Keeping Islamic State from Money Exchanges

Denying The Islamic State Access To Money-Exchange Houses

Energy: Regional regulators must take steps, as the Iraqi Central Bank has done, to wall off their financial systems from unlicensed or loosely regulated money remitters vulnerable to exploitation by the Islamic State.

This week, the entity known as the Foreign Ministers of the Small Group of the Global Coalition to Counter ISIL/Da’esh met in Rome to assess the coalition’s work and accelerate its efforts to degrade and ultimately defeat the Islamic State. In a statement, the ministers stressed that they “are determined to keep ISIL/Da’esh cut off from the international financial system [and] to disrupt its economic and financial infrastructure.” Making good on this pledge requires tackling the group’s access not only to banks but also to remittance providers such as exchange houses, which play an important role in the local economies and are more difficult to regulate. In December, the Central Bank of Iraq took action against nearly 150 Iraqi money-exchange companies — most, but not all, in Islamic State-controlled areas — showing how U.S. and regional regulators, along with other coalition partners, can join forces to isolate the group from the international financial system.

BACKGROUND

Given the Islamic State’s 2014 budget of roughly $2 billion, U.S. Department of Treasury officials have called the group’s ability to draw revenues from its own territory “unprecedented.” The sources of funds include between $500 million and $1 billion seized from bank vaults as the Islamic State gained territory (a onetime take), hundreds of millions a year from taxation and extortion, and tens of millions a month from oil sales, among other sources. While the Islamic State derives most of its income from the territory it controls, denying the Islamic State the ability to use bank branches and exchange houses in its territory to make and receive international transfers — to access foreign currency, procure goods, and finance foreign fighters and potentially foreign affiliates — is a critical part of isolating the group.

Military strikes have played an increasingly important role in degrading the Islamic State’s ability to derive income from resources in the territory it controls. Furthermore, given that the Islamic State derives most of its income from natural resource extraction and extortion directed at commercial activity, territorial losses will have a direct impact on the organization’s bottom line. Recently, airstrikes have also targeted Islamic State cash collection and distribution points, depriving the group of millions of dollars stored at these “cash depots,” according to military estimates.

Previously, the Iraqi government and other regional regulators have taken steps to cut off bank branches in Islamic State territory from participating in the broader financial system. The United States and other countries, together with Iraqi authorities, headquarters of international banks, and others within the international financial community, have partnered to counter the Islamic State’s backdoor banking through these bank branches, as well as those in Syria. International banks now look closely for indications of Islamic State financing and file suspicious activity reports that, U.S. authorities say, have provided “valuable insight into financial activity in areas where ISIL operates.” The Central Bank of Iraq instructed financial institutions incorporated in Iraq to prevent wire transfers to and from banks located in areas under Islamic State control, and international banks with regional branches in Islamic State-controlled territories have relocated staff away from areas around the group’s territories.

Another area of effort is limiting new funds entering Islamic State territory through countersmuggling initiatives and by ceasing to pay Iraqi government salaries, which had been taxed directly and indirectly by the Islamic State, in areas under the group’s control. As pressure mounts on the Islamic State’s backdoor banking, the group has become more reliant on money-exchange houses to send and receive funds. More explanation and details here.

Meanwhile, there is finally those who are declaring Russia is aiding Islamic State:

US says Russian campaign in Syria helping the Islamic State

WASHINGTON (AP) — The U.S. says Russia’s counterterrorism campaign in Syria is actually helping the Islamic State.

Brett McGurk, the Obama administration’s point-man for defeating the group, says a Russian-backed offensive in northern Syria is targeting rebel fighters who were battling the Islamic State and who now have to face the Syrian military.

McGurk tells the House Foreign Affairs Committee, “What Russia’s doing is directly enabling ISIL.”

He says Russia is strengthening the Syria’s government, worsening a humanitarian crisis and fueling extremism. McGurk, who will meet Russian and other diplomats at a conference on Syria later this week, called the developments “totally unacceptable.”

Clapper Breaks with Obama’s Threat Crisis Plank

North Korea has restarted plutonium reactor: US

North Korea has restarted a plutonium reactor that could fuel a nuclear bomb and is seeking missile technology that could threaten the United States, Washington’s top spy said on Tuesday.

