Almost from the inception of the modern Islamic banking structure ( early 1980s), the international Muslim Brotherhood set up a parallel and far-flung offshore structure that has become an integral part of its ability to hide and move money around the world. This network is little understood and has, so far, garnered little attention from the intelligence and law enforcement communities tracking terrorist financial structures.
The fundamental premise of the Brotherhood in setting up this structure was that it is necessary to build a clandestine structure that was hidden from non-Muslims and even Muslims who do not share the Brotherhood's fundamental objective of recreating the Islamic caliphate and spreading Islam, by force and persuasion, across the globe.
To this end, the Brotherhood's strategy, including the construction of its financial network, is built on the pillars of "clandestinity, duplicity, exclusion, violence, pragmatism and opportunism." [1]
Among the leaders of the Brotherhood's financial efforts, based on early Brotherhood documents and public records, are Ibrahim Kamel a founder of Dar al Maal al Islami Bank (DMI ) and its offshore structure in Nassau, Bahamas; Yousef Nada, Ghalib Himmat and Yusuf al-Qaradawi and the Bank al Taqwa structure, in Nassau; and Idriss Nasreddin, with Akida Bank International in Nassau.[2]
Mapping the network of bank, insurance (takofol) companies and offshore corporations – which are often used as covers to open bank accounts and move money in difficult-to-trace paths protected by bank secrecy laws – should be the focus of far more attention because the network provides a mechanism for funding the Brotherhood's licit and illicit activities around the globe .
This is of fundamental importance because the Brotherhood has played a central role in "providing both the ideological and technical capacities for supporting terrorist finance on a global basis… the Brotherhood has spread both the ideology of militant pan-Islamicism and became the spine upon which the funding operations for militant pan-Islamicism was built, taking funds largely generated from wealthy Gulf state elites and distributing them for terrorist education, recruitment and operations widely dispersed throughout the world, especially in areas where Muslims hoped to displace non-Muslim or secular governments."[3]
Almost every major Islamist group can trace its roots to the Muslim Brotherhood, founded in 1928 by the Hassan al-Banna , a pan-Islamicist who opposed the secular tendencies in Islamic nations. Hamas is a direct offshoot of the Brotherhood. Hassan al-Turabi, who offered sanctuary in Sudan to Osama bin Laden and his al Qaeda allies, is a leader of the Brotherhood. He also sat on the boards of several of the most important Islamic financial institutions, such as DMI. [4]
Bin Laden's mentor Abdullah Azzam was a stalwart of the Jordanian Muslim Brotherhood. Ayman Zawahiri, al Qaeda's chief strategis t, was arrested at age 15 in Egypt for belonging to the Brotherhood. Khalid Shaikh Mohammed, Ayman al-Zawahiri, "Blind Sheikh" Omar Abdul-Rahman, and chief 9/11 hijacker Mohamed Atta, were members of the Brotherhood.
There has been some understanding of the Brotherhood's relationship to Islamist groups, and of those ties even in the United States. In 2003 Richard Clarke said "the issue of terrorist financing in the United States is a fundamental example of the shared infrastructure levered by Hamas, Islamic Jihad and al Qaeda, all of which enjoy a significant degree of cooperation and coordination within our borders. The common link here is the extremist Muslim Brotherhood – all these organizations are descendants of the membership and ideology of the Muslim Brotherhood." [5] However, this understanding has not taken root in the intelligence, law enforcement and policy communities, nor has the financial network of the Brotherhood come under intense scrutiny.
Public records show the Brotherhood's financial network of holding companies, subsidiaries, shell banks and real financial institutions stretches to Panama, Liberia, British Virgin Islands, Cayman Islands, Switzerland, Cyprus, Nigeria, Brazil, Argentina, Paraguay and beyond. Many of the entities are in the names of individuals who, like Nada, Nasreddin, al-Qaradawi and Himmat, have publicly identified themselves as Brotherhood leaders.
