CTF intelligence apparently led to thwarting of airline bomb plot

None of us contributors to the Terror Finance Blog would, I hope, claim the gift of prophecy. But only three days after writing the piece here ’Better CTF intelligence is needed to fight future plots against civil aviation,’ I can’t help feeling some satisfaction in reading the report from the ’Daily Times’ of Pakistan <http://www.dailytimes.com.pk/default.asp?page=2006’08’12’story_12-8-2006_pg1> that the plot to blow up several US airliners using liquid explosives that was foiled on Thursday was apparently discovered thanks to effective CTF intelligence cooperation between British and Pakistani authorities.

The Daily Times reports as follows in its Saturday August 12th edition:

KARACHI: A UK-based Islamic charity organisation remitted a huge amount of money to three individuals in three different bank accounts in Mirpur, Azad Kashmir, in December last year with the sole purpose of helping its recipients and their organisations carry out the aircraft bombing plan in the UK, insider sources told Daily Times yesterday.

An investigation carried out by Daily Times showed that Muslim Charity of UK remitted not so long ago a huge amount of money under the head of "earthquake relief" to the accounts of three individuals in three different banks - Saudi Pak Bank, Standard Chartered and Habib Bank Ltd. One of these banks is UK based and has its presence in Azad Kashmir because of a huge number of British citizens of Kashmir origin in UK. The money was transferred from UK to banks in Azad Kashmir through Barclays Plc.

Two of the recipients of the transaction are British citizens of Kashmir origin while the third is an Islamabad-based builder, also of Kashmir origin. They were arrested in the last two weeks at three different places in the country. One of them was arrested in Karachi, the "builder" was arrested in Islamabad while the place of the arrest of the third suspect is still not known. There are no available details about these three suspects with regard to their links with organisations such as Al Qaeda or Lashkar-e-Taiba or both.

Pakistani FIA investigators were apparently tipped off by the British authorities about the fund transfers and asked to investigate. Following their arrests the three suspects revealed some key elements of the aircraft bombing plan during interrogations by various agency personnel, who were also aided by at least one expert specialising in money laundering. The Pakistani and British investigators were able to discover how operatives at both ends had raised and moved their funds around. These investigations also established that it was due to the prompt and successful operation of Pakistan’s intelligence agencies, particularly the FIA, that the world was saved from a fate worse than 9/11.

"Had we been even slightly complacent, the perpetrators of this plot might have been able to carry out their operations without little or no problem in the UK because of two broad reasons," said a senior government official, who
was privy to the inquiry carried out by Pakistani agencies following the receipt of a tip from UK’s National Terrorist Financial Investigation Unit in June this year.

What this report shows clearly is that the kind of monitoring of unusual financial transactions that has been mandated by international financial regulators can indeed be effective in producing actionable intelligence on planned terrorist operations. In particular, this success -- assuming that the ’Daily Times’ report is accurate -- must serve to reinforce the resolve of US financial intelligence authorities to continue mining data from SWIFT’s international money transfer network, in spite of all the well-publicised expressions of outraged opposition led by the ’New York Times.’ The US government and governments of other target countries would also be well advised to be more open with the public about why and how they are gathering intelligence about everyone’s financial transactions: however, I would like to address the SWIFT-mining issue in a separate article.

This news report also calls to attention other important questions of CTF policy that have not yet been addressed satisfactorily. One is the status of charities and the level of monitoring that needs to be applied to them: in this particular case, the people planning the airliner attack tried to finance the operation by collecting money from British Muslims for an ostensibly worthy purpose -- earthquake relief in Kashmir -- and then diverted money back to the terrorists in England. Presumably, some of the money may also have been used to pay for the terrorists’ travel to the training camps on the Pakistan-Afghanistan border, and for other logistic support. The UK Charities Commission is supposedly tightening its controls, because of the ease with which charities can be exploited for money laundering and terror financing; but it needs to abandon the political correctness that characterises most British government bodies, and impose mandatory monitoring of international money transfers carried out by Muslim charities, however much political protest this may attract. It goes without saying that the same also applies to Muslim charities in the USA.

Another policy issue is regulation of the non-bank financial sector. The investigators of Britain’s National Terror Finance Investigation Unit, perched at the top of Scotland Yard, and their Pakistani colleagues, were lucky that the money trail from the Muslim Charity of the UK to Pakistan and back to Britain passed through banks that presumably comply properly with the regulations, monitor unusual transactions, and are willing to share information with the authorities. However, the next terrorist group won’t make the same mistake: it will choose, instead, to use some combination of pre-paid plastic cards, hawala and electronic money transfer networks; with all of these, the regulatory requirements to identify customers unequivocally and to report on unusual transactions are honoured mainly in the breach.