Intel Chief Breaks From Obama Narrative On Iran Deal

DailyCaller: The head of U.S. intelligence believes that Iran’s recent actions speak loudly to its intentions, particularly given the country’s recent provocations since the Iran nuclear deal came into effect.

Testifying to the Senate Committee on Armed Services Tuesday, director of national intelligence James Clapper gave a very somber description of what he sees as Iran’s intentions toward the U.S. now that last summer’s nuclear deal has commenced. In particular, his statements offered little assurance that Iran is acting as an honest actor with the U.S. and the other states involved in last year’s negotiations, or that the nuclear deal will stop Iran from obtaining a nuclear weapon.

“Iran probably views JCPOA [Iran deal] as a means to remove sanctions while preserving nuclear capabilities, as well as the option to eventually expand its nuclear infrastructure,” said Clapper, who also noted that, so far, he sees no evidence that Iran is violating the nuclear deal.

Clapper’s statements stand in stark contrast with those made by President Barack Obama, who lauded the nuclear accord last summer, claiming it would not only stop all of Iran’s possible pathways to a nuclear weapon, but that “under its terms, Iran is never allowed to build a nuclear weapon.” More here.

***

Clapper went into all specifics on the threat matrix both at home and globally. He did not leave anything behind, from cyber wars, space wars, weapons systems, human trafficking, terror organizations, economic instability, migrants, disinformation and drug cartels.

 STATEMENT FOR THE RECORD WORLDWIDE THREAT ASSESSMENT of the US INTELLIGENCE COMMUNITY
February 9, 2016
INTRODUCTION
Chairman McCain, Vice Chairman Reed, Members of the Committee, thank you for the invitation to offer
the United States Intelligence Community’s 2016 assessment of threats to US national security. My statement reflects the collective insights of the Intelligence Community’s extraordinary men and women, whom I am privileged and honored to lead. We in the Intelligence Community are committed every day to provide the nuanced, multidisciplinary intelligence that policymakers, warfighters, and domestic law enforcement personnel need to protect American lives and America’s interests anywhere in the world.
 The order of the topics presented in this statement does not necessarily indicate the relative importance or magnitude of the threat in the view of the Intelligence Community. Information available as of February 3, 2016 was used in the preparation of this assessment.
 
TABLE OF CONTENTS
 
GLOBAL THREATS Cyber and Technology Terrorism Weapons of Mass Destruction and Proliferation Space and Counterspace
 
Counterintelligence Transnational Organized Crime
 
Economics and Natural Resources Human Security
 
REGIONAL THREATS East Asia
China Southeast Asia North Korea
Russia and Eurasia
Russia Ukraine, Belarus, and Moldova The Caucasus and Central Asia
Europe
 
Key Partners The Balkans Turkey Middle East and North Africa 
Iraq Syria Libya  Yemen Iran  Lebanon Egypt Tunisia
 
South Asia
Afghanistan Bangladesh Pakistan and India
Sub-Saharan Africa  Central Africa Somalia South Sudan Sudan Nigeria
 
Latin America and Caribbean
 
Central America Cuba Venezuela Brazil
 

 

 

 

 

N. Korea Launch Flew Over the Super Bowl

TOKYO—Here’s a bit of Super Bowl trivia: North Korea’s newest satellite passed almost right over the stadium just an hour after it ended.

Whatever motives Pyongyang may have about using its rocket launches to develop nuclear-tipped long-range missiles, it now has two satellites circling the Earth, according to Norad, the North American Aerospace Command, which monitors all satellites in orbit.

Both of the Kwangmyongsong, or “Shining Star,” satellites complete their orbits in about 94 minutes and based on data released by international organizations tracking them, the new one passed almost right over Levi’s Stadium about an hour after the Super Bowl ended.

“It passed almost directly overhead Silicon Valley, which is where I am and where the stadium is,” tech watcher Martyn Williams said in an e-mail to the Associated Press. “The pass happened at 8:26 p.m., after the game. I would put it down to nothing more than a coincidence, but an interesting one.”

***

WASHINGTON (Reuters) – The Pentagon confirmed on Monday that it will start formal talks with South Korea on deploying an advanced missile defense system to South Korea to counter the growing threat of North Korea’s weapons capabilities after its rocket launch this weekend.

U.S. military officials have said the sophisticated system called Terminal High Altitude Area Defense (THAAD) was needed in South Korea. South Korea said on Sunday it and the United States would begin talks on the THAAD, after North Korea launched a long-range rocket earlier carrying what it has called a satellite.

