Cautioning that the 'hawala' money in India is directly linked to terrorist financing, the US has suggested to New Delhi to strengthen its anti money laundering and counter terrorism-finance legislations.

It also recommended that New Delhi should work towards becoming a full-fledged member of Financial Action Task Force (FATF), an inter-governmental body for development of policies to combat money laundering and terrorist financing.

While noting that the Indian Parliament passed the Prevention of Money Laundering (Amendment) Bill, early this week, a US State Department report has suggested that India should make necessary legislative amendments to bring its anti money laundering and counter terrorism finance regime in conformity to FATF.

"Given the number of terrorist attacks in India and the fact that in India hawala is directly linked to terrorist financing, India should prioritise cooperation with international initiatives that provide increased transparency in alternative remittance systems," said the report in its section on India related to money laundering.

The report, released by Assistant US Secretary of State for International Narcotics and Law Enforcement Affairs, David T Johnson, quoted RBI estimates that remittances to India sent through legal, formal channels in 2007-2008 amounted to USD 42.6 billion. PTI

Source: PTI

The annual US report on worldwide drug trafficking says Thailand no longer produces illicit drugs in important quantities, but remains a major source of chemical smuggling and money laundering by cross-border drug gangs.

The report by the US State Department, produced every year for more than two decades, is yet another indication that Thailand has become a victim of drug traffickers over the past 20 years.

"There is no significant drug cultivation or production in Thailand," the report states flatly. Rather, lack of enforcement and trafficking by gangs in Burma "have a devastating impact on Burma’s neighbours, especially Thailand."

The always straight-talking International Narcotics Control Strategy Report, however, does not exonerate Thailand or most other countries. For example, it charges that Thailand and 14 other nations - including the United States - are major sources for chemical percursors used in making illicit drugs.

In addition it names Thailand and 59 other countries as major centres for money laundering, abetted by official financial institutions. Again, the US is included in the list.

Without mentioning it, the US report effectively contradicted a recent United Nations survey, which expressed alarm that acreage under opium cultivation had increased in northern Thailand. "There is no significant cultivation or production of opium, heroin, methamphetamine or other drugs in Thailand today," it repeated at several points.

"The uncertainties of the political situation in Thailand have not adversely efforts to combat drugs," it said.

But while local and out-bound Thai drug trafficking has all but halted, "various regional and international drug trafficking networks use Thailand as a transit point and sell drugs produced in Burma and elsewhere."

In addition, international crime syndicates based in Thailand and abroad both find the country attractive, partly because of its open borders and welcome to visitors nad tourists.

"Thailand is vulnerable to money laundering from its own underground economy as well as many categories of cross-border crime, including illicit narcotics and other contraband smuggling," the report said.

Since the mid-1990s, when US authorities figured that Thailand accounted for about one per cent of world opium output, the State Department reports have charted a steady downhill trend in drug production while documenting an equally steady rise in drugs smuggled into the country.

The report, unsurprisingly, was harsh on the western neighbour.

"Burma remains the largest source for methamphetamine tablets in Asia," it said. The State Department charged that the anti-drug laws are not consistently enforced, and it claimed that the Burmese regime has helped the United Wa State Army (UWSA, or Red Wa) become the pre-eminent drug gang in Southeast Asia.

"It is probable that higher level officials of the military regime protect some traffickers," the report stated without clarification, although it noted that Lt Gen Ye Myint, a former member of the ruling junta, resigned as head of the Bureau of Special Operations Number 1 shortly after his son was arrested on drug trafficking charges last year.

In addition to methamphetamines, Thailand has become increasingly targetted by smugglers of cocaine from South America and night club drugs. Cocaine, Ecstasy and similar illicit drugs are bought "by well-off abusers and foreigners, and most often found in private residences and entertainment places in Bangkok," the US report stated.

Among the other neighbours, the US said it was highly concerned at the growing production of amphetamines in Indonesia and the "immense" use of drugs in the Philippines, but praised Laos for reducing its opium crop steadily until it is now at the lowest level since 1975.

Source: Bangkok Post

Nearly every day, it seems, we read about money laundering scandals, some even involving high-ranking officials. What is Israel doing to combat this crime?

