

Background:

Following enactment of the increased “due diligence” and “know your customers” requirements contained in the Patriot Act, US banks moved quickly to re-assess their relationships with the foreign banks with whom they maintain a correspondent relationship. They had to assure themselves that these foreign banks were also taking the steps necessary to vet their clients and that they would accurately record and pass on required transactional information, including the correct identification of the beneficial parties involved. But, the fact is that this is not always the case.

And, in the fast and very competitive world of international financial transactions, these assurances are often shortchanged. Our banks must also rely heavily, therefore, on any cautionary information that our public sector regulatory agencies, such as Fincen, OFAC, and other relevant Treasury Department offices share with them.

• This cooperative relationship and information sharing is essential, and needs to be formalized.

Today, when US banks have doubts about the legitimacy of transactions they are required to file suspicious activity reports with FinCen. In most cases they still permit the transaction to be processed.

• However, when their doubts suggest the possibility of terrorism financing, they will usually place some kind of hold on the transaction.
• US Depository Institutions filed some 15,500 suspicious wire transfer reports in 2009. Of these, only about 545 involved possible terrorism financing concerns.
• How well they are actually doing in discerning such terrorist-related risks remains any ones guess.
• Nevertheless, the number of suspicion-of-terrorism SARS did increase some 8 percent last year.

Considerable strides have also been made with regard to the regulation and oversight of the myriad money services businesses operating in the United States. This sector has seen exponential growth in the volume of international financial transfers.

2. We must recognize, however, that at least one part of this sector – the informal mom and pop transfer mechanisms, such as Hawala, lack the wherewithal to closely vet the transactions they handle and they remain particularly vulnerable to being used to handle terrorism related transfers. Here too, much of the problem resides overseas.

• Funds transferred through Hawala like systems are very hard to trace, particularly as they are re-directed once they are received overseas.
• Terrorist organizations have become sufficiently sophisticated in handling such transactions to assure that the initial overseas recipient of the funds appears squeaky clean.
• Let me suggest, Mr. Chairman, that it is essential that we broaden the focus of our attention, when it comes to inhibiting the financing of terrorism, to include financial institutions beyond our shores.

When I say that the locus of the terrorism financing problem is largely overseas I do so with a caveat.

A number of foreign financial institutions that maintain branches and correspondent accounts in the United States have engaged in banking activities that have become of grave concern to us.

• In August 2005, the New York branch of Jordan’s Arab Bank signed a consent decree, and paid a $24 million penalty, for its involvement in transferring more than $20 million to and from more than 45 suspected terrorists or terrorist groups in the Middle East. The bank acknowledged that it had dollarized many of these transactions.
• In April 2009, Doha Bank, New York paid a civil penalty of $5,000,000 which was assessed, in part, because of its involvement in dollarizing transactions related to terrorist groups overseas.
• There have been several other cases involving US branches of foreign banks that have engaged in practices inconsistent with U.S sanctions laws and regulations. Last May a criminal information was filed against, ABN AMRO, now part of the Royal Bank of Scotland, for facilitating transactions by altering or stripping information from the transactions so that they might pass undetected through compliance filters at other U.S. financial institutions. These transactions involved more than $3.2 billion dollars moving to, from, and through AMB AMRO’s New York branch.
• And, in December 2009, Credit Suisse was assessed a $536 million penalty for processing thousands of transactions over a 20-year period that concealed the involvement of sanctioned parties and the routing of wire transfers and securities transactions to and through the United States.

These regulatory actions have sent a strong message to overseas financial institutions that the United States will not countenance such activities on the part of their branches in the United States.

But, an even stronger message is now being sent by victims of terrorism as they move in U.S. courts to hold such financial institutions accountable under section 2333 of the anti terrorism act for facilitating the flow of funds to terrorist organizations.

I cite as examples the civil damages cases now proceeding in New York against Arab Bank, Nat West, and Credit Lyonnais for their having facilitated the transfer of funds to Hamas and other terrorist groups that have launched suicide and other terrorism attacks against innocent victims in Israel.

The real problem here is that while these terrorist related transactions are illegal in the United States, they have not been deemed illegal by many of the other countries in which these banks operate. This is in spite of the fact that almost all countries are now parties to the International Convention for the Suppression of the Financing of Terrorism, which came into force in April 2002.

