Thursday, January 30, 2014

Terror Finance in Demons of Gadara

Terror Finance

Demons of Gadara[i]

A Fictional Thriller

By John A. Cassara

             At the Main Library at 1:00pm, on Monday, February 10th, John A. Cassara will talk about his novel Demons of Gadara.  The intent of this article is to preview the geography of and terror-finance terminology in this novel.  Most of us are aware of some of the tactics used in the United States’ “War on Terror,” but few of us probably understand how the “enemy” finances its side of the war.  Previously, Cassara published two technical books on the subject intended for law enforcement and intelligence entities and policy makers.  In Demons of Gadara the author puts the conflict in human terms in an effort to reach and inform a larger public audience on terror financing.  To trace terrorist activity, as in most criminal activity, the mantra is “follow the money or value trail.”  Succinctly, without money (and per terrorist episode, the amount may not be that great), there would be few terrorist acts. 

The novel focuses on Middle Eastern-directed financial operations. Under different   What is striking, and is recounted in this novel, is how U.S. concepts of combating financial misbehavior often do not take into consideration the practices used by other financial systems, which can be attributed partly to U.S. bureaucratic short-sightedness and ineptitude.
nomenclature the descriptions are also similar to transfers between North and South America, as well as in gold transfers all over the world.

 Before going on to Middle Eastern geography and vocabulary used in the novel, the reader should remember that though the locations in the novel are an ocean away, the value transfer trail of terror finance is also very close to home.  Interstate 81 slices through Rockingham County and has connecting tentacles that reach into the ports and coves of the Great Lakes, of the Eastern Seaboard, and of the Gulf of Mexico.  These routes and terminuses are where goods and money can be moved and cleaned.  Our area is also home to ethnic populations that need to transfer money.  The local financial institutions in which you do business are subjected to the Bank Secrecy Act requirements on the reporting of currency transactions exceeding $10,000, of keeping records of negotiable instruments, and of the reporting of suspicious activity.  Virginia advertises itself as a business friendly state, but is also an “easy” state in terms of corporate conduct laws.

Though much of much of the novel is set in Rome, to direct the reader through the Middle East territory used by terrorist financiers in Demons of Gadara a map is provided below.   The geographic extent of the money trail helps to visualize the movement of money through the Middle East.   A vocabulary of commonly used terms of trackers of terror finance is provided. 

The Geography

            In Demons of Gadara, when the action is not in Rome, the setting stretches from the eastern Mediterranean Sea, to Dubai, to Afghanistan, to Islamabad and Karachi – areas known also for the exchange of great quantities of gold and opium. 

            Gadara, the starting location for this novel, is an over two millennium-year settlement that appears in Greek, Roman, and Gospel writings.  It is located in present day Jordan near its borders with Israel and Syria.  Gadara’s population has cultural roots and rituals that are generations deep.  This setting illustrates the temperament of the inhabitants of the Middle East through which the novel travels - and to which Americans may be insensitive and/or clueless.  Gadara also has a symbolic meaning.  It is in the area where it is believe Jesus healed a man possessed by demons and sent the demons into a herd of swine which ran into the Sea of Galilee. 

The Vocabulary of Money Laundering and Value Transfers[ii]

            The language of Middle East monetary transactions, value transfers, and underground financial arrangements has equivalents in other parts of the world.  In the Islamic dominated region where interest and usury are forbidden and, until recently where banking systems did not exist, a system of transferring value developed making financing terror activities possible.

Of course, individually wealthy Islamist can and do finance terror activities, but there are other substantial sources for funding terrorist actions that are more anonymous.   One example derives from the five pillars of Islam called zakat or alms giving.  A Muslim is obligated to give a percentage of ones possessions each year to charity that is intended to help deprived Muslims.  Established Muslim community organizations are obligated to collect and distribute what can be substantial sums of money.  Controllers of these funds can directed some of these collections into corrupt and terrorist activities.

            Another method of concealing financial activity is through the system of hawala.  A  primary distributor of money and goods in the Middle East is through the local hawaladars – transfer agents for money and goods.  The hawala system transfers money and value without physically moving it. This Middle Eastern centuries-old brokered financial system is based on trust.  Hawaladars often have side businesses for shipping and importing goods. In this region banking institutions are a recent development and, where they exist, are expensive to use and slow acting. For an undereducated and economically unsophisticated population, these local/tribal intermediaries are trusted and they are also cheaper and faster than using the banking system.  For example, a father in Karachi, Pakistan takes money to his local hawaladar to be transferred to his son at the university in Rome.  The Karachi hawaladar contacts his counterpart in Rome who contacts the son at the university and gives the son the funds from his father – perhaps on the same day the request is initiated.

Eventually the hawaladars balance their accounts possibly by over or under invoicing transactions of amounts due or owed. This provides an opportunity to launder money by misrepresentation in the guise of legitimate transactions.  Over Invoicing is done by indicating that value of goods, services, or money transfers is more than it actually is.    Under-Invoicing is accomplished by invoicing the value of goods, services, or money transfers at a cost of less than it actually is. These practices also allow transfers of value in the guise of legitimate trade.

A practice also exists in the transfer of commodities that a shipment of misrepresented goods would be inspected against a labeling bill. Given the size of global trade and corruptible port officials, this usually does not represent a high risk for illegal transfers.

            Another aspect of disguising terror finance and illegal activities is cleaning and moving of money, which funds could be obtained from hawala transactions or charitable organizations or wealthy individuals.  There are three stages to cleaning dirty money:

Stage One:  Placement  - illicit money is placed into circulation through deposits in financial institutions, casinos, and other businesses. 

Stage Two: Layering – at this stage and beyond following the money for law enforcement entities becomes difficult as the money is converted into monetary instruments, material assets that are bought and sold in cash transactions, and money is moved between bank accounts and co-mingled with legitimate assets. 

Stage Three: Integration: the laundered money is introduced into the economy in what appears to be normal transactions, for example, real estate deals, acquisition or establishment of front companies, and the making of false loans.

            We hope this background on the scope and intricacies of terror financing will enhance your understanding and enjoyment of John Cassara’s thrilling, educational, and scary novel.  We hope you join the lecture and discussion of Demons of Gadara on February 10th at 1:00pm at the Main Library in downtown Harrisonburg.      .         

[i] John A. Cassara,  (press) 2013.        
[ii] This section is based on information provided in John A Cassara and Avi Jorisch’s On the Trail of Terror Finance, Red Cell Intelligence Group, Washington, DC. 2010.

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