Last December, the Tax Authority published a detailed overview of Israel's efforts to combat money laundering (http://ozar.mof.gov.il/taxes/).

According to the Tax Authority, the international campaign against serious crime and terror over the last decade has sought to sap the financial means of crime and terror organizations, on the premise that they cannot survive without money. Removing the profit element from criminal and terror activities serves a dual purpose. First, criminal funds taken out of circulation won't be re-used in the future. Second, preventing criminal gain removes the incentive to commit crime.

One of the key means of enforcement is the Prohibition of Money Laundering Act, 2000 and related regulations. (They can be viewed in English at http://www.justice.gov.il/MOJEng/Halbanat+Hon/.) The law is administered by the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) at the Justice Ministry.

But first, the basics: What is money laundering? Money laundering is defined in the law as performing a property transaction, on property originating directly or indirectly in an offense, used to commit an offense, or enabling the commission of an offense, with the object of concealing or disguising its source, the identity of the owners of the rights therein, its location, its movements or the performance of a transaction with respect to such property Such activity is often carried out using the legitimate financial system or by mixing property derived from crime with other property.

Recognizing the need to combat money laundering as part of the strategy against serious crimes, terror and narcotic dealings, international cooperation is a key objective for many countries now. The present international strategy is based on uniform standards of legislation and enforcement. Anti-money laundering legislation is based on standards developed by a body known as the Financial Action Task Force (FATF). The law was passed in the light of international efforts, to protect Israel's reputation and uphold public confidence in its anti-money-laundering system.

The cross-border transfer of money is a typical money laundering technique. Therefore, the Knesset, like other countries, has adopted Recommendation 9 of the FATF by prescribing the need and the means to report money transferred to or from Israel. According to the law, as amended, a report is required from any person entering or leaving Israel with money on him (Israeli or foreign currency, cash, bankers' drafts or travelers' checks) exceeding NIS 90,000, or importing or exporting money exceeding NIS 90,000 by mail or any other method.

The Prohibition of Money Laundering Act prescribes a range of enforcement measures regarding the conduct and non-reporting of money laundering offenses depending on the circumstances and severity of each case, distinguishing between civil and criminal enforcement.

In serious cases, involving a prohibited property transaction aimed at concealing its source or carrying out a property transaction intended to obstruct its disclosure, the law prescribes a 10-year jail sentence or a substantial fine. In many cases the fundamental element of "intent" may not exist, in which case the Law prescribes a six-month jail sentence or a lesser fine.

In cases where the facts indicate that an infringement has occurred, a Financial Sanction Committee is authorized to impose a financial sanction on reporting infringers. This civil process is intended impose rapid administrative sanctions without a criminal indictment in cases where an infringement has occurred but it is decided to make do with a civil process and satisfy the public interest with a financial sanction that reflects the circumstances of the case.

According to the Tax Authority, 28 decisions taken in the first half of 2008 imposed a total of NIS 744,000 in fines, with the largest sanction imposed totaling NIS 200,000.

As always, consult experienced legal and tax advisers in each country at an early stage in specific cases.

Source: JPost

A free tutorial that provides AML training for financial institutions located in Romania is now available from Edcomm Banker’s Academy.

Law on the Prevention and Sanctioning of Money Laundering, and its subsequent amendments, has laid the groundwork for the AML regime in the country. The Law on Preventing and Fighting Terrorism was passed to criminalize terrorist financing. Additional legislation aiding in Romania’s fight against money laundering and terrorist financing includes the Criminal Procedure Code, which sets confiscation provisions for property including the proceeds of crime, equivalent value, income or valuable benefits obtained from the proceeds of crime.

Focus on Anti Money Laundering, from Edcomm Banker’s Academy, teaches bank employees about AML laws in their country and familiarizes them with their company’s own policies and procedures. Through this interactive course, students learn everything they need to know to detect and prevent money laundering. Focus on Anti Money Laundering can be customized to meet the needs of every Bank, Credit Union, or Money Services Business (MSB). Each course is regularly updated to include changing laws and policies. Recognizing that money laundering can occur anywhere and everywhere, Edcomm Banker’s Academy is prepared to create a course for any country in need.

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The Financial Intelligence Unit-India (FIU-IND) has marked more than 200 financial transactions in the country as "terror financed" with trails to foreign shores, in the current fiscal.

