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The Funding Methods of Bangladesh's Islamic Terrorist Groups

The Funding Methods of Bangladesh's Islamic Terrorist Groups

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Published by Tarek Fatah
Bangladesh receives minimal attention in counterterrorism circles, the international media and academia despite the large amount of Islamist violence in the country.

Occasionally, however, it enters the spotlight when major incidents occur, such as the mutiny by the Bangladesh Rifles (BDR) in February 2009.

August 17, 2005 was another day that grabbed international attention: 459 bombs were detonated in 63 out of 64 district towns within seven minutes. It was an extraordinary
act of terrorism that was logistically impressive, disciplined and deadly.
Bangladesh receives minimal attention in counterterrorism circles, the international media and academia despite the large amount of Islamist violence in the country.

Occasionally, however, it enters the spotlight when major incidents occur, such as the mutiny by the Bangladesh Rifles (BDR) in February 2009.

August 17, 2005 was another day that grabbed international attention: 459 bombs were detonated in 63 out of 64 district towns within seven minutes. It was an extraordinary
act of terrorism that was logistically impressive, disciplined and deadly.

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Published by: Tarek Fatah on Feb 21, 2013
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The Funding Methodsof Bngldeshi TerroristGroups
By Pa Cchran
bangladesh receives minimal
attentionin counterterrorism circles, theinternational media and academiadespite the large amount o Islamistviolence in the country. Occasionally,however, it enters the spotlight whenmajor incidents occur, such as themutiny by the Bangladesh Riles (BDR)in February 2009.
1
August 17, 2005 wasanother day that grabbed internationalattention: 459 bombs were detonatedin 63 out o 64 district towns withinseven minutes. It was an extraordinaryact o terrorism that was logisticallyimpressive, disciplined and deadly.The incident triggered a marked shitin the Bangladeshi government’s stanceon terrorism. Ater initially blamingexternal orces or the attacks—including Israel’s Mossad and India’sResearch and Analysis Wing (RAW)—the administration o Prime MinisterKhaleda Zia admitted, or the irst time,the presence o Islamist militants in thecountry, declaring Jamaatul MujahidinBangladesh (JMB)
2
responsible orthe blasts.
3
Some 743 suspects wereapprehended, and the leadership o the JMB and its ailiated party JagrataMuslim Janata Bangladesh (JMJB) werearrested and executed.
4
 
1 The BDR is responsible or Bangladesh’s 2,750-milelong border with India and Myanmar. On February 25,2009, more than 1,000 BDR soldiers mutinied in Dhaka,killing 56 ocers. For 36 hours, as the revolt spread to 12other towns and cities, the BDR ought the regular army beore surrendering.2 Jamaatul Mujahidin Bangladesh (JMB) was created in1998 by Shaykh Maulana Abdur Rahman, with the aimo capturing power through arms and implementing Is-lamic law. The Jagrata Muslim Janata Bangladesh (JMJB)is an oshoot o JMB, ounded in 2003 ollowing clasheswith the police. Both organizations overlap in structureand personnel; JMB activists are oten JMJB members.3 Haroon Habib, “17 August 2005: Milestone o Terror,”in Jaideep Saika,
 Bangladesh: Treading the Taliban Trail 
(New Delhi: Vision Books, 2006), p. 252. The JMB letleafets at the blast sites, declaring: “We’re the soldierso Allah. We’ve taken up arms or the implementation o Allah’s law the way the Prophet, Sahabis and heroic mu- jahidin have done or centuries…it is time to implementIslamic law in Bangladesh.”4 The six leaders were hung on April 30, 2007. See the
Today, Bangladesh aces threats rom notonly JMB, but rom a number o Islamistterrorist groups.
5
These organizationsare resurgent with inancing comingrom numerous sources, most notablynon-governmental organizations (NGO).While legislation exists to curb illicitinancing, it aces numerous obstacles.This article will outline the variousIslamist militant groups in Bangladesh,and then address the known andsuspected inancing methods o suchgroups and the obstacles aced incountering terrorist inancing.
Bngldeshi Terrorist Groups
Nearly our years since the August2005 bombings, JMB has resuracedunder new leadership. Raids by thearmed orces in Dhaka and elsewherehave regularly uncovered JMB armscaches, ammunition, and literature.
6
 Out o the country’s 29 to 33 possibleterrorist groups,
7
only our areoicially banned: JMB, Harkat-ul- Jihad-al-Islami Bangladesh (HuJI-B), JMJB, and Shahadat-e al Hikma.
8
Morethan 100 Islamic political parties andorganizations exist.
9
 