That convention clearly obligates all countries to criminalize the funding of groups or individuals that engage in terrorist activities.

Shortly after the 9/11 attack the Security Council also adopted resolution 1373 which obligates all countries, whether or not they have adopted the Terrorism Financing Convention, to take the steps necessary to prevent the transfer of funds to terrorist organizations or for terrorist purposes. But, the resolution failed to contain any definition or criteria as to what constitutes terrorism.

• It left it to each country, independently, to determine this crucial issue for itself.
• Without common criteria, or a definition of terrorism, each country remains free to interpret its own obligations. Each can decide which groups they consider terrorists and which they wish to hail as “freedom fighters.”
• Saudi Arabia uses this distinction, for example, to justify its continuing funding for Hamas while Iran and Syria use it to provide funds and support to Hezbollah.

The fact of the matter is that there is still only a very limited international consensus as to which organizations are terrorist organizations. And, for the most part, that consensus is limited to a very short list of entities and individuals identified and designated by a Committee of the Security Council, as being directly associated with al Qaeda and/or the Taliban.

At my own last count, in June 2010, that designation list includes 137 members of the Taliban, 257 members or associates of al Qaeda, and 103 entities directly related to al Qaeda.

I want to be clear on this point. Beyond that list of designated individuals and entities there is no international consensus, and therefore, no clear and enforceable international obligation, which inhibits countries from allowing their financial institutions to engage in financial transactions with such undesignated individuals and entities.

Only a limited number of countries have joined with us in designating such organizations as Hamas and Hezbollah as terrorist organizations. This includes, for the most part, our European friends and allies. Yet, some European countries still exempt the political and humanitarian wings of these organizations from such designation. Many other countries have not even gone that far and openly permit their financial institutions to process transactions in Hamas’ and Hezbollah’s favor.

Given US bank interaction with this larger international banking community, the vulnerabilities become stark. And, that means that very careful attention must be paid to assuring that accurate information regarding origination and the ultimate recipient of the transaction is complete and accurate.

The problem is further complicated by the emergence in numerous lesser developed countries of new under-funded and under-regulated home grown banks. These banks rely heavily on their correspondent and payable through accounts maintained in more established banking institutions.

Many of these home grown banking institutions continue to lack the wherewithal to mount and maintain an effective compliance system.

• At the same time the national regulatory environment under which they operate is unable to provide effective oversight.
• And, many of these banks are located in areas quite susceptible to the recruitment of terrorists.

So, Mr. Chairman, I would also place great emphasis on the need to strengthen the international banking communities resources and commitment to halting the financing of terrorism.

I do not want to appear too pessimistic in this regard.

• A very substantial segment of the international banking community does take terrorism financing and money laundering issues quite seriously.
• The Wolfsberg group of banks, for example, has established high standards to prevent terrorist organizations from accessing their financial services, and they have pledged to assist governments in their efforts to combat terrorist financing.

FATF

The FATF, The Financial Action Task Force, has made great strides in providing guidance and best practices for the strengthening of international banking compliance, and in brokering assistance for jurisdictions wishing to upgrade their compliance programs.

• It has also spawned numerous regional organizations to facilitate cooperation and share the burden of compliance among their member banks
• .FATF has also finally gotten back to holding certain countries accountable for their failings in this regard.
• In 2008 FATF began publishing a list of high risk and non cooperating jurisdictions whose banks have failed to adequately implement an anti-money laundering and counter terrorism financing program.
• FATF issued a series of statements expressing concerns about the AML/CFT deficiencies in Iran, Uzbekistan, Pakistan, Turkmenistan, São Tomé and Principe, and the northern part of Cyprus.
• The FATF statements called on FATF members to pay special attention to transactions dealing with Iran and Uzbekistan and to strengthen preventive measures in response to the risks associated with these countries.
• In February 2009, FATF also called on its members and other jurisdictions to apply additional counter-measures to protect their financial sectors from money laundering and terrorist financing risks emanating from Iran.

Ultimately, United States regulatory agencies can also make reference to the broad powers provided to them in Section 311 of the Patriot Act. As you know, Mr. Chairman, that section authorizes the Secretary of the Treasury to impose special enhanced due diligence requirements with regard to the maintenance and operation of correspondent and payable through accounts maintained in US banks for foreign jurisdiction banks. And, in some cases this may include precluding the operation of such accounts in favor of risky banks overseas.