The agency has forwarded these Suspicious Transaction Reports (STRs) to other investigative and enforcement agencies of the country for necessary action.

According to sources in the Union Finance Ministry, the agency found that a number of Cash Transaction Reports (CTRs), which were subsequently categorised under terror financing, had money trails to certain Gulf and other foreign countries.

The FIU-IND has sent the reports to the Economic Intelligence Council (EIC), headed by the Finance Minister, to be subsequently forwarded to agencies like the ED, DRI, IB and the CBI for further probe.

The agency also sent almost 30 requests to its counterparts in other countries in this regard during 2008-09 to detect international networks financing terror modules in the country.

The agency, which has prepared more than 3,000 STRs, to be finalised by the end of this fiscal, has categoried these suspicious transactions under "Combating Financing of Terrorism (CFT)".

Source: The Hindu

A Monmouth County man who admitted to financial scams in which he and his girlfriend bilked victims out of $2.9 million is headed to state prison.



Forty-six-year-old Spiro Pollatos of Marlboro received a 13{-year sentence on Friday. He had pleaded guilty in October to money laundering and has agreed to pay restitution to victims and forfeit assets seized in the investigation.

His live-in girlfriend, 50-year-old Crystal Velitschkow, was sentenced in December to 10 years in prison.

An investigation by the state Division of Criminal Justice determined Pollatos used fraudulent loan services to collect excessive fees and commissions.

The Attorney General's Office, which prosecuted the case, says Pollatos also induced several victims to invest nearly $900,000 to purchase the former Yellow Rose Diner in Keyport. But the victims never got ownership of the business.

By Soman Baby

A number of Gulf ports are being used for trade-based money laundering, experts said yesterday. Under or over-invoicing of goods can take place at intermediary ports in the Gulf while re-exporting goods to the final destination, said International Chamber of Commerce's (ICC) Bahrain Trade Finance Forum chairman Pradeep Taneja.

Mr Taneja, who was speaking at a seminar on trade-based money laundering, did not specify which ports in the Gulf were being used for such activities.

"Several invoices issued and routed through various financial institutions lead to multiple payments for the same goods," he said.

The seminar was organised by the forum at the Bahrain Chamber of Commerce and Industry (BCCI), in Manama.

It was aimed to increase awareness of various stakeholders in international trade finance about trade-based money laundering, said ICC Bahrain chairman Ebrahim Zainal.

"Most bankers feel that they deal in documents and not in goods," he said.

"But this is not the real case in today's complex world, where money laundering, compliance and due diligence have become issues of concern.

"It is important to understand if the presentation under a Documentary Credit is a fraudulent one aimed to abuse the banking system to siphon off money against a cargo which is non-existent.

"Also, it is essential to know if the money is diverted for tax evasion, terrorist funding or the like."

Banks take millions of dollars worth of decisions based on documents, but these documents can be forged, said Mr Zainal.

"It is vital for banks, exporters and importers alike to be aware as to how the abuse of trade finance system has increasingly become attractive to the money launders," he added.

There have been several cases of misrepresentation of quality and type of goods and services, said Mr Taneja.

"Shipping and customs documents may differ from what is actually shipped," he added.

Mr Taneja stressed the need for increasing awareness on trade-based money laundering through training, international co-operation and information sharing amongst competent authorities.

Forum secretary Mohammed Essa Al Gassab said that money laundering was a process by which criminals attempt to hide the true origin and ownership of the proceeds of their criminal activities.

"The term money laundering is also used in relation to the financing of terrorist activity where funds may, or may not, originate from crime," he said.

"Bahrain's Anti-Money Laundering Law of 2001 describes money laundering as committing an act for the purpose of showing that the source of property is lawful, while knowing or believing that it is unlawful.

"The law imposed obligation on an institution to maintain client and transaction record, and report a suspicious transaction to the enforcement unit."

Source: Gulf Daily News

The Financial Intelligence Unit (FIU) estimates that around F$100,000,000 is linked to money laundering transactions and tax evasion cases in Fiji annually, and according to the Interim Attorney General this number is expected to increase as more cases are detected.

