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UNHCR: Afghan Refugees Need to Wait Before Returning Home
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Jack Blum tells IRP Fellows about how terrorists get financing. |
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Click here for audio excerpt |
Washington, February 5, 2002 - Offshore "shell" banks and bogus religious charities are two major sources of funding for global terrorist networks, an expert on international money laundering told IRP Fellows today.
Jack Blum, a partner with Lobel, Novins and Lamont, said the Pacific island nation of Nauru, for example, "sells bank licenses for about $5,000," which a terrorist or criminal network can use to launder money through banks in the United States. Using such licenses, terrorist and criminal organizations can hide under the veil of the tiny nation's "bank secrecy" and prevent authorities from viewing records of their financial transactions, Blum said.
However, the use of offshore banks to cover criminal activities is starting to come to an end, said Blum, a former congressional investigator in the 1980s. "Anti-money laundering provisions that were my wildest dreams suddenly came into law" with recent congressional action, he said, "and now U.S. banks can't open correspondent banking accounts for shell banks."
Following the terrorist attacks on New York and Washington on September 11, investigators have been examining the role of contributions to charitable organizations in the Middle East that may actually be used to finance terrorist activity. Blum said there is a "huge dilemma of how to sort out what is genuine religious charity and what is money going to bad guys."
"When money is collected and it's supposed to help the poor people of the Muslim world, is the money really going to that or is it being used to train people to hate? It's a really close call." Blum said the problem exists partly because of corrupt or failed government leaders in North Africa, the Middle East, and Central Asia diverting the national wealth into their own pockets and leaving no money for social services.
"The only money that fills the gap is the money contributed to Islamic charities," said Blum. But legitimate contributions to some of these charities may wound up financing terrorist training or anti-American educations in Islamic schools such as Pakistani madrassas, he said.
Copyright © 2005 International Reporting Project. All Rights Reserved.