We all recognize that these powers must be used sparingly and prudently. At the same time they do provide us considerable leverage when it comes to influencing and correcting bad banking conduct overseas.

The Rest @ Counterterrorism Blog

Holder v. Humanitarian Law Project - Non Profits Who Support Terrorists are on Notice

Several months old, but This US Supreme Court Decision has far reaching conclusions, and will likely be used to prosecute US citizens and residents who contribute to non-profits in Somalia, Sudan, Chad, Lebanon, Gaza, Jordan, an Pakistan.


-Shimron Issachar


Thursday, June 24, 2010, 6:08:49 AM Jean-Charles Brisard

In its ruling of June 21, 2010 (Holder v. Humanitarian Law Project), the U.S. Supreme Court further clarified the notion of “material support” to designated foreign terrorist organizations (FTOs) and brushed aside so-called “peaceful or humanitarian” support to such organizations.
The “material support” statute (18 U.S.C. § 2339B) adopted in 1996, prohibits the provision of material support or resources to a foreign terrorist organization. “Material support or resources” is defined as “any property, tangible or intangible, or service, including currency or monetary instruments or financial securities, financial services, lodging, training, expert advice or assistance, safehouses, false documentation or identification, communications equipment, facilities, weapons, lethal substances, explosives, personnel (1 or more individuals who may be or include oneself), and transportation, except medicine or religious materials”.

The main question was the legality of providing non-violent resources to support the humanitarian and peaceful efforts of terrorist organizations.

• The Court found that not only there was no distinction between the violent and non-violent wings of terrorist groups, but that terrorist groups benefit from any support given to them, even peaceful or humanitarian.
• The Court conceded that FTOs may engage in political and humanitarian activities, but insisted that “Foreign organizations that engage in terrorist activity are so tainted by their criminal conduct that any contribution to such an organization facilitates that conduct.”
• The Supreme Court therefore confirmed that it was necessary “to prohibit providing material support in the form of training, expert advice, personnel, and services to foreign terrorist groups, even if the supporters meant to promote only the groups’ nonviolent ends”, because this aid would “legitimize” the organization.

Referring to such humanitarian support during the oral arguments, Chief Justice Roberts stated “It's going to make their hospital run better. People are going to like their hospital. So the party, the group, will be legitimized.”

Justice Scalia insisted that “The theory of the legislation is that when you aid any of their enterprises, you're aiding the organization.

Hamas, for example, gained support among the Palestinians by activities that are perfectly lawful, perhaps running hospitals, all sorts of things.”

Solicitor General Kagan clearly emphasized that "when you help a terrorist, foreign terrorist organization's legal activities, you're also helping the foreign terrorist organization's illegal activities".

"Hezbollah builds bombs. Hezbollah also builds homes. What Congress decided was when you help Hezbollah build homes, your are also helping Hezbollah build bombs."

The Supreme Court held that "Material support meant to 'promote peaceable, lawful conduct' can further terrorism by foreign groups in multiple ways.

Material support is a valuable resource by definition. Such support frees up other resources within the organization that may be put to violent ends.

It also importantly helps lend legitimacy to foreign terrorist groups—legitimacy that makes it easier for those groups to persist, to recruit members, and to raise funds—all of which facilitate more terrorist attacks."

By its unambiguous ruling the Supreme Court clarifies the debate about “political wings” or “humanitarian wings” of terrorist organizations including the Hamas and Hezbollah, and sends a strong message to those promoting a dialog with so-called “moderate” elements within designated terrorist organizations.

The Rest @ Jean-Charles Brisard

Anwar al-Awlaqi Assets Frozen

US: AWLAQI HAS HAD HIS ASSETS FROZEN.

The US government on Friday approved financial sanctions against Yemeni-American Imam Anwar al-Awlaqi who has been identified as a leader of al-Qaida in the Arabian Peninsula. The Treasury Department has now frozen Awlaqi’s financial assets.

Hawala By Mobil Phone?

Earlier this week I had an opportunity to speak with Zahir Khoja, Executive Director - Mobile Money (M-PAISA) at Roshan. As the world’s focus turns once again to Afghanistan during the country’s elections process, I wanted to get Zahir’s perspective on launching mobile money in this complex environment.