In opening a workshop on the issue of money laundering this morning, AG Ayaz Sayed Khaiyum says this figure equates to approximately 1.5% of Fiji’s Gross Domestic Product.

However he says it also indicates that Fiji’s money laundering risk is in the lower bracket when compared globally as the global estimate is 2 to 4.8% of the global GDP.

Sayed Khaium also says that while the various agencies such as the FIU, Fiji Police Force, FIRCA, FICAC, the Immigration Department and the National Anti-Money Laundering Council contribute to the overall implementation of money laundering laws, they cannot operate on their own and therefore effective cooperation and assistance is needed from the private sector.

Source: Fiji Broadcasting Corporation

Dave Gibson

The United Nation´s Office on Drugs and Crime Executive Director Antonio Maria Costa recently told the Austrian magazine Profil that drug money has been the only thing that has kept many major banks in business.

Costa said: "In many instances, drug money is currently the only liquid investment capital. In the second half of 2008, liquidity was the banking system´s main problem and hence liquid capital became an important factor."

Costa went on to say that UNODC has discovered that "interbank loans were funded by money that originated from drug trade and other illegal activities." Incredibly, he said there were "signs that some banks were rescued in that way."

In the last few years, large banks have been getting into the remittance industry, which sends over $50 billion annually from the U.S. to Latin America. While much of the money is sent from laborers in this country back home to their families, drug traffickers heavily use remittances as a way to send their profits south of the border.

The banks charge very high fees for the service.

In 2008, the Wall Street Journal reported that the U.S. Justice Department has opened an investigation into money transfers conducted by Wachovia bank. It is alleged that Wachovia transferred funds from drug deals in the United States to Mexican and Columbian money-exchange houses, or casas de cambio.

There are countless casas de cambio just inside the Mexican border.

The following is a portion of the report which appeared in the Wall Street Journal on April 26, 2008:

"Wachovia built up its ties to casas de cambio as a way to tap the Hispanic market, which doesn´t always bank through traditional Main Street outlets. Wachovia served as a larger partner, holding the foreign-exchange houses´ deposits and providing back-office services. In 2005, it introduced the Dinero Directo card to facilitate cross-border remittances."

"The bank pushed into the business despite concerns from U.S. law enforcement that such firms were sometimes used to launder drug money. Wachovia declined to discuss why it pursued this business despite the warnings."

"Internal emails and documents filed in federal courts in Miami, Chicago and New York describe former ties between Wachovia and money-changing firms. In a case in U.S. court in Miami, federal agents seized more than $11 million in 23 Wachovia accounts belonging to Casa de Cambio Puebla…Mexican police raided Puebla offices last fall, alleging relationships with a major drug cartel."

However, Wachovia is only one of many U.S. banks to come under investigation for laundering drug cartel profits.

The following is a short list of banks which have resolved cases of money laundering, to avoid federal prosecution (Source: U.S. Justice Dept.):

2008, Sigue Corp. was alleged to be part of $24.7 million in suspicious funds in processed remittances. They forfeited $15 million and avoided prosecution.

2007, Union Bank of California was discovered to be laundering drug cartel profits through casas de cambio. The bank forfeited $21.6 million and avoided prosecution.

2007, American Express International Bank failed to report $55 million passing through the accounts of known drug traffickers. They paid $65 million in fines and avoided prosecution.

2006, Bank Atlantic paid a $10 million fine to avoid prosecution, when an undercover investigation discovered that drug profits were being laundered through one of their branch locations.

As part of their deferred prosecution, the banks agreed to reform their practices as well as submit to federal oversight.

Of course, this practice involves very large banks and very large amounts of money.

After an investigation of Union Bank of California, the Justice Department claimed that the bank failed "to maintain an effective anti-money-laundering program."

One case involved two drug traffickers using accounts from Ribadeo Casa de Cambio in order to transfer millions of dollars in drug proceeds. Federal prosecutors discovered $295 million in transfers from several Union Bank accounts back to their account, with only $29 million ever being repaid.

Prosecutors faulted Union Bank not only for failing to corroborate the legitimacy of the transfers, but prosecutors allege, the bank ignored the large volumes of traveler's checks with sequential numbers, large cash deposits and wire transfers strategically structured below federal reporting limits.