A senior U.S. government official estimates the total assets of the international Brotherhood to be between $5 billion and $10 billion.[6] It is a difficult thing to assess because some individual members, such as Nada and Nasreddin, have great individual wealth. They also jointly own dozens of enterprises , both real and offshore, with Ghalib Himmat and other Brotherhood leaders. Discerning what is personal wealth, legitimate business operations, and Brotherhood wealth is difficult if not impossible . It is clear not all the money is intended to finance terror or even radical Islam. But it is equally clear that this network provides the ways and means to move significant sums of cash for those operations.
One indication of a company or corporation being a Brotherhood activity, rather than part of individual assets and wealth, is the overlap of the same people on the directorships of the financial institutions and companies. For example, the Brotherhood network entities established in Nassau, Bahamas, all registered their address as that of the law firm --Arthur Hanna and Sons -- which incorporated their businesses and banking institutions.[7] Members of the Hanna family served on the boards of the banks and companies, handled legal correspondence and represented the companies in legal cases . Many of the directors of the myriad companies served as directors of several companies simultaneously. In turn, many of those same people served simultaneously on the governing boards or sharia boards of DMI and other important Brotherhood-dominated financial institutions. The overlap of directorships and shareholders strongly indicates the tight-knit nature of the organization and the inter-connectedness of the financial network.
The most visible part of the network, offshore shell banks in the Bahamas, did merit some investigation immediately after 9/11. The Treasury Department publicly stated that Bank al Taqwa and Akida Bank International were "involved in financing radical groups such as the Palestinian Hamas, Algeria's Islamic Salvation Front and Armed Islamic Group , Tunisia's An-Nahda, and Usama bin Laden and his al-Qaida organization."[8]
The primary shareholders in al Taqwa Bank were Nada, Nasreddin, members of the Binladen family and dozens of other Brotherhood leaders , including Yousef al-Qaradawi, the grand mufti of the United Arab Emirates.[9]
A cluster of charities based in Herndon, Virginia, where many leaders had ties to Nada and his banking activities, is under active investigation by the FBI and the Department of Homeland Security. Two of the leaders of the cluster, called the "Safa Group," incorporated the al Taqwa Bank in Nassau, and other leaders worked for Nada's banks and had extensive financial dealing with him. Many of the Safa Group's leaders are also members of the Brotherhood.[10]
Unfortunately, while the Treasury Department designated Bank al Taqwa and Akida Bank with great fanfare in the immediate aftermath of 9/11, it was largely theater. The government of the Bahamas had already shut both banks down in April 2001.[11] The investigations subsequent to 9/11 revealed the terrorist ties that had been suspected, but never acted on . Earlier intelligence operations by the CIA found Bank al-Taqwa and other structures of the business empire were used not only to funnel money to al Qaeda, but also provided the terrorist organization with access to Internet services and encrypted telephones, and helped arrange arms shipments. [12] The Treasury Department, citing intelligence sources, said that "As of October 2000, Bank Al Taqwa appeared to be providing a clandestine line of credit to a close associate of Usama bin Laden and as of late September 2001, Usama bin Laden and his al-Qaida organization received financial assistance from Youssef M. Nada."[13]
The structure of Bank al Taqwa and Akida Bank in Nassau follow the pattern of other offshore endeavors. The bank was a virtual bank, with only a handful of employees in Nassau manning computers and telephones. The bank was affiliated with the al Taqwa Management Organization, owned by another Nada entity in Switzerland. Nada owned a controlling interest in the bank, and Nasreddin was a director. At the same address, Nasreddin's Akida Bank Private Ltd, operated as a subsidiary of the Nasreddin Foundation . Nasreddin was the president, and Nada served on the board. The real banking activity, however, was carried out through correspondent relationships with European banks.[14]
Nada and Nasreddin, along with their banks, were designated by the U.S. and the U.N. as terrorist financiers in November 2001 . In August 2002, the United States and Italy jointly designated 14 more joint Nada/Nasreddin entities for supporting terrorism.[15] But that was not the end of the use of shell companies and off-shore havens by the Nada/Nasreddin group. An examination of these activities point to serious shortfalls in the efforts to combat terrorist financing.