Chang/DailyBeast: On Sunday, North Korea completed its second-in-a-row successful test of a three-stage launcher, showing the regime’s mastery of an especially complex technology.  

Pyongyang claims it put an earth observation satellite — the Kwangmyongsong-4 — in a polar orbit. More likely, the object now circling the earth is a decoy. In 2012, after the North’s last long-range test, it announced it had put a communications satellite in space. No signal, however, has ever been detected from the device.  

That “satellite,” and the one launched this week, are about the same weight as a nuclear warhead, and that was the point of these elaborate exercises.

North Korea has been putting dead objects in orbit so that it can test, in violation of four sets of UN Security Council resolutions, its ballistic missile technology under the guise of a civilian rocket program.  

The rocket the North Koreans call the Unha-3 was probably the most advanced version of their Taepodong missile. It appears, from the location of Sunday’s splashdown zones, that the launcher has a range of 10,000 kilometers, the same as that of the 2012 version.  

Some have taken comfort that the North Koreans have not improved the reach of their missile, but that would be a mistake. “This test launch took less time to set up and was conducted more covertly than any other launch in North Korean history,” notes North Korea analyst Bruce Bechtol, in comments circulated to The Daily Beast and others on Sunday.  

Up to now, the North’s longest-range missile was never much of a weapon. It required weeks to transport, assemble, fuel, and test before launch. The calculus was that the U.S., in a wartime setting, would have plenty of time to destroy the launcher on the ground.  

The North Koreans since 2012 have obviously been able to compress the cycle.  This time, Pyongyang moved up the launch window and sent the Unha-3 into space on the window’s first day, surprising just about every observer.  

That means, of course, the North Koreans are perfecting their launch skills, thereby decreasing on-the-ground vulnerability.  

The Taepodong is still an easy target before launch, but once it reaches the edge of space it becomes fearsome. It has the range to make a dent in more than half of the continental United States. If its warhead is nuclear and explodes high above the American homeland, an electromagnetic pulse could disable electronics across vast swatches of the country.  

The American intelligence community does not think the North Koreans have built a miniaturized nuclear warhead to go along with the Taepodong yet, but it’s clear they are on their way to developing such a device. The launch this week was one month and one day after their fourth nuclear detonation.

Pyongyang, for all the snickering and derision it attracts, is capable of sneaking up on us and becoming an existential threat.  

Why has the United States, the most powerful nation in history, not been able to stop destitute North Korea’s missile and nuclear programs? As Stapleton Roy, the former American diplomat told me in 2004, “No one has found a way to persuade North Korea to move in sensible directions.”  

Certainly not the Obama administration. A multi-faceted bargain in 2012, the so-called Leap Day deal, fell apart weeks after it was put in place, when Kim Jong-un, the ruler of the despotic state, launched what his regime called a rocket.  

Then a new approach, backed by existing sanctions, also failed to produce results. The White House during this phase essentially left North Korea alone, ignoring Kim with a policy now known as “strategic patience.” It has been more like “strategic paralysis,” as David Maxwell of Georgetown University’s Center for Security Studies aptly termed it after the Sunday launch.  

The evident failure of the current administration follows failures of different kinds by its two immediate predecessors. These days, like in past ones, American officials tell us how the North’s actions are “unacceptable,”

the words of Secretary of State John Kerry, or “flagrant,” the term used by National Security Advisor Susan Rice, but the U.S. never seems to do anything effective.  

Similarly, an emergency session of the Security Council on Sunday “strongly condemned” the launch but did nothing else. The UN still has not imposed any sanctions for the Jan. 6 detonation of what North Korea claims is a “hydrogen” device. Veto-wielding Beijing has made it clear it will not support a fifth set of UN sanctions.  

Ultimately, the problem, as Maxwell notes, is that no country wants to pressure Kim so much that either he decides he has nothing to lose and go to war or his decrepit state falls apart, causing tragedy of a different sort. Yet as long as the Kim family regime stays in power, it will continue to build horrific weapons.  

“What North Korea wants most,” said Ashton Carter before he became secretary of defense “is oddly to be left alone, to run this rather odd country, a throwback to Stalinism.” If that were indeed true, President Obama’s strategic patience would have worked by now. Yet the North’s leaders are not content to misrule their 25 million subjects. They have institutionalized crisis.  