The challenges in the country are well known, but Zahir was quick to highlight the opportunities that come with advancing financial inclusion and developing important communication and payments infrastructure as the country rebuilds.

Paul Leishman: Zahir, can you start by providing us with a 10,000 ft view of M-PAISA in Afghanistan?

Zahir Khoja: We re-launched our service in October, 2008. When we piloted M-PAISA in Afghanistan, the idea was to bring a service to customers to repay their microfinance loans and serve those who didn’t have access to a bank because of distance. We created a trial partnership with First Microfinance Bank Afghanistan (FMFB) and today have about 5,000 customers using the service for microfinance loan repayments. From there, we moved the product into something similar to what you’d see in Kenya today - customers have the ability to send money, pay bills, receive salaries and buy Roshan airtime.

Over the last few months we’ve analysed our business and number of factors emerged. The first is that our tariff schedule was tiered and not easily understood. As a result, in August we launched a new tariff schedule which simplifies everything for the customer: sending money is now one flat fee regardless of how much a customer sends and the same goes for withdrawals. This simplifies the service for the average customer, who typically doesn’t have much education and 75% of whom are illiterate.

Paul Leishman: Where does M-PAISA stand by way of adoption today?

Zahir Khoja: Each month since launch we’ve seen an increase in gross registrations. As customers are interested to learn more about the service, the challenge of driving education still exists.

Paul Leishman: So your offering includes money transfer, MFI loan repayment, salary distribution and airtime purchase. What types of market conditions or customer needs were taken into account when designing this offering?

Zahir Khoja: First, we considered is access to finance. When you look at what Afghanistan has to offer today in terms of a banking environment, only about 3% of the population are banked and there are about 300 bank branches which are owned by 17 banks. So most of the country doesn’t have access to financial services unless you’re in a large city, and even those who do have access generally don’t trust banks given the history they’ve had with them over the last 20-25 years. We also considered the transportation infrastructure.

It’s very hard to get around in Afghanistan: roads aren’t developed like they are in Europe or North America, and buses or cars aren’t as common: donkeys or walking are often the preferred mode of transportation here.

The third factor we considered is security. When you’re travelling with large sums of cash, and when I say large I mean $100 or more, you stand the risk of meeting someone on the road who wants to take your money. In the last 6 months of 2008, there were about $30 million in transit robberies.

There are a lot of obstacles in Afghanistan, but these do vary in severity depending on where you are in the country. Take Southern Afghanistan for example, where the rules of engagement are different than what they may be in the North, it’s not safe to walk around there with money or conduct business. For women in particular it’s a lot easier for them to have a business in Central or Northern Afghanistan than it is in the South due to instability.

Opening up the movement of money is the first step to financial inclusion and alleviating poverty: that’s where the money transfer offering comes into play.

P2P payments break down boundaries between different villages or communities so that people can expand their trading partners.

The second thing is that these customers now have access to are microfinance loans without actually having to visit a specific bank branch. They can repay their loan by changing cash at an agent.

Once they take a microfinance loan, they’re probably using it to develop their business. If they’re developing their business they’re employing more people. If they’re employing more people they’re probably generating more revenue.

Through all of this comes savings, which will probably be the next thing we explore: once these people have money they want somewhere to put it other than under their pillow. You can see that over 10-15 years all of this plays into making the community self sufficient and alleviating poverty. At Roshan we don’t just look at products from a commercial perspective. We also consider economic and personal development perspectives and they were obvious in bringing M-PAISA to market in Afghanistan.

Paul Leishman: We read a lot about the challenges facing Afghanistan as the country rebuilds and stabilizes. What’s your on-the-ground assessment of the opportunities and challenges of doing business in the country?

Zahir Khoja: Security is clearly a major issue: it’s hard to ask an agent to walk around in the field and talk to people about mobile money. If you look at some of the activities we’ve had over the last 60 days, they’ve been limited or non-existent due to the election. Also, because of some of the political issues and the war in the country, we face security challenges with a number of our sites which are located in the volatile South. With an interruption of service, someone can’t check their balance. When someone can’t check their balance they freak out. These are the types of challenges we face operating in Afghanistan.