While ignorance may be bliss, it would be difficult for the banks to declare it as a defense. Since the mid-1990s, U.S. bank regulators and drug enforcement investigators have been warning U.S. banks that Mexican casas de cambio pose a great money-laundering risk.

Recently, both U.S. and Mexican authorities have taken a much tougher approach in policing the operations of the foreign-exchange firms. The Mexican Attorney General's office says some of the casas de cambio are part of an elaborate system which funnels drug money through U.S. banks, on to European banks and then back to the U.S. and Latin America.

This new and vigorous effort is undoubtedly in response to not only the extreme violence taking place in Mexico, as that nation´s powerful drug cartels threaten to topple the government, but to the growing presence the cartels now have in the U.S. as well.

Of course, it is not only the drug traffickers and low-level operatives who transfer drug profits through U.S. banks.

In 1998, the brother of former Mexican President Carlos Salinas, Raul Salinas was caught transferring hundreds of millions of dollars out of Mexico to Citibank in New York. Citibank was then sending the money to banks in Switzerland.

The Salinas family is believed by both U.S. and Mexican law enforcement to have received nearly a billion dollars from Mexican and Columbian drug cartels. Raul Salinas was released from prison in 2005, after serving ten years for the murder of his brother-in-law.

Upon consideration of the fact that many U.S. banks have engaged in laundering drug profits for the powerful and violent cartels, the $700 billion bank bailout engineered by Bush administration Treasury Secretary Hank Paulson seems even more questionable.

The fact that none of that bailout money went to help homeowners facing foreclosure, combined with the Treasury´s refusal to specifically tell Congress where $200 billion of it went makes you wonder if the relationship between the banks and the drug cartels goes far beyond what we are being told by the Justice Department.

Source: American Chronicle

Boris Berezovsky, a controversial Russian businessman who is wanted in his home country on charges of fraud, claimed to Sky’s Jeff Randall in an interview yesterday that Moscow is using Iceland to launder “dirty money” before investing in other countries.

“You remember three months ago the Russian government declared that they would help Iceland,” Berezovsky said.

In October last year, in the wake of the crisis, news circulated that Iceland had been granted a giant loan from Russia to help save the economy. The news was premature, as it turned out, and although a loan from Russia is not off the table, it hasn’t been granted yet.

Berezovsky stated that since Iceland is not a member of the European Union, it is vulnerable to money-laundering, RÚV reports.

“Their trick is very simple because Russian, let's say top level bureaucrats like Putin, like others, oligarchs together created a system how to operate on the West,” he said in the interview.

Iceland’s Ministry for Foreign Affairs issued a statement to Sky on the matter, which was published on the program, firmly denying Berezovsky’s accusations.

The statement explained that the same financial regulations apply to Iceland as the EU member countries (Iceland is a member of the EEA), also pointing out that Iceland and Russia haven’t reached an agreement on a loan.

Source: Iceland Review

From March 1, customs officials will be allowed to interrogate people carrying large amounts of cash or securities into the country.

The measure, approved by the cabinet on Wednesday, empowers officials to ask individuals personal question such as what the money is to be used for if the sum exceeds SFr10,000 ($8,620).

But the minimum amount is waivered if money laundering or terrorist financing is suspected.

The officials have the right to temporarily confiscate the money.

The measure is in line with the implementation of recommendations by the inter-governmental body, the Financial Action Task Force (FATF).

FATF membership is currently made up of 32 countries - including Switzerland - and territories and two regional organisations.

The FATF also works in close co-operation with a number of international and regional bodies involved in combating money laundering and terrorist financing.

Source: SwissInfo

Cash-rich mafia groups have been channelling funds into banks desperate to survive the global credit crisis, the UN anti-crime chief said on Monday.

Antonio Maria Costa of the UN Office on Drugs and Crime said he had collected ample evidence to make such accusations.

"Consultations I've had with prosecutors and law-enforcement officials around the world show there is ample evidence that the banking system's illiquidity is providing a unique opportunity for organized crime to launder their money," Costa said.

"Just about every financial centre can be characterized as part of the problem," Costa said, but declined to name countries or banks involved, saying that was for prosecutors and other law-enforcement bodies to do.

Costa said a Vienna conference next month marking the 10th anniversary of a UN General Assembly special session on drugs would mull ways to boost steps against money laundering and ease the impact of drug gang profits on the integrity of states.

