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Terrorists are manipulating stock exchanges to raise funds: NSA

TIMES OF INDIA

NEW DELHI: Manipulation of stock exchanges is the new modus operandi used by terrorist groups to raise funds for their operations and fictitious companies have operated in the Mumbai and Chennai stock exchanges.

Revealing this, National Security Advisor M K Narayanan has said some of these companies were later traced to terrorist groups.

“Isolated instances of terrorist outfits manipulating the stock markets to raise funds for their operations have been reported. Stock exchanges in Mumbai and Chennai have, on occasions, reported that fictitious or notional companies were engaging in stock market operations,” he said while addressing the 43rd Conference on Security Policy in Munich last week.

Calling for the lifting of banking secrecy and the corporate veil in terrorist-related cases, he said security agencies had detected many instances of funds received via banking channels from so-called safe locations like Dubai and UAE that were intended for terrorist groups.

Squarely blaming certain “official agencies” in Pakistan for pumping millions of dollars for militancy in India, he said jehadi groups had started to establish a network of legitimate businesses to fund their activities.

The terrorist groups are involved in legitimate business enterprises like restaurants, real estate agencies and shipping and use part of their proceeds to siphon off funds for their terrorist activities, he said.

“Among terrorist outfits, the LTTE has a very well- established network of legitimate business, which provides both funds as well as logistics for their activities. Jehadi terrorist organisations have begun to follow suit,” Narayanan said.

He said a combination of conventional money laundering techniques, with placement of funds by using the “underground and parallel banking system” (hawala) has made it extremely difficult to track funds utilised for terrorist purposes since no audit or paper trail is available.

Referring to 11 common ways of terrorist funding, the NSA said among them were voluntary contributions on which terrorist groups like Al Qaeda and LTTE thrive, forced and compulsory donations including forcible subscription of their publications, extortion and use of coercive methods.

“The Lashker-e-Taiba, the Hizbul Mujahideen and the Al- Badr (militant outfits which operate in India) are well patronised, including through provisions of funds, by certain official agencies across the border,” he said.

Shared objectives such as involvement in “low intensity conflict” provide the excuse for such official support. “A tentative estimate of funds made available to such terrorist outfits annually is in the region of a few million dollars,” he said.

The unholy nexus between jehadi groups and non-jehadi terrorist groups seek, and enter into, partnerships with organised criminal syndicates for fund-raising by indulging in kidnapping for ransom and bank robberies, Narayanan said.

Counterfeiting of currency is currently a favourite method adopted (by agencies across the border) to fund terrorist activities directed against India, he said.

The NSA said large amounts of “high quality” counterfeit Indian currency were detected each year and the “normal route” for bringing the forged notes into India was through Nepal and Bangladesh.

Elaborating on the misuse of legitimate banking channels, Narayanan said terrorist groups generally make small transactions so as not to attract attention and to avoid detection. “Use of both real, and fraudulent, ATM cards has also been resorted to at times,” he said.

Charities and proceeds from narcotics were among other funding channels for terrorist groups, Narayanan said.

“India believes that there is a need for greater vigilance and stricter provisions so as to make off-shore jurisdiction more transparent. In addition, lifting banking secrecy and the corporate veil in terrorist-related cases would help,” he said.

Seeking further international cooperation to tackle the menace of terrorism, he said, “…pooling of strengths by all concerned states is critical to defeat terrorism worldwide.”

The conference was attended, among others, by Russian President Vladmir Putin, Iran’s National Security Advisor Ali Larijani and German Chancellor Angela Merkel.

Discussion

One comment for “Terrorists are manipulating stock exchanges to raise funds: NSA”

  1. http://www.liverpoolecho.co.uk/news/liverpool-news/liverpool-men-part-gang-who-6520846

    Gang who laundered more than £20m using ancient Islamic system jailed
    17 Jan 2014 07:27

    Two Liverpool men part of four man gang

    Two Liverpool men who helped launder more than £20m of drugs money through banks were spared prison.

    The money is believed to have been laundered using legitimate bank accounts and an ancient Islamic money lending system.

    Kamran Butt and Instar Ahmed, from Greater Manchester and Liverpool men Steven McKenna and Sean Moore were put under surveillance by police in two undercover operations.

