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Terrorists are manipulating stock exchanges to raise funds: NSA


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.


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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