He said the multilateral Financial Action Task Force (FATF) formed in 1991 did much to help drive mafia money out of banks over the ensuing decade but that achievement was being challenged by the global hemorrhaging of legitimate credit.

"You have the supply--an organized crime industry with enormous amounts of cash, estimated at$322 billion in 2005,not any more stored in banks--and the demand, a banking sector strapped for liquidity," said Costa.

"This is a supply and demand driven situation. Our intuition, based on logic, is now supported by ample evidence."

Asked where cases were occur-ring, he said:"Traditionally, Europe and North America are the places where, as financial centres, most money would be laundered.

Source: The Calgary Herald 2009

The British Virgin Islands Financial Services Commission has published what law firm Harney Westwood & Riegels says are significant changes to the BVI's anti-money laundering and terrorist financing code of practice.

Harneys' regulatory group says that the measures include a number of positive changes for funds domiciled in the BVI. They include the production of a list of countries and territories that the Commission acknowledges as 'recognised jurisdictions' that are equivalent to the BVI for anti-money laundering purposes.

The firm also expresses satisfaction with the recognition that BVI funds may outsource anti-money laundering compliance, including the money reporting officer function, to administrators or other functionaries in recognised jurisdictions.

The regulator also accepts that a non-BVI administrator in a recognised jurisdiction observing its local anti-money laundering/know your customer regime for a BVI fund is compatible with that fund's own obligations under the code.

It also acknowledges that funds, managers and administrators who deal with customers in recognised jurisdictions may benefit from streamlined KYC requirements.

However, Harneys notes, the new code of practice also imposes significant new obligations, including the need for a BVI fund to have written outsourcing agreements in place with administrators, setting out how a mutual fund's anti-money laundering compliance is to be achieved.

There is also an obligation on managers and administrators to ensure adequate staff training on anti-money laundering compliance, and the requirement to have an independent audit function for know your customer and anti-money laundering compliance.

These changes, strongly influenced by industry consultation and the BVI's recent report from the Caribbean Financial Action Task Force, are particularly welcome, Harneys says, time given the regulator's announcement that it intends to actively enforce the anti-money laundering regime from February 22.

Source: HedgeWeek

By Jane Novak

Yemeni President Ali Abdullah Saleh recently struck a deal with Ayman Zawahiri, and Yemen is in the process of emptying its jails of known jihadists. The Yemeni government is recruiting these established jihadists to attack its domestic enemies as it refrains from serious counter-terror measures against the newly formed Al Qaeda in the Arabian Peninsula. The tripartite relationship between the Yemeni regime and al Qaeda enables all participants to further their goals at the expense of national, regional, and global security.

Yemen releases 95 jihadists

News reports from Yemen detail a meeting in Sana'a between President Saleh and a number of so-called reformed jihadists late January. The militants demanded freedom for imprisoned associates. A presidential committee identified 170 jihadists eligible for release, and 95 were released Saturday. Other reports indicate that authorities have cleared for release a total of 300 of the 400 total suspected al Qaeda in prison.

In the latest round of negotiations, Saleh reportedly asked the militants to engage in violence against the southern mobility movement. The southern uprising is bent on achieving the independence of South Yemen and is a substantial threat to Saleh's grip on power. Tariq al Fahdli was present at the meeting, and at a later meeting in Abyan, militants brandished an official order directing the military to supply the mercenary group with arms and ammunition. Fahdli fought alongside bin Laden in Afghanistan and has been accused of complicity in the 1992 Aden hotel bombing, the first al Qaeda attack that targeted American troops. Fahdli's sister is married to Brigadier General Ali Mohsen al Ahmar, President Saleh's half brother and a recruiter for bin Laden in the 1980s.

President Saleh deployed Fahdli and other Afghan Arabs against southern Socialists in 1994's civil war. Some bin Laden loyalists were rewarded with high positions in the administration and military after the 1994 civil war. More recently, General al Ahmar incorporated Sunni extremists into military ranks during the 2004-2008 Saada War against Shiite "Houthi" rebels. Militants legitimize both the 1994 and Saada deployments by referencing the "apostate" nature of the enemy. This task is made easier by the official media's description of both Socialists and Shiites as satanic.

