Money Jihad: How Islamists Finance Their Operations

radicalislam.org 12 November 2012
By Ryan Mauro

The author of the Money Jihad blog wishes to remain anonymous. The daily blog documents how Islamists finance their operations. The author previously served in military-intelligence and has been blogging about terrorism financing for three years.
The following is RadicalIslam.or’s Security Analyst Ryan Mauro’s interview with the author of the Money Jihad blog about how the Islamist terrorism continues to be lavishly funded 11 years after the attacks of September 11, 2001.
Ryan Mauro: What legal loopholes are the Islamists using to finance their operations worldwide?
Money Jihad: Saudi Arabia’s approach to terror finance is a giant loophole in and of itself. The Islamic zakat tax, what some call "Islamic charity,” is a massive source of jihadist revenues. The Saudi Arabian Monetary Agency is supposed to approve charitable zakat transfers overseas, but it’s a fig leaf; the Saudis still fund the spread of radical Wahhabism abroad. Also, it took Saudi Arabia’s Senior Ulema Council nine years after 9/11 to criminalize the financing of terrorism. Whenever the Council comments on terror finance, it vigorously defends zakat in the same breath. The Council won’t even define terrorism to include suicide bomb attacks against Israel.
In the U.S., we need a totally different approach to regulating hawala, the traditional Islamic system money transfer system that has helped fund terrorists. But on balance I would say that most of the terror finance shortcomings in the West involve inadequate enforcement of existing laws rather than a lack of laws.
Ryan Mauro: What laws aren’t being enforced and why?
Money Jihad: First, the Patriot Act prohibits providing material support to terrorism such as transferring money to Hamas. The Holy Land Foundation (HLF) trial revealed that Islamic organizations such as the North American Islamic Trust and the Islamic Society of North America worked closely with HLF. The Bush administration never intended HLF to be their final prosecution, but they ran out of time to pursue HLF's associates. Especially now that HLF's final appeal was rejected by the Supreme Court, this would be a great time to enforce the material support provisions of the Patriot Act against HLF's unindicted co-conspirators.
Second, the Foreign Agents Registration Act isn't being enforced with respect to CAIR which engages in political activities in the U.S. but is funded from abroad.
Third, the nonprofit provisions of the Internal Revenue code are being abused by Islamic organizations that claim to be charities but are actually engaged in business activities. For example, Islamic Food and Nutrition Council of America (IFANCA) is a certifier of halal foods. It gets most of its revenues from inspecting food manufacturers that seek a halal certification label, but IFANCA claims tax-exempt status on the false basis of receiving revenues from charitable donations and grants, which is discredited by a simple review of their tax forms. Canada does a better job than the U.S. of stripping bogus charity fronts of their tax-exempt status.
Fourth, Bank Secrecy Act and Treasury regulations require money services businesses, including hawala dealers, to register their business with the Treasury Department’s Financial Crimes Enforcement Network. One study showed that about 85 percent of hawala businesses simply ignore the requirement.
As to why these laws aren't being enforced, I think it's political.
Ryan Mauro: What methods are the Islamists using today to raise money, besides soliciting wealthy donors?
Money Jihad: Well, it’s not just about zakat from wealthy donors. Folks like Amina Farah Ali in Minnesota, Shabaaz Hussain in London, and Irfan Naseer in Birmingham have fundraised for relatively small donations from individual Muslims to support jihad overseas. A few thousand dollars from the West goes a long way to fund a holy warrior on the ground in Somalia.
But apart from zakat donations, there are a whole host of other Islamic taxes that receive less attention but are huge revenue stream for jihad. Western reporters call it extortion, but the mujahideen don’t look at it that way.
Take for example two terrorist organizations with a ground game: Al-Shabaab and the Taliban. They have fighters on the ground and control definite territory. Organizations like that rely to a great extent on levying Islamic taxes on the people under their jurisdiction. The Taliban still gets money from ushr, the Islamic tax on harvests, which includes poppy yields. Al Shabaab imposes harbor taxes, checkpoint taxes (a practice from the early days of Islam up through Ottoman times), and a zakat on the lucrative Somali charcoal trade.
Ransoms, which are also permitted against infidels by the Koran, are a major revenue source for organizations like AQIM and Abu Sayyaf. For Hezbollah, the West focuses on their drug money, but they get a lot of money from khums, the Shia Muslim tax on individual profit.
Counterfeiting, Sharia finance, street crimes, welfare fraud — those are all being used as well in different parts of the world to fund terrorism, individual Islamists or both.
Ryan Mauro: Can you explain how hawala works and just how much money is being raised through it?
Money Jihad: Hawala is a way of transferring money without actually moving money across borders. Say that Farouq wants to get $1,000 to his cousin Ali in Pakistan. Farouq gives the money to a hawala dealer in New York. The NY dealer knows another dealer in Pakistan. The two dealers basically keep a running tab so their transfers remain balanced between the two of them over time. The dealer in Pakistan simply gives $1,000 to Ali. Farouq has $1,000 less than he started with, Ali has $1,000 more, and the money never went through any visible, trackable remittance system with the normal controls and know-your-customer standards that you would expect from Western Union or a major bank. Hawala originates from Islamic law which describes how debts can be transferred to third parties.
I've estimated that U.S. hawala dealers probably transfer almost $6 billion a year to the Middle East with few questions being asked. Even if only a small percent is going to Islamist causes, the math isn't encouraging.
Ryan Mauro: Do you believe that the Muslim Brotherhood network in the U.S. has stopped financing Hamas since the shutting down of the Holy Land Foundation, deciding to solely focus on political influence instead?
Money Jihad: No, not at all. KindHearts was an attempt to continue the work of the Holy Land Foundation until it was exposed. Last year, a well-placed source in the Justice Department said Islamic Relief and Viva Palestina have become the new conduits for transferring zakat from Muslims in America to Hamas. My own research has revealed collaboration between the Illinois-based Zakat Foundation and Muslim Aid—a U.K. Islamic charity with documented ties to Hamas that Muslim Aid denies. The difference now from when the HLF was in operation isn’t a lack of financing; it’s a lack of investigations and prosecutions.
Ryan Mauro: What governments are most responsible for filling the wallets of the Islamists?
Money Jihad: Saudi Arabia and its Gulf neighbors, Pakistan through its ISI spy agency, Iran and the Palestinian Authority. Europe and the U.S. has distributed a lot of fungible foreign aid throughout the Middle East that has been siphoned off for nefarious purposes, such as flawed subcontracting in Afghanistan that has enriched the Taliban, so we’re not without blame either. Leaks indicate that the governments of Spain and France have paid multi-million dollar ransoms to jihadist groups, which they deny. Sweden is one of the biggest financiers of the movement to boycott, dives, and sanction Israel—a movement that funds anti-Semitic Islamist organizations.