US: Terrorists Rely on Crime for Money

Governments and private finance have gone after donors who have funded terrorist groups like Al-Qaeda, so terrorists are relying more heavily on organized crime to raise money, according to David Cohen, assistant treasury secretary for terrorist financing.

He made his remarks to a money laundering conference in DC:

The government's identification of domestic and foreign financiers to terrorist groups and private financial institutions' willingness to not engage in business with the designated donors has cut into the available capital for terrorist groups, Cohen said. He noted that in the first six months of this year, Al Qaeda publicly appealed for money four times. In June the group said that lack of funding was hurting its recruitment and training. "We assess that al Qaida is in its weakest financial condition in several years and that as a result, its influence is waning," Cohen said.

But Cohen cautioned that other terrorist groups, notably the Taliban in Afghanistan, are in stronger financial shape. And networks' increasing reliance on conventional crime, including drug and weapons trafficking, helps bring in profits.

While Cohen’s remarks could be grounds for pessimism – particularly because police attention to and funding for fighting organized crime switched over to anti-terrorism after Sept. 11, 2001– Cohen said the shift could be in law enforcement’s favor.

Activities accompanied by large movements of cash are more easily detected by banks and financial institutions watching for suspicious activities, he said in an appeal for more private-sector help in monitoring potential criminal efforts.

"The increasing use of financial crime by terrorist organizations to fund their activities places financial institutions in a much stronger position to detect terrorist financing," Cohen said.


What if those financial institutions aren’t interested? The world is still full of secrecy jurisdictions, according to a new research project from the Tax Justice Network that reports on the openness (or lack thereof) of countries and principalities worldwide. Here’s the brief on the project, called Secrecy Jurisdictions: Mapping the Faultlines:

Secrecy jurisdictions facilitate illicit financial flows stemming from three overlapping sources: bribery, criminal activity and cross-border trade mispricing. Secrecy jurisdictions and those operating through them undermine development for the poorest countries, and create a criminogenic environment in which all sorts of crimes can thrive and feast on the fruits of law-breaking.

Secrecy jurisdictions facilitate a wide range of crimes such as tax evasion, non-payment of alimonies, money laundering, terrorist financing, drug trafficking, human trafficking, illegal arms trading, counterfeiting, insider-dealing, embezzlement, fleeing of bankruptcy orders, all sorts of fraud, and many more.


What will it take to open up these jurisdictions? If the events of the past year haven’t provided the impetus to truly open up the global financial system, maybe it will take government officials talking about what’s happening at the intersection of crime and terrorism to move things along. 

Russia: Oligarchs Stir Strikes to Extort Government?

Oligarchs who own companies in Russia’s one-company towns have come up with a new twist on extortion, according to Georgian Daily. Because the Russian government fears people taking to the streets against the government, oligarchs are covertly drumming up strikes at their companies to extract money from the government. Quoting a story on a Russian web portal by an independent journalist in the Urals, Georgian Daily writes:

One technologist said that these owners have an obvious interest in such tensions: “At the same time with the protest actions, the owner turns to the government with a request to allocate funds to eliminate debts or simply to cover current account short falls. He can also ask for other concessions: reductions in taxes and fees or special conditions for work with state monopolies.”

Anything’s possible, and this would be an ingenious new method of extortion if it’s true, but it’s probably a good idea to take Georgian Daily’s posts about Russia with a grain of salt. The Daily is as eager to report on malfeasance in Russia as Serbian newspapers are to report on crime in Kosovo.

Deripaska Denial

In other oligarchs news, aluminium tycoon Oleg Deripaska has denied any connection with companies that Spanish officials are investigating for money laundering. The press in Spain has reported that Deripaska is suspected of laundering €4 million in the early 2000s through Russian mob bank accounts in Spain. Deripaska issued a statement on Sunday that said he had no links with any of the companies in the Spanish case, and that he’d had no word from Spanish authorities asking for interviews.

Serbia to Pass Visa-free Test?

The European Commission (EC) could decide on visa-free travel for citizens of Serbia as soon as November or December, Interior Minister Ivica Dacic told the press last week. The EC delegation will visit Serbia this week to check the country’s progress on several benchmarks – including fighting corruption and crime – before deciding to free up European travel for Serbian passport holders. For once I won’t complain about toothless EC benchmarks. This is a good benchmark, and good for the EC for pushing it.

Perhaps it was then auspicious timing that Serbian law enforcement had two major coups last week: Police arrested eight men suspected of robbing a Croatian post office of €2 million and other crimes, and the security services working with the US DEA in the Atlantic Ocean seized nearly three tons of cocaine. In the first case, police also suspect the men were behind several murders, other armed robberies and trafficking arms and drugs. In the second, a Montenegrin newspaper reported that a businessman in the north of the country allegedly ordered the cocaine. Dacic said that police would question anyone they thought to be involved with the cocaine, which he said had come from Colombia.

Serbia Denies Extradition in Pukanić Case

Serbia’s Supreme Court last week rejected Croatia’s request to extradite a suspect in last year’s murder of a prominent journalist in a car-bombing in downtown Zagreb. Extradition has a sketchy history in the region, for myriad reasons, but in this case the suspect – Zeljko Milovanovic – is facing charges in Serbia, and hasn’t been turned loose with impunity (yet).

The VSS decided that the conditions for Milovanović's extradition had not been met, given that he is a Serbian citizen who is already facing charges of criminal conspiracy and the murder of (Ivo) Pukanić before the Belgrade District Court.

Kosovo Police Arrest Five in Raid

The Kosovo Police Service’s organized crime unit last week raided spots around Prizren and Peja, arrested five people and seized one kilo of cocaine, the Kosovo Press Agency reported. The operation, which also seized two vehicles, came after a three-month investigation by both Kosovo and Albanian police.

Italy: Mobbed-up Firms Angle for’Quake Contracts

Companies fronting for the Sicilian mob are vying for reconstruction contracts in and around the earthquake-shattered town of L’Aquila, anti-mafia investigators reported last week.

Though mobbed-up firms getting their fingers in reconstruction pies is something Italy has a great deal of experience with, and various Cassandras warned after the L’Aquila earthquake in April that the same smarminess was likely to reoccur, one company linked to the Rinzivillo crime family won contracts worth about €450,000. Half the company’s workers were also found to have criminal records.

Construction companies must be certified as organized-crime-free before they can get public works contracts in Italy. On large projects, authorities apparently have a hard time sorting out the maze of contractors, sub-contractors and sub-sub-contractors.

Berlusconi Watch

Also last week, following a high court decision that overturned Prime Minister Silvio Berlusconi’s immunity from prosecution while in office, Berlusconi vowed to reform the court system to end the “witch hunt” against him. Now that Berlusconi no longer has immunity, Milan courts plan to restart two corruption cases against him that had been scuttled by last year’s law. He has blamed both cases on a Milan cabal of left-leaning judges. Berlusconi said he wants to change the current system under which investigating magistrates can become presiding judges, which he said compromises the judiciary.