The deployment of al Qaeda extremists as a government paramilitary affords the jihadists training, experience, contacts, financial benefit, and the ability to dictate to the regime and indoctrinate followers. Many are awarded military salaries and official positions. After years of integrating militants into Yemen's security forces and bureaucracy, aspects of the state have been co-opted by extremists.

Direct negotiations between the Yemeni president and al Qaeda operatives grew out of Yemen's "Dialog Program" established in 2002. Through discussion of the Koran, the program sought to gain assurances that jihadists would not launch assaults within Yemen but said nothing about the Islamic legitimacy of attacks on US troops in Iraq. The program ran until 2005 and was described by some participants as an expedited release program.

In 2005, President Saleh began openly negotiating with the jihadists. One such negotiation in 2006 was conducted by Saleh and the head of Yemen's Political Security Organization. The jihadists' representative was Rashad Mohammed Saeed (Abu al Feida), formerly a major figure in al Qaeda and the Taliban who has been seen in videos near Osama Bin Laden.

Saeed later described the outcome of the meeting with Saleh. "It was also agreed to cancel measures imposed on those who are released, like house arrest, the monthly signing of official register and taking permission if you wish to go another province in Yemen," he said. In 2006, Saeed praised Yemen as "the best country" to deal with militants and noted "The Yemeni government will not enter open confrontations with Mujahideen."

President Saleh has also arranged state jobs, cars, cash payments and even weddings for militants who pledged to follow the regime's dictates. Officials spin these negotiations as fostering rehabilitation and integration into society.

In January 2008, a spokesman for an al Qaeda cell in Yemen said the government had recruited some of its members to fight in the Saada War. In exchange, the security forces agreed to "ease the persecution of (al Qaeda) members." Ahmed Mansour said the group is and has been in contact with the government through intermediaries, adding bin Laden ordered a ban on attacks directed against the regime and that the US remains enemy number one. Other al Qaeda insiders who reference bin Laden's prohibition on assaults against Saleh's government include Nasser al Bahri (Abu Jandal), bin Laden's longtime bodyguard, and Rashad Saeed.

Al Qaeda Central

Another prong of President Saleh's tripartite relation with al Qaeda is with the group's central leadership, thought to currently be in Afghanistan or Pakistan. Yemen supplied thousands of recruits to the Afghan jihad in the 1980s, and Yemenis were among the top ranks in the organization, as well as forming the core of personnel who were guarding, feeding, and transporting bin Laden. Saleh welcomed thousands of Yemeni and non-Yemeni jihadists from Afghanistan after the withdrawal of the Soviets. Ayman Zawahiri and Osama bin Laden frequently visited and preached in Yemen in the 1990s and have many loyalists among Yemeni government ranks.

A long-standing pattern of negotiation exists. After al Qaeda operative Khallad bin Attash was arrested in Yemen in 1999, bin Laden contacted a Yemeni official and bargained for Attash's release. The Yemeni regime released Attash and promised not to confront al Qaeda. In exchange, bin Laden pledged not to attack the government. Attash later went on the play a role in the USS Cole bombing. Another round of negotiation appears to have taken place 2003 in which regime concessions resulted in immunity from attack.

A current agreement between Yemen's President Saleh and the al Qaeda terror group was referenced in a report here at The Long War Journal detailing communication between Ayman Zawahiri and President Saleh after September's embassy attack. A US military official reported that "Saleh feared his government would be the next target, but Zawahiri wanted al Qaeda prisoners released from Yemeni jails and committed al Qaeda foot soldiers to fight the Houthi rebels."

Active Jihadists

Although Yemen formally joined the US-led War on Terror after the Sept. 11 attacks, the Yemeni regime has facilitated jihadists' efforts externally, sheltered fighters internally, and repeatedly misled the US about their whereabouts and status. In early 2007, a Yemeni newspaper tallied 1800 Yemenis who traveled to Iraq for jihad; their families said the young men were trained by top level Yemeni military commanders.

Yemeni courts fail to criminalize attacks on US troops or civilians abroad. In a 2006 trial of 13 jihadists who fought in Iraq, the court found that it is not against Yemeni law to murder foreign nationals in "occupied" Muslim nations. Although the defendants admitted to fighting US and Iraqi forces, they faced no judicial penalty and were convicted only of document fraud.

