Greater International Pressure Needed to Crack Down on Terror Group LeT: CFT AnalystPrintable Version
(Amit Kumar, ACAMS moneylaundering.com)
U.N. and U.S. sanctions against the Lashkar-e-Taiba, one of the largest militant Islamist groups operating in the world, have done little to stem its finances, according to Amit Kumar, the fellow for Homeland Security and Counterterrorism at the Center for National Policy.
The terrorist organization, which was responsible for the coordinated November 2008 attacks in Mumbai that killed 164 people, is still able to fund its operations through donations sent through informal hawala networks, said Kumar. Without greater international pressure and efforts by South Asian nations, the group, known as the LeT, will continue to work with and fund al-Qaida, the Taliban and the Haqqani network, he said.
Kumar, who is currently co-editing a textbook on combating the financing of terrorism (CFT), recently spoke with Managing Editor Brian Orsak about the LeT’s funding and recent attempts at currency counterfeiting. What follows is an edited transcript of their conversation.
What is LeT and why is it important?
LeT is a terrorist organization that was set up in around the early1990s and it arose out of an organization, Markaz-ud Dawa-wal-Irshad, which was helping with the Afghanistan cause during the Soviet invasion of Afghanistan in the 1980s. After the Soviets exited Afghanistan in 1988, it assumed a more anti-India focus. In roughly the early 1990s, the militant arm of that organization was born as the LeT, or Lashkar-e-Taiba.
What is the group’s connection with other terrorist groups?
There are reports that Bin Laden had put in some seed capital to set up the group and, of course, there is the fact that Hafeez Saeed, the head of a charitable social services arm of LeT, and others in the LeT organization were involved in the Afghanistan cause. That’s the moment the association of LeT with al-Qaida, the Taliban, the Haqqanis and other terrorist groups in Pakistan and Afghanistan really began. After that, LeT started espousing the cause of Kashmiri separatism from India. The connections with al-Qaida and the Taliban are still as strong as ever. If you look at reports, [al-Qaida member] Abu Zubaydah was arrested in a safe-house of LeT in Afghanistan in 2002 and the LeT has given logistical support to Taliban attacks and Haqqani attacks against the India embassy in 2008 and 2009. Generally, I see it as part of one whole larger terrorist network, allied and affiliated with al-Qaida.
Is the group affiliated with state-related actors, such as Pakistan’s ISI?
The perception is that the Pakistani intelligence agents are providing guidance to or preparing the leaders for attacks against India. If you just take the 2008 Mumbai attacks, when the LeT killed 166 people, including six Americans, the training and the guidance and the logistical support by the ISI was manifest. The degree of the support varies depending on sources and investigations.
What’s known about how the Mumbai attacks were conducted and financed?
As far as how they were perpetrated, it’s open knowledge that the 10 LeT terrorists who were trained in Pakistan and were handled by ISI, especially the retired ISI folks, came by sea to India and killed 166 people, including through the protracted battle in the Taj Hotel in Mumbai. Alongside that, there are certain other activities. For example, Tahawwur Rana and David Coleman Headley. Headley is a U.S.-born LeT terrorist and is of Pakistani origin and Rana is of Pakistani origin and a Canadian citizen but a resident of Chicago. They were involved in providing reconnaissance of the Mumbai targets. Both have recently been sentenced by U.S. courts; Headley for the Mumbai reconnaissance, and Rana for providing material support to the LeT plot in Denmark. Obviously, other terrorist operators involved in the 2008 LeT attacks in Mumbai have been designated by the U.S. Then there’s Zaki-ur-Rehman Lakhvi. He’s imprisoned in Pakistan right now and six of his henchmen are facing cases in Pakistani courts right now. It’s alleged that Hafeez Saeed, the head of [Pakistan-based] Jamaat-ud-Dawah, which is the charitable social services arm of LeT, is also responsible, although it’s not been proven in a court of law beyond the U.N. and U.S. sanctions by [the Office of Foreign Assets Control].
They’re financed through different sources. It’s difficult to separate the financing of certain attacks from the financing of the group’s activities in general. A good deal of LeT’s financing comes from rich donors—Pakistani, Kashmiri, Emirate, Qatari, Saudi Arabian and Kuwaiti.
What besides terrorism are these donations used for?
They are engaged in a lot of social services, a lot of charity work. For example, in 2005, earthquakes in the Pakistani part of Kashmir—they were really involved in directing relief and charitable efforts. They are pretty popular with the people of Pakistan. They have ingratiated themselves with them through all of these social efforts.
Have the U.N. and U.S. sanctions effectively restricted the group’s financing?
In my view, the U.S. and the U.N. sanctions, beyond the name-and-shame deterrent element, have not really impacted the spigots of finance from the Gulf, especially, that the LeT has been used to hogging for the last almost two decades of its life. That hasn’t been deterred. Nor have measures in India and elsewhere really restricted their finances.
There are basically two questions with sanctions. One is: how effective are the sanctions? Are the sanctions really freezing the assets? There aren’t really any figures on that. The other is: are the sanctions really creating an impact and are the sanctions deterring the financing of LeT? The answer in both cases is no, really.
Are the financiers of LeT using financial institutions to donate their money?
There are two ways of moving these donations. Obviously, one is the banking channels. When the Taliban was ruling Afghanistan, about $100,000 was ostensibly channeled through HSBC. But they rely generally on hawala—informal value transfers—and also cash couriers. Those are the two main methods of moving funds from and to the Gulf and South Asia.
Are there specific red flags compliance officers should look for, or specific steps they should take?
Know-your-customer (KYC) and customer due diligence (CDD) standards are really important. Suffice it to say that the banks—international as well as domestic banks within India, Pakistan and Afghanistan and, of course, the UAE, Qatar, Kuwait and Saudi Arabia—need to look at establishing money laundering controls and really implementing restrictive measures to make sure the banking channels aren’t misused by terrorist financiers.
The AML/CFT regimes [in these countries] have to be really spruced up big time to bring then to the level of what we see in the U.S. Despite the kind of financial controls we have in the U.S., we’re still having problems with HSBC, Standard Chartered, Lloyds and others but if you look in South Asia [there needs to be improvements of] KYC, CDD, effective asset freezes and the understanding of terrorist financing typologies. There’s a kind of paucity of actual convictions or even money laundering charges. I think the Indians are on the right track and the Pakistanis are trying as far as establishing all of these measures but a concerted effort of the public and private sector is really needed, from the bank side and the law enforcement side.
So there needs to a ratcheting up of pressure internally in these countries as well as more pressure from the international community?
Absolutely. India became a member of FATF around two-and-a-half years ago and it instituted changes in its money laundering regime through amendments in the Unlawful Activities Prevention (Amendment) Act, 2012, adding a number of terrorist financing offences. For example, the counterfeiting of currency is a now a terrorist financing offence.
One of the things LeT, with the ostensible support of the Pakistani establishment, is doing is trying to print fake Indian currency and transporting it through cash couriers through Nepal or Bangladesh or Pakistan into India, according to reports. That’s been a very important thing that the Indians have been very concerned about it for quite a while. That not only is financing terrorism but also chips away at the Indian economy. That’s been another thing that the AML/CFT people should be concerned about.
This interview originally appeared on ACAMS moneylaundering.com.