When we examine evidence of the most recent crisis — scraps of the missile that fell into the sea Sunday and flight data — we will probably learn the North Koreans in fact tested their new 80-ton booster, which they have been developing for at least two years. It is almost certain Iran has paid for its development.  

That’s why Bechtol, author of North Korea and Regional Security in the Kim Jong-un Era, thinks America in the months ahead should be looking for evidence of sales of the new missile to Iran. Larry Niksch of the Center for Strategic and International Studies told the House Committee on Foreign Affairs in July that North Korea earns “upwards of two to three billion dollars annually from Iran for the various forms of collaboration between them.”  

Even if one thinks Washington should not sanction North Korea to the brink of war or collapse, the U.S. at a minimum needs to stop sales of the launcher North Korea fired off this week. The Bush administration’s Proliferation Security Initiative, a comprehensive program to stop such transfers, has languished in Washington in recent years.  

At this point, American policymakers are not trying very hard to stop North Korea’s trade in dangerous weapons. That, to borrow a phrase, is unacceptable.

*** Why did North Korea launch this now? Rand Corporation explains.

 

 

Saudi Arabia Diving into Islamic State War?

Carter: Saudis to Contribute More in Counter-ISIL Fight

WASHINGTON, February 5, 2016 —The Saudi Arabian government has indicated its willingness to do more with the coalition in the fight against the Islamic State of Iraq and the Levant, Defense Secretary Ash Carter said yesterday at Nellis Air Force Base in Nevada.

Speaking with reporters after addressing airmen at the Air Force installation, Carter said he looks forward to discussing contributions to the accelerated anti-ISIL fight with the Saudis and 25 other nations next week in Brussels.

“The United States has very much indicated our desire to accelerate the campaign to defeat ISIL, [and] we’ll do that better, and it’ll be easier to sustain the defeat … if other countries that are part of the coalition accelerate their efforts at the same time,” Carter said.

Positive Contribution

Saudi Arabia also has said it’s willing to take the lead in marshaling some Muslim-majority countries, he added, noting that the local population in Syria and Iraq will sustain the defeat of ISIL.

“The Saudis indicated that they and other countries would be best positioned to help make those arrangements,” the secretary said. “I think that’s a very positive contribution as well.”

On other contributions, Carter said the Dutch also have said they are willing to join in the counter-ISIL campaign in Syria, as they have done in Iraq.

“So you see others stepping up,” he added, “and the reason I’m going to Brussels next week is to bring the full weight of the coalition behind accelerating the defeat of ISIL.”

Budgetary Priority

To the airmen in Nevada, Carter previewed the Air Force portion of the fiscal year 2017 DoD budget proposal, noting that the Pentagon is adding another $1 billion over the next five years for the kind of training available at Nellis, home of the Air Force Warfare Center.

“Nellis is incredibly important to the Air Force, now and in the future, [and] they can expect increased investments in the quality of the range, in the intensity of the training, the number of exercises conducted here, the variety of aircraft that will be coming here and will need to be maintained here,” Carter said.

“This is a critical place,” he added. “It’s going to stay a critical place, and it’s going to get budgetary priority. The key is readiness — that’s the key to the Air Force today and tomorrow.”

***

Saudi Arabia vs Iran: The view from Turkey, stuck in the middle

ISTANBUL – Turkey should avoid picking sides in the current diplomatic crisis between Saudi Arabia and Iran, according to experts.

“I hope that Turkey doesn’t feel that it needs to rush in and take sides in this issue. It’s not in the interests of the region that everyone lines up on one side or the other,” said Stephen Kinzer, a visiting fellow at the Watson Institute for International Studies and a former bureau chief for the New York Times in Istanbul.

Sunni-majority Saudi Arabia terminated diplomatic ties with its longtime rival Iran, which has a Shi’a majority, on Sunday following an attack by protestors on its embassy in Tehran. The protestors, who the Saudi foreign minister said were supported by the Iranian government, were angry at Saudi Arabia’s execution of prominent Shi’a cleric and critic of the Kingdom Nimr Al-Nimr on Saturday.

“This certainly heralds a more acute period of confrontation between the two,” said Sinan Ülgen, former Turkish diplomat and chairman of The Centre for Economics and Foreign Policy Studies in Istanbul.