Despite the clear and compelling evidence that the offshore network of the Brotherhood provided vital financial and logistical support to a variety of Islamic terrorist operations, the only action taken so far has been to freeze a few more of the companies owned by Nada and Nasreddin. There has been little or no coordinated, concerted effort to map out, identify and understand the rest of the Brotherhood structure. One possible exception is the NATO project on the Muslim Brotherhood, which focused on the Brotherhood's activities in Europe and has sought to identify the different Brotherhood entities.
Many Brotherhood businesses were registered as offshore companies through local trusts in Liechtenstein, where there is no requirement to identify companies' owners, and no record is kept regarding activities or transactions. On Jan. 28, 2002, Nada, in violation of the U.N. travel ban he is subject to, traveled from his home in Campione d'Italia, Switzerland, to Vaduz, Liechtenstein. While in Vaduz, he sought to change the names of several of the designated companies. At the same time, he applied to put the new companies in liquidation, and had himself appointed as liquidator. As offshore entities, the newly-named companies maintained no records in Liechtenstein. [16]
Attempts by designated terrorist financiers to switch company registrations, or establish new companies without their visible participation, is a pattern discovered by U.N. and European investigators. While some entities have been detected, many others are believed to have transpired without being detected or blocked. The United Nations Monitoring Group, which wrote a series of well-documented reports based on months of investigations around the world by a team of financial experts, uncovered the Nada movements in Liechtenstein. The group concluded that "The Nada and Nasreddin examples reflect continued serious weaknesses regarding the control of business activities and assets other than bank accounts." The group cited the difficulties in identifying beneficial ownerships and shared assets, and the weakness of the travel ban. [17] In fact, the panel found the whereabouts of the vast majority of the 272 individuals named as terrorist financiers by the United Nations, remained unknown.[18]
The modus operandi of Nada and Nasreddin is visible elsewhere. Dozens of companies of designated individuals remain active despite the ostensible international commitment to shutting them down . In some cases, such as Panama, companies under the names of designated individuals remain untouched.[19] This does not include the many dozens of companies and other corporate entities belonging to designated individuals, either outright or through nominee shareholders, registered in the British Virgin Islands, Cayman Islands and elsewhere in the Caribbean. While the Brotherhood registered dozens of companies in the 1980s and 1990s using Brotherhood leaders as identified directors, this changed over time, making it more difficult to trace the ownership of the entities. Beginning in the late 1990s, perhaps in response to the few intelligence probes that were carried out, many offshore companies have been shut down. Many appear to be re-opened under the direction of nominee shareholders, making the direct tie to the Brotherhood more difficult to detect.
However, it is often not necessary to take any precautions at all because the international sanctions regime aimed at designated terrorist financiers is so weak. For example, Nigeria is in flagrant violation of the U.N. sanctions regime by refusing to freeze the functioning businesses of Nasreddin. Nasreddin has done nothing to hide his ownership of the enterprises. The primary company is Nasco Investment & Property Ltd., owned by Amana Holdings and Management Inc., a still-functioning offshore company registered in Panama.[20] The company lists Nasreddin as its president .[21]
These issues – offshore and shell companies, front companies and the inability to account for the vast majority of the designated al Qaeda financiers or their billions – make it difficult to ascertain how much of al Qaeda's financial flow has been impaired in the 4 1/2 years since 9/11. While the 9/11 Commission's Monograph on Terrorist Financing states that al Qaeda's operating budget is now reduced to a few million dollars a year and its financial needs are minimal [22], this assessment is not universally shared. The U.N. Monitoring Group estimated the value of al Qaeda's financial portfolio "at around $30 million," including its "large portfolio of ostensibly legitimate businesses."[23] Whatever the amount in the direct portfolio of al Qaeda may be, it is only a small fraction of the portfolio of the Muslim Brotherhood. If al Qaeda were to run into serious financial difficulty, its coffers could easily be quietly replenished through the Brotherhood's offshore structure with very little danger of being interdicted.