Another major challenge is that of building a team - specifically from an agent perspective. The approach to team building is very different here than most developed countries. Like many emerging markets, Afghanistan is very transactional - ‘if I give you a dollar, you give me a good’ and that’s the end of our relationship. The idea of ‘customers for life’ doesn’t really exist here. This plays out in recruitment of agents.Paul Leishman: What would be your biggest barrier to scale or growth at the moment?

Zahir Khoja: Development of our agent network. The reason I say that is because getting agents to invest in the business so they can keep a float balance isn’t easy. Agents look at this and say, ‘well that’s $500 that I could use to do something else with.’ As I said, the country is very transactional (i.e. give me a dollar and I’ll give you a good). What we’re asking agents to do is put $500 into float and manage that as your business grows with the customer base. They’ll see returns on the money, but it would be over a period of time. That concept is hard for agents to understand. The concept of sending money over a phone also doesn’t yet register with an average customer. When we talk about getting agents to explain this to customers, agents look for the quick hit. They look for opportunities to maximize commissions today, which makes education really challenging.

Paul Leishman: MFIs play an important role in your model. What advice would you offer around selecting and working with MFI partners?

Zahir Khoja: MFIs are looking at this from an expansion perspective as well as a cost reduction perspective. They can now send a loan officer out into a village and sign up customers to MFI loans. Their loan officer then disburses the loan on site. The customer knows where the village agent is, and is able to make their payments. These are people who may never have considered getting an MFI loan because they a) might not have known about it, or b) the distance to an MFI was too hard. So we’re giving the MFI an opportunity to get more customers and customers the opportunity to access financial services. In the future, we’d like to integrate all of the MFIs on the M-PAISA system so the back end functions more efficiently.

Paul Leishman: What are the unique things that a mobile operator can contribute to an MFI?
Zahir Khoja: First, I think it’s the ability to communicate with customers using various communication channels offered by Roshan. Second, MFIs now have an ability to look at a customer’s transaction history - do they make loan payments, do they qualify for incentives, etc. In Afghanistan, we don’t have a credit bureau, so there’s no way of checking if someone is a good or bad applicant. This allows the customer to develop some type of credit history, and allows the bank on the other end to give $1000 instead of just $100 because they know that they’re dealing with a good customer.Paul Leishman: What’s been your experience from a regulatory perspective launching M-PAISA in Afghanistan?

Zahir Khoja: Mobile money products are a brand new concept to Afghanistan. Roshan, along with USAID, World Bank, CGAP and many other entities are working very closely with the Central Bank of Afghanistan (the regulator) in the development of new regulations. Best practices from Kenya, Philippines and other countries where mobile money has been successful are being taken into account.

Paul Leishman: Does the Central Bank see opportunity in gaining better visibility into financial flows in Afghanistan?

Zahir Khoja: Yes. One of the things the Central Bank asked us is ‘how can you be sure that criminals, won’t use this system?’ We have an Anti Money Laundering Officer that monitors transactions on a daily basis. Any transactions that look suspicious is flagged immediately. This enables the Central Bank to deal with these matters instantly rather than waiting for the outcome of what these funds would be used for.

Paul Leishman: What about other elements of regulation. Can non-bank agents perform account opening and cash in/out? Is there proportionate KYC in Afghanistan?

Zahir Khoja: To open an M-PAISA account, you need to have a valid passport, or a national ID card. You also need to have 2 colour photographs, name, fathers name, birth date, mobile phone number. We also ask whether the applicant is involved with any political party or if they’ve ever been involved in terrorist activity. All of our customers are screened through various sources, like the Dow Jones watch list, to make sure that applicants are legitimate.


Paul Leishman: What types of tactics do you use to convert registered customers into active users?

Zahir Khoja: There are a number of tactics, but the primary one is educating and training M-Paisa agents so that they are well equipped to talk to customers about the service.

That’s our main focal point. There are also a number of marketing initiatives utilizing the Roshan mobile network that we use to communicate with customers. The marketing services we deploy take into account the fact that 75% of the Afghan population is illiterate. These types of initiatives have been recently launched so we are still in the process of evaluating their effectiveness.

Paul Leishman: So your offering includes

• money transfer,
• MFI loan repayment
• salary distribution
• airtime purchase.

What types of market conditions or customer needs were taken into account when designing this offering?