    But officers found they were linked when Butt and Ahmed were seen depositing money into the same bank accounts.

    The money was transferred to the defendants, who were recruited by operatives in the Middle East, using the ‘Hawala’ system – an informal Islamic way of lending money based on honour agreements and third-party lenders.

    A fifth man, named in court as ‘Akhtar’, was also heavily involved – but was deported to Pakistan in 2012 and has not been traced since.

    Watched by undercover police, Akhtar and Ahmed were seen depositing huge sums of money at banks in Chorlton, Longsight and Manchester city centre.

    The two men would travel to branches of Lloyds, HSBC and Halifax together but then pretend not to know each other once inside.

    Ahmed also worked in partnership with others in the gang.

    Manchester Crown Court heard how on Monday, August 22, 2011, police intercepted Ahmed and McKenna and seized three rucksacks stuffed with more than £200,000 in cash.

    On another occasion, Moore was seen with Butt in his Mercedes car.

    Butt was stopped and a bag was seized, which was found to contain about £120,000 in cash.

    Some of the money involved in laundering scam Some of the money involved in laundering scam

    His Stretford home was then searched and a further £10,000 was seized.Cash receipts in vehicles traced to the four men showed they were paying in anywhere from £500 to £10,000 a time.

    All the money is believed to have come from criminal gangs, mainly through drug sales.

    The criminal cash was given to a Hawala money lender abroad who then transferred the money to a Hawala lender in the UK and gave them a password.

    This password was then passed onto one of the defendants allowing them to collect the cash.

    They then paid the money into bank accounts in Manchester which the criminals had access to.

    The court heard the four defendants were the bottom of the chain – below controllers and then co-ordinators, working as collectors to receive the money, deliver it and pay it into various bank accounts in the UK.

    After being caught, all four defendants pleaded guilty – Moore to two charges of money laundering and Butt, McKenna and Ahmed to one charge of money laundering each.

    Butt, of Great Stone Road, Stretford, was believed to be behind £12m in laundered cash, and was sentenced to three years and six months.

    Ahmed, of Kelstern Square, Rusholme, who is believed to have laundered £10m also received a sentence of three years, six months.

    Moore, of Kingfisher Grove, Liverpool, and McKenna, of Maley Street, Liverpool, both received 14 month sentences suspended for 12 months and 12 month supervision orders.

    Moore was ordered to carry out 108 hours unpaid work and McKenna 150 hours.

    Sean Moore

    Dad-of-three Moore was described as being ‘close to the bottom of the food chain’ of the money laundering scam.

    Paid £300 to act as a courier, he twice delivered cash amounts of up to £19,000.

    The 35-year-old from Kingfisher Close had been drawn into the money-laundering scam through his own financial difficulties, the court heard.

    He was caught along with Butt by undercover police surveillance as part of Operation Mosquito when the pair were seen exchanging a holdall of cash.

    Steven McKenna

    McKenna, 56, and from Toxteth in Liverpool, was caught after his fingerprints were found on a bag in a car being driven by Ahmed.

    In one exchange, he had met Ahmed and Akhtar near the Trafford Centre off Junction 10 of the M60 at Urmston, where a bag was seen being passed to them from a Punto he had driven.

    Arrested in March 2012 as part of Operation Crocodile, he already had 25 previous convictions, the most recent for shoplifting household goods, fruit and vegetables – proof, his defence said, of the small amount of money he had made from taking part in the scam.

    The Hawala System

    Originating in ancient Islamic law, the Hawala system operates through huge numbers of money lenders across the Middle East – and principles of honour through family and religion.

    The system operates outside any legal framework – so although not illegal in itself, is often exploited by criminals needing to move large amounts of money without attracting suspicion.

    To move money, a customer approaches a Hawala broker in their native city and gives them the money to be transferred.

    That broker then contacts a broker in the same city as the recipient, giving them the cash along with a password or code number.

    The recipient, given the code by the original customer, contacts the second Hawala broker and uses the password to prove they are the correct recipient and receive the money.

    Posted by Vanfield | January 17, 2014, 11:49 am

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