If the flow of money to Islamist terrorist groups is to be cut off, and the funding for the Muslim Brotherhood's announced intention of recreating the Islamic caliphate and the eventual domination of the world by a radical Islam is to be slowed, then the offshore structure must be understood and steps must be taken to shut it down. It will be necessary to undertake the tedious task of digging up corporate and financial records and mapping the complex and secretive relationships among individuals, corporations and financial institutions. A first, and relatively easy step, would be to reinvigorate the U.N. sanctions regime by putting pressure on the most flagrant violators. A second would be to dedicate more U.S. government resources to the mission of identifying and tracking Brotherhood financiers and assets. This would raise the Brotherhood's cost of doing business and force the members to move away from the easiest, most profitable ways of doing business, while also affording democratic governments a clearer picture of their enemies' capabilities.
# #
This article first appeared at the International Assessment and Strategy Center's site .
[1] Alain Chouet, "The Association of Muslim Brothers: Chronicle of a Barbarism Foretold," European Strategic Intelligence and Security Center, April 6, 2006.
[2] Corporate records and Muslim Brotherhood writings in possession of the author.
[3] Testimony of Jonathan Winer, former Deputy Assistant Secretary of State for International Law Enforcement, before the Senate Committee on Governmental Affairs, July 31, 2003.
[4] Documents on al Turabi's leadership of DMI in possession of the author.
[5] Testimony of Richard A. Clarke before the Senate Banking Committee, Oct. 22, 2003.
[6] Confidential author interview.
[7] Documents in possession of the author.
[8] The United States and Italy Designate Twenty-Five New Financiers of Terror," U.S. Treasury Department, Aug. 29, 2002.
[9] 1999 List of Bank al Taqwa shareholders, obtained by author.
[10] Douglas Farah, Blood From Stones: The Secret Financial Network of Terror, Broadway Book, New York, 2004, pp. 155, 209.
[11] Notice of closures in possession of the author.
[12] Hosenball, Perain and Skipp, op cit.
[13] The United States and Italy Designate Twenty-Five New Financiers of Terror," U.S. Treasury Department, Aug. 29, 2002.
[14] Corporate records obtained by author and "The United States and Italy Designate Twenty-Five New Financiers of Terror," U.S. Treasury Department, Aug. 29, 2002.
[15] "The United States and Italy Designate Twenty-Five New Financiers of Terror," U.S. Treasury Department, Aug. 29, 2002.
[16] Second report of the Monitoring Group Established Pursuant to United Nations Security Council Resolution 1363 (2001) and to Resolution 1455 (2003) on Sanctions Against al Qaeda, Dec. 3, 2003, paragraphs 77-80.
[17] Ibid, paragraphs 81-82.
[18] Ibid, executive summary, pg. 3.
[19] Documentation of currently registered companies by SDIs in possession of the author.
[20] Lisa Myers, "Alleged Terrorist Financier Operates in Plain Sight," NBC, June 30, 2005.
[21] Registro Publico de Panama, ficha 271559, rollo 38428.
[22] National Commission on Terrorist Attacks Upon the United States, Monograph on Terrorist Financing, p. 28.
[23] Second report of the Monitoring Group Established Pursuant to United Nations Security Council Resolution 1390 (2002) on Sanctions Against al Qaeda, December 2002, paragraph 48.
FamilySecurityMatters.org Contributing Editor Douglas Farah is an award-winning investigative journalist, author of "Blood From Stones:The Secret Financial Network of Terror", and Senior Fellow in Financial Investigations and Transparency at the International Assessment and Strategy Center . He blogs on the Counterterrorism Blog and also at www.douglasfarah.com.
Author: By Douglas Farah
Source: The Family Security Foundation, Inc.
Date: August 25, 2007 http://www.familysecuritymatters.org/terrorism.php?id=1274090
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