Yemen refuses to extradite or imprison the al Qaeda operatives convicted of the terror attack on the USS Cole. President Saleh has been equally lenient with those convicted of attacks on tourists and oil facilities. Several were granted "house arrest" after escaping from prison. Yemen's banking system lacks the legal framework to criminalize terrorist financing.

Some analysts assert that some of the terror attacks since 2006 were orchestrated by Yemen's security forces in a bid to manipulate international perceptions or overshadow domestic political crises. One of Yemen's most wanted terrorists, Hamza Ali Saleh al Dhayiuani, said "I am ready to prove the reality that some attacks were planned in co-ordination and agreement of the Political Security and its agents to gain foreign support."

In November 2008, Al Quds Al Arabi carried an interview with a former terrorist in Yemen who was described as "very close to al Qaeda". The senior jihadi reported that the terrorist organization has entered a "positive phase" in planning an attack against the US that will "outdo by far" Sept. 11. Al Quds Al Arabi previously published bin Laden's 1998 fatwa against the US. The Yemeni former operative reported that he is contact with the current leaders of the organization in Yemen who in turn receive messages from bin Laden.

Al Qaida groups in Yemen and Saudi Arabia formally merged operations in January, under the name al Qaeda in the Arabian Peninsula (AQAP). The group announced the merger at a press conference attended by a single journalist, Abdulea Shaya, employed as a researcher by the state news agency, SABA. The group was acknowledged by Ayman Zawahiri in a statement. AQAP is based in Yemen. Its leader is a Yemeni, Nasser al Wahishi, who was a close associate of Osama bin Laden in Afghanistan. AQAP vowed to strike at Western interests and supply routes across the region. The new group and its broad goals appear to be a strategic development on the part of al Qaeda Central in furtherance of its global strategy.

The stated goals of AQAP mirror an April 2008 statement by Al Qaeda's central leadership which said establishing naval terror cells and control of the seas around Yemen is a "vital step" in achieving a global caliphate. The Bab al Mandeb waterway and Gulf of Aden were termed "of supreme strategic importance" in al Qaeda's long-term plan. The April statement highlighted the attacks on the USS Cole in 2001 and the French tanker Limburg in 2002 in Port Aden.

In response to the formation of AQAP, Saleh's regime made several announcements of its intent to find the group's hideout. Saleh called on tribal leaders and citizens to turn in the militants. Officials accused the opposition parties of supporting al Qaeda in an attempt to overthrow the state. Security forces set up checkpoints, engaged in hunting activities, and beat a man named al Zaheri because his name was similar to the al Qaeda chieftain's.

AQAP issued a communiqué explaining the unique configuration to its local members and legitimized fighting for the state by referencing the 1994 war. A copy of the letter was obtained by News Yemen. Echoing the earlier agreement by Saleh and Zawahiri late in 2008, Al Qaeda in the Arabian Peninsula explained to its followers that President Saleh wants jihadists to fight on behalf of the state, especially those who did already in 1994, against the enemies of unity-- southern oppositionists. AQAP in return will gain prison releases and unimpeded travel to external theaters of jihad, the letter explained.

Source: The Long War Journal

The government on Wednesday approved amendments to the Prevention of Money Laundering Act, which would expedite the process of India's entry into Financial Action Task Force (FATF) -- an inter-governmental body combating money laundering and terrorist financing.

A Bill seeking to change the Act will be introduced in Parliament, Home Minister P Chidambaram told reporters after a meeting of the Cabinet.

"Some amendments have been made. The Bill will be introduced in the current session of Parliament and we will plan to get it passed if possible," he said.

He said the changes in the Act were necessary for India to become a member of the FATF.

"This is important in order to get India's membership in the Financial Action Task Force, which is an international body," he said, however, not elaborating what amendments have been proposed in the Bill.

India, along with South Korea, has been trying to become a full member of FATF. It was given the observer status in February 2007.

In another decision, the Cabinet gave post-facto approval for Agricultural and Processed Food Private Export Development Authority Amendment Bill 2008, which is already in Parliament as an amendment Bill.

Source: ZeeNews