Turkey, majority-Sunni, has relations with Saudi Arabia and Iran, and has called for restraint from both sides. Ankara criticized Saudi Arabia for “political death penalties” without specifically mentioning Nimr, and said Iran must protect all diplomatic missions in its country, calling the attacks on the Saudi embassy “unacceptable.”

Ülgen told The Media Line that since the American invasion of Iraq in 2003 and the ensuing instability, “we have seen a rise in sectarian tension between Tehran and Riyadh.”

However, both Ülgen and Kinzer say that dismissing the conflict purely as religious sectarianism is overly simplistic.

“Sectarianism is being used as a façade, behind which Saudi Arabia and Iran are jousting for power in the Middle East,” Kinzer told The Media Line. “Basically these are the only remaining powers in the [region]. You’d like to think the Middle East is big enough for both of them, but it doesn’t seem that way.”

North Korea Missile or Satellite Launch?

IAEA on North Korea

Countdown to Launch: New Activity at the Sohae Horizontal Processing Building

By

Editor’s Note: With North Korea’s recent notifications to the International Maritime Organization (IMO) and International Telecommunication Union (ITU) that it would launch an “earth observation satellite” between February 8 and February 25, 38 North has initiated a series of brief imagery analysis updates to closely follow developments at the North’s Sohae Satellite Launching Station (“Tongchang-dong”). This is the first of these updates.

Activity at the Horizontal Processing Building

Recent commercial satellite imagery indicates that the level of activity at the Horizontal Processing Building at the Sohae Satellite Launching Station (“Tongchang-dong”) is suggestive of preparations for a space launch and supports North Korea’s announced launch window of February 8 through 24. During past launches, this building has been used to receive the various rocket stages. Once received, they are assembled in the horizontal position to test all connections, perform final testing of subsystems and prepare the stages for mounting on the launch pad. Specifically, on February 1, there are nine vehicles present, of which two are likely to be buses. Compared with only one vehicle present on January 25, this level of activity is similar to that seen prior to the previous launch in 2012 and is suggestive of launch preparations.

At the nearby covered rail station, the shed roof obscures the view of any activity within. On February 1, a small utility pole (i.e., for lighting or communications) has been erected near the northeast corner of the shed.

Figure 1. Increased activity at the Horizontal Processing Building and rail station. 

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No New Activity at the Launch Pad

Recent imagery indicates no significant changes at the Sohae launch pad since last viewed on January 25. The work platforms on the gantry tower remain folded forward, with the environmental covers in place, obscuring any activity that might be taking place within. It is also not possible to see whether a space launch vehicle (SLV) is already present within the utility platforms.

No personnel or vehicles appear present elsewhere on the launch pad or in the fuel/oxidizer bunker. The rail-mounted transfer structure, which will likely be used to move the various rocket stages from the underground station or the stationary processing building to the launch pad, remains at the south end of the pad adjacent to the stationary processing building. Although there is no activity indicating an imminent launch, the gantry tower and launch pad complex appear to be in a condition capable of conducting a launch within the announced launch window of February 8 through 24.

Figure 2. Environmental covers still obscure any activity that might be taking place inside the gantry tower.

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Low Activity at other Key Launch related Facilities

Recent imagery indicates a still low level of activity at other key facilities likely to be involved in a space launch when compared to January 25. Specifically:

  • There are no significant changes at what is believed to be the launch control building. The structure appears to be in good condition. Activity at this facility should increase as the launch date grows closer.
  • No activity is noted at the building North Korea has previously identified at the Satellite Control Building. On January 25, there were five vehicles present in the two buildings in the VIP housing area. By February 1, only one vehicle is present. Extended vehicle activity in this area—seen prior to the 2012 launch—could mean that scientists and engineers are present.
  • There are no significant changes at what is believed to be the National Aerospace Development Administration (NADA) Auditorium between January 25 and February 1, although the adjacent helicopter pad had been cleared of snow. Guests, dignitaries and workers would view the launch from this location.

Vertical Engine Test Stand Appears Ready

Activity noted at the vertical engine test stand during the last month indicates that an engine test could be conducted at any time and with little prior notice. There are no significant changes noted at the vertical engine test stand between January 25 and February 1. The rail-mounted environmental shelter remains immediately adjacent to the test stand. No personnel are visible and there are no indications that an engine test has recently taken place. The complex appears capable of conducting a test at any time.

Figure 3. Engine test stand appears ready for use. 

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For media licensing options, please contact [email protected].