Islamic State ‘earning millions by playing the stock market’
Group using cash looted from banks in Mosul to speculate on international currency markets
Telegraph: Isil is making millions of dollars for its war chest by playing foreign currency markets under the noses of bank chiefs, it was revealed today.
The terror group is earning up to $20m (£14.29m) a month by funnelling dollars looted from banks during its takeover of the Iraqi city of Mosul into legitimate currency markets in the Middle East.
It then makes huge returns on currency speculation, which are then wired back via unsuspecting financial authorities in Iraq and Jordan, a parliamentary committee was told on Wednesday.
Islamic State of Iraq and the Levant’s (Isil) extraordinary venture into white collar crime is now a major source of income, along with oil smuggling and extortion from people living in Isil-controlled areas.
Details of the scam emerged during a hearing of a specially-convened Foreign Affairs sub-committee set up to examine Britain’s role in Isil financing.
The hearing was told that Isil finance chiefs would play the international stock markets using cash looted during their 2014 take over of Mosul, in which the group got its hands on an estimated $429m from the city’s central bank.
They also used money “siphoned off” from pension payments that are still being made by the Iraqi government to civil servants living in the city.
The details were revealed to the hearing by John Baron, the sub-committee’s chair, who demanded to know whether the British government – which has pledged to help cut off Isil’s finance networks – was taking proper action against it.
“The cash that Isil has looted, along with siphoned off pension payments, is routed into Jordanian banks and brought back into the system via Baghdad,” he said. “That allows the system to be exploited by Isil, in that they take a turn (profit) on the foreign currency actions and siphon that cash back.”
The profits were channeled back into Isil coffers by “hawala” transfers, an unregulated system of money transfer whereby cash payments are made via agents in one country after a similar amount is presented as collateral in another.
Tobias Ellwood, a junior Foreign Office minister, admitted to the committee that there was a “porousness” in the local financial system but said that work was now underway to shut it down. It had been done without the active connivance of bank staff, he added.
In December, the Central Bank of Iraq named 142 currency-exchange houses in Iraq that the US suspected of moving funds for Islamic State. It banned them from its twice-monthly dollar auctions in a bid to stop the terror group getting its hands on the cash – a main source of exchange in war-torn Iraq.
But Mr Ellwood conceded: “Iraq could have moved faster on this”. Asked if the similar moves had been made in Jordan, he said he was unable to give an answer.
“Jordan plays an important role in the (anti-Isis) coalition,” he added. “Work is being done to close it down, I don’t think there is anything near as much from that source of revenue as before.”
The committee heard claims that Isil’s “rake off” from foreign currency speculation was a “significant part of their income stream”, although Mr Ellwood said he thought that estimates of $20m were excessive.
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Spiegel: Some members of the intelligence community even view spying in the global financial system with a certain amount of concern, as revealed by a document from the NSA’s British counterpart — the Government Communications Headquarters (GCHQ) — that deals with “financial data” from a legal perspective and examines the organization’s own collaboration with the NSA. According to the document, the collection, storage and sharing of “politically sensitive” data is a highly invasive measure since it includes “bulk data — rich personal information. A lot of it is not about our targets.”
Indeed, secret documents reveal that the main NSA financial database Tracfin, which collects the “Follow the Money” surveillance results on bank transfers, credit card transactions and money transfers, already had 180 million datasets by 2011. The corresponding figure in 2008 was merely 20 million. According to these documents, most Tracfin data is stored for five years.
Monitoring SWIFT
The classified documents show that the intelligence agency has several means of accessing the internal data traffic of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a cooperative used by more than 8,000 banks worldwide for their international transactions. The NSA specifically targets other institutes on an individual basis. Furthermore, the agency apparently has in-depth knowledge of the internal processes of credit card companies like Visa and MasterCard. What’s more, even new, alternative currencies, as well as presumably anonymous means of payment like the Internet currency Bitcoin, rank among the targets of the American spies.
The collected information often provides a complete picture of individuals, including their movements, contacts and communication behavior. The success stories mentioned by the intelligence agency include operations that resulted in banks in the Arab world being placed on the US Treasury’s blacklist.
In one case, the NSA provided proof that a bank was involved in illegal arms trading — in another case, a financial institution was providing support to an authoritarian African regime. Full article here.