Zahir Khoja: First, we considered is access to finance. When you look at what Afghanistan has to offer today in terms of a banking environment, only about 3% of the population are banked and there are about 300 bank branches which are owned by 17 banks. So most of the country doesn’t have access to financial services unless you’re in a large city, and even those who do have access generally don’t trust banks given the history they’ve had with them over the last 20-25 years. We also considered the transportation infrastructure.

It’s very hard to get around in Afghanistan: roads aren’t developed like they are in Europe or North America, and buses or cars aren’t as common: donkeys or walking are often the preferred mode of transportation here.

The third factor we considered is security. When you’re travelling with large sums of cash, and when I say large I mean $100 or more, you stand the risk of meeting someone on the road who wants to take your money. In the last 6 months of 2008, there were about $30 million in transit robberies.

There are a lot of obstacles in Afghanistan, but these do vary in severity depending on where you are in the country. Take Southern Afghanistan for example, where the rules of engagement are different than what they may be in the North, it’s not safe to walk around there with money or conduct business. For women in particular it’s a lot easier for them to have a business in Central or Northern Afghanistan than it is in the South due to instability.

Opening up the movement of money is the first step to financial inclusion and alleviating poverty: that’s where the money transfer offering comes into play.

P2P payments break down boundaries between different villages or communities so that people can expand their trading partners. The second thing is that these customers now have access to getting a microfinance loan without actually having to visit a specific bank branch. They can repay their loan by changing cash at an agent.

Once they take a microfinance loan, they’re probably using it to develop their business. If they’re developing their business they’re employing more people. If they’re employing more people they’re probably generating more revenue. Through all of this comes savings, which will probably be the next thing we explore: once these people have money they want somewhere to put it other than under their pillow. You can see that over 10-15 years all of this plays into making the community self sufficient and alleviating poverty.

At Roshan we don’t just look at products from a commercial perspective. We also consider economic and personal development perspectives and they were obvious in bringing M-PAISA to market in Afghanistan.

Paul Leishman: What other payment options exist in Afghanistan, given that just 3% of the country is banked?

Zahir Khoja:

If you want to send money today from one district to another, you’ll personally deliver that money by walking, taking a taxi, or taking a donkey.

Alternatively you would give the money to a friend, what’s referred to as a trusted agent, and say ‘please deliver this for me and you can keep 5-10% for yourself.’

Or finally you would go to a Hawala market and pay a set fee for the money to be sent to the recipient in a corresponding district, village or province.

These are the money transfer options that exist today, and we’re trying to educate people on how to send money on their mobile phone. 25% of the population in Afghanistan have a mobile phone and this is the group we’re targeting. The challenge we have is that people don’t trust banks, let alone the idea that their money is now just on an SMS. But recall that 75% of Afghans can’t read: that’s where our IVR comes in.

Paul Leishman: What have you done to driving understanding of the benefits and functionality of an IVR?

Zahir Khoja: That’s the challenge we’re having now: getting the IVR message into the marketplace. What we’re trying to do now is address the market based on their needs. Afghanistan just went through an election period which was an unsafe time for the country. In response, the campaign we’ve launched is ‘buy Roshan airtime using your M-PAISA wallet from the convenience of your home.’ This gets a customer to say ‘Yes, I’d like to continue to have airtime, so I’ll figure out how this M-PAISA thing works because I don’t want to leave my home and risk my safety.’

It’s important to use tactics like this that will make a customer say ‘Yes, I really need this’. Right now if you talk to the average Afghan person, there’s no desire to put money into a bank. In some sense, we need to create the need for them - illustrate how these services can make a difference in their lives. Right now we charge 50 Afghani, which is the equivalent of US$1, to send money.

The average person today sends between US$30 and US$50. The pitch to these people to justify our fee is that they no longer need to leave their home, take a taxi or donkey, or spend time going to a Hawala market. Yes, there is a fee but it’s cheaper than all other methods used today.

Paul Leishman: You’ve chosen to use the word ‘Hawala’ in your tagline: ‘The Hawala on your Mobile’. What is the significance or thought behind this?

Zahir Khoja: Hawalas have been around for hundreds of years and everyone knows that this is where you go to send money. Rather than recreate the wheel, we decided to go with what people understand. Our pitch is that we’re bringing the Hawala to you through your mobile.

Paul Leishman: Thanks Zahir.

The Rest @ Mobil Money for the Unbanked