 Bangladesh Assessment 2008
at the South Asia TerrorismPortal, located at www.satp.org. For inormation on thearrested suspects, see “Intelligence Focused Only on Ac-cused JMB Men,”
 Bangladesh News
, October 28, 2008.5 “Lack o Policy Aecting Fight Against Militancy inBangladesh,” Indo-Asian News Service, October 26,2008. A detailed list o the organizations can be ound in
 Bangladesh Awami League Newsletter 
4:4 (2005).6 According to
The Daily Star 
in Dhaka, 35 out o the 50most wanted JMB cadres are still active in our northerndistricts.7 “Lack o Policy Aecting Fight Against Militancy inBangladesh.” A detailed list o the organizations can beound in
 Bangladesh Awami League Newsletter 
4:4 (2005).8 Harkat-ul-Jihad-al-Islami Bangladesh (HuJI-B), aDeobandi group, is aliated with the Pakistan-basedHuJI, and was ormed by 17 Bangladeshi mujahidin thatreturned rom Aghanistan, allegedly with nancial helprom al-Qa`ida. Shahadat-e al Hikma (SAH) announcedin 2003 that it planned to launch an armed struggle toturn Bangladesh into an Islamic state. It was promptly banned. Its chie, Sayed Kawsar Hussain Siddiki Raja,stated at the time that SAH had 10,000 “commandos”and 25,000 ghters. SAH has since gone underground.9 Shakhawat Liton, “Islamic Parties Boom ater 1976 BanLiting,”
The Daily Star 
[Dhaka], August 29, 2006. A con-stitutional ban on religious parties was repealed in 1976.Liton notes that there are no exact gures on the num- ber o parties with either the government or the ElectionCommission.
The Indian government, on the otherhand, claims that there are 50 Islamicmilitant groups operating in Bangladesh,and has accused Dhaka o harboring148 arms training centers.
10
“The levelo operational terrorism is as active asa ew years back; we’ve had extensivelevels o terrorism,” explained MajorGeneral (Rtd.) Muniruzzaman, thepresident o the Bangladeshi Institute o Peace and Strategic Studies (BIPSS) inDhaka. “People who say we don’t have aproblem are in a state o denial.”
11
While militant groups have carried outterrorist attacks within Bangladesh—although none on the scale o the 2005 bombings—there has been increasedactivity in India in recent years, as wellas links to Indian groups.
12
HuJI-B,which has ties to al-Qa`ida,
13
is allegedlycarrying out contract activities in Indiato garner international recognitionand obtain unds, explosives andmunitions.
14
Reports in the Indian presshave also indicated Bangladeshi links toterrorist attacks in Bangalore and NewDelhi,
15
as well as the Mumbai attackson November 26, 2008.
16
 
10 Personal interview, Colonel Satinder Saini (rtd.), In-stitute o Deence Studies and Analyses, New Delhi, Sep-tember 24, 2008.11 Personal interview, Major General Muniruzzaman(rtd.), Dhaka, November 24, 2008 and April 22, 2009.12 India’s Union Home Ministry in its 2007-2008 An-nual Report stated: “The hand o Pakistan-based terroristorganizations—Lashkar-e-Toiba (LeT) and Jaish-e-Mo-hammed (JeM)—and, increasingly o the Bangladesh- based HuJI, known to have close links with the InterServices Intelligence, has been observed in most cases”o terrorist attacks in India. New Delhi has also accusedHuJI o providing grenades to the LeT in India, in addi-tion to coordinating attacks in India with the Students’Islamic Movement o India (SIMI), the LeT and JeM.13 Rohan Gunaratna,
 Inside Al Qaeda: Global Networkof Terror 
(New Delhi: Roli Books, 2003), p. 219; BruceVaugh, “Islamist Extremism in Bangladesh,” Congres-sional Service Report, January 17, 2007.14 Personal interview, Major General Muniruzzaman(rtd.), Dhaka, November 24, 2008 and April 22, 2009.15 “Delhi Police Launches Drive to Deport Illegal Immi-grants,”
 Press Trust of India
, July 13, 2008.16 Personal interview, Major General Muniruzzaman(rtd.), Dhaka, April 22, 2009. According to one report,the Thuraya satellite phone recovered rom the shingtrawler the terrorists used to reach Mumbai containedrecords o a conversation between Lashkar-i-Tayyibachie Yusu Muzammil in Muzaarabad, Kashmir, and“Yahya,” a point man or LeT and HuJI in Bangladesh.Pakistan’s Federal Investigation Agency committee re-port also has a reerence to HuJI’s involvement, and there
May 2009
. Vol 2 . Issue 5
 
Yet while the Bangladeshi and Indianauthorities have continued to crack downon militant organizations operating inand out o Bangladesh, this has beenlargely conined to the more immediate:raids, arrests and intelligence gathering.Stopping the inanciers and incomegenerating techniques o Bangladesh- based terrorist organizations remains agreat challenge, with Bangladesh lackingthe inrastructure as well as the politicalresolve to curb terrorist inancing.
Funding Methods
Bangladesh is plagued by illicitinancial transers. It is suspected thatmilitants regularly tap into these illegalmoney lows to und their operations.More than $1 billion in taxable goods issmuggled into the country rom India,and analysts believe that some o thismoney ends up in the hands o terroristgroups. This is also the case with smallarms sales, drugs and countereitU.S. dollars that enter Bangladeshrom neighboring Myanmar and theGolden Triangle. Money laundering isalso a prime way o generating unds,estimated to account or 12-13% o thecountry’s GDP at $3.4 billion.
17
Some90% o revenue rom smuggling islaundered: 30% o bribes, 60% o theretail sector, 35% o import-export, and25% in tax evasion.
18
Remittances rom expatriateBangladeshis working in the MiddleEast, the United Kingdom and elsewhereare a urther area o concern. Currentlyestimated at $7 billion a year through banks, remittances surged rom only $2 billion in 2006 as a result o inancialinstitutions improving their deliverytime and including value-addedservices.
19
A urther $7 billion, however,is estimated to enter Bangladeshillegally through the
 hundi 
system,
20
an
are indications that mobile SIM cards were purchased inKolkata by Bangladeshis on behal o the perpetrators.17 These gures are based on research carried out byAbul Barkat, Proessor o Economics at Dhaka Univer-sity, in the report titled “The Economics o Fundamental-ism and the Growth o Political Islam in Bangladesh.”18 Ibid.19 Personal interviews, members o Bangladesh Bank,Dhaka, November 25, 2008.20
 Hundi 
, or
 hawala
, is an alternative remittance system(AMS) widely used in the Middle East and South Asia,particularly by expatriate workers, to send money viaocial or unocial brokers with minimal (or no) pa-perwork involved. Many countries are trying to better
illegal alternative remittance systemsimilar to the
 hawala
network thatoperates in the Middle East.
21
Sourcesat the Bangladesh Bank, the country’scentral bank, said the government isloathe to legalize
 hundi 
—which wouldincrease oversight—as it would divertcapital away rom the oicial bankingsector and the inancial system.
22
While there is a broad consensus thatsuch techniques are used by militantorganizations, the levels o undinggenerated are mere speculation. Severalraids on JMB sae houses in Dhakahave revealed that the properties wererented by expatriate workers in SaudiArabia.
23
In the case o remittances,research by the BIPSS has indicatedthat large volumes o money are sentrom members o the Bangladeshicommunity in London,
24
and that thereare increasing signals o a diasporalink to incidents in Bangladesh. Oneo the most signiicant links to undingrom the diaspora was unearthed inMarch 2009 when a
madrasa
in Bhola insouthern Bangladesh was raided by ananti-terrorist division, turning up 10irearms, 2,500 rounds o ammunitionand radical Islamic literature.
25
 Investigations revealed that the
madrasa
 was unded by the British-registeredcharity Green Crescent, and that theounder, British citizen Dr. FaisalMostaa, had close links to the JMB andits current leader, Saidur Rahman.
26
The Green Crescent case highlightsthe lack o oversight by the authoritiesin regulating charities and NGOs—inBritain as well as in Bangladesh—andindicates what analysts have longsuspected: NGOs are a major sourceo unding or militant groups. Thereare some 2,500 oicially registeredNGOs operating in Bangladesh, but
regulate AMS.21 Ibid.22 Personal interviews, members o Bangladesh Bank,Dhaka, November 25, 2008.23 Personal interview, Major General Muniruzzaman(rtd.), Dhaka, November 24, 2008 and April 22, 2009.24 There are an estimated 500,000 British citizens o Bangladeshi origin.25 James Brandon, “UK Charity Funding Arms andTraining or Bangladeshi Terrorists,”
Terrorism Monitor 
7:9 (2009).26 “Faisal Now Admits Ownership o Arms,”
The DailyStar 
[Dhaka], April 16, 2009. Faisal was arrested in Ban-gladesh on April 6, 2009.
potentially as many as 100,000, withsmaller initiatives registered locally.
27
 “No one has an exact number,” saidItikhar Zaman, executive director o Transparency International Bangladesh.Given that authorities are not evenclear how many exist, monitoringand regulating NGOs has provendiicult. The Saudi Arabia-based al-Haramain Islamic Foundation, bannedinternationally by United NationsSecurity Council Committee 1267,has come under suspicion, along withother charities rom the Middle East,or inancing terrorism in Bangladesh.NGOs and charities have also been linkedto the rise o Islamic extremism in thecountry, with the Kuwait-based Revivalo Islamic Heritage Society (RIHS)
28
andthe Saudi Arabian organization HayatulIgachha (HI) connected to unding orsome 650 mosques that have been used by terrorist organizations such as AhleHadith Andolan Bangladesh (AHAB)
29
 and the JMJB.
30
an “Econom within n Econom”
Financing or legitimate Islamic politicalgroups—such as the country’s largest, Jamaat-i-Islami Bangladesh (JIB),and others such as the Islami Oikya Jote
31
—are believed to stem rom whathas been called an “economy within aneconomy.”Abul Barkat,
32
a proessor o economicsat Dhaka University, states that Islamicpolitical parties have invested in 13dierent economic sectors, includinginance, insurance, retail, education,real estate, communication, media,health care and pharmaceuticals. “Theyearn to the tune o $300 million a year
27 Personal interview, Itikhar Zaman, executive direc-tor o Transparency International Bangladesh, Dhaka,November 26, 2008.28 The RIHS registration was canceled in 2007, but isstill operating. The head o a local wing o the RIHS, a Su-danese national, was arrested in March 2009 or usingthe charity to train militants.29 Ahle Hadith Andolan Bangladesh (AHAB) is a simi-lar party to the JMB and JMJB, oten working closelytogether, and has been linked to Jamaat-i-Islami Bangla-desh (JIB).30 Hiranmay Karlekar,
 Bangladesh: The Next Afghani- stan? 
(New Delhi: Sage Publications, 2005).31 Islamic political party Islami Oikya Jote was part o theBangladesh Nationalist Party’s our-party ruling coali-tion rom 2001-2006.32 Personal interview, Abul Barkat, proessor o eco-nomics, Dhaka University, November 27, 2008.
May 2009
. Vol 2 . Issue 5
 
in net proits, and invest 10-20% orpolitical purposes, anywhere rom $30-$60 million, including paying salariesto up to one million ull timers,” hesaid.
33
Muniruzzaman o the BIPSSthinks the amount is much higherthan Barkat indicates. “They probablyrun a parallel economy,” he said. Yetwhile ront companies are undoubtedlylinked to Islamic organizations, notall are militant, although the rise o an alternative economy does presenturther opportunities or militantgroups to generate unds.The JIB is a case in point. The largestIslamic political organization in thecountry, the JIB was a member o theBangladesh Nationalist Party-ledgovernment coalition rom 2001-2006.Yet while the JIB claims they have nolinks to militant groups, not everyoneis convinced. Both JMB leaders whowere executed in 2007, Abdur Rahmanand Bangla Bhai, were active memberso the JIB’s student wing, the IslamicChhatra Shibir.
34
Moreover, the JMBdraws its ideology and political supportrom JIB.
35
There are also allegationsthat support or the JMB and the JMJBextended to the higher echelons o theBNP government and the JIB.
36
Theselinks are attributed to the government’shal-hearted response to Islamicextremism and violence, and initialreusal to blame the JMB or the August2005 bomb blasts.The questions over the JIB and itsplans or the uture have Bangladeshianalysts concerned about the growtho the Islamist economy, believingit is a means to build up economicpower as a way o gaining politicalpower over time. “The Jamaat [JIB]works with long term plans unlike
33 Following the publication o “The Economics o Fun-damentalism and the Growth o Political Islam in Ban-gladesh” in Dhaka University’s
Social Science Review
 journal, Barkat told the author that he received some 70death threats. In JIB newspaper
Shagram
, Barkat wassubjected to character assassination, but his economicstatistics and ndings were not reuted.34 The Islamic Chhatra Shibir (ICS) is the JIB’s studentwing, operating in most universities (but banned at Dha-ka University). The ICS has been involved in violenceand has connections to the banned Students’ IslamicMovement o India (SIMI).35 Wilson John, “The Bengali Taliban: Jamaat-ul-Muja-hideen Bangladesh,”
Terrorism Monitor 
6:10 (2008).36 For a detailed account, see Karlekar.
[the major two political parties] theBNP and Awami League,” said ItikharZaman, o Transparency InternationalBangladesh. “They have iniltrated theadministration, bureaucracy, the army,media and increasingly, even NGOs.”
37
 The JIB also controls the largest bank,the Islamic Bank o Bangladesh, sixuniversities throughout the country, anda think tank in Dhaka. Moreover, withthe undamentalist economy registeringhigher annual growth (7.5% to 9%) thanthe mainstream economy (4.5% to 5%),“it means that i it grows higher, theremight be a time in 15 years where theireconomy will be diicult to ight in amonetary sense,” warned Barkat.
Enforcement nd Relit
In the immediate months ater amilitary-led emergency governmentseized power in January 2007, anumber o enorcement initiatives wereput into place. A Financial IntelligenceUnit was immediately established, theMoney Laundering Prevention Act wasre-enacted in April 2008, and an Anti-Terrorism Ordinance was passed in June 2008.
38
Yet continuous politicalundermining o the legal process,
39
 in addition to coercion, bribery andcorruption, has made the country’santi-money laundering (AML) andcounterterrorist inancing (CTF)measures “conined to regulationswe have printed.”
40
Furthermore, thegovernment lacks eective knowledgeand training to curb money launderingand terrorist inancing. “At a recentworkshop o 50 people rom theinancial sector, law enorcement andkey ministries, the people most relatedto CTF and AML said, rankly, that theydidn’t have a clue on this sector andare comparatively weak in knowledgeand implementation,” explainedMuniruzzaman.
37 Personal interview, Itikhar Zaman, executive direc-tor o Transparency International Bangladesh, Dhaka,November 26, 2008.38 For details, see the Bangladesh Bank’s Anti TerrorismOrdinance #28 (2008) and Money Laundering Preven-tion Ordinance #12 (2008).39 Politicians have continuously undermined the judi-ciary through bribery and applying pressure on the judi-ciary to drop cases linked to political parties and promi-nent businessmen.40 Personal interview, Major General Muniruzzaman(rtd.), Dhaka, November 24, 2008 and April 22, 2009.
The Bangladesh Bank is also strugglingto implement regulations, lacking themanpower and inances to investigateoreign and domestic transactionspassing through the inancial system.Sources at the bank have admittedas much, conceding that some o thecountry’s six Islamic banks are “notproperly run.” The country equallylacks reporting agencies, such as on cardealerships and precious stones, raisingconcerns that such businesses could be used to launder money and inanceterrorism.The NGO bureau is o more concernconsidering the thousands o NGOsand charities in the country, and atotal lack o transparency by the sectorin the usage o unds.
41
Sources at theBangladesh Bank said the bureau hasinsuicient human resources to regulatethe whole sector, urther highlighted bythe Green Crescent case in March 2009.A thorough investigation o charitiesand NGOs has also been suggested bythe Bangladeshi media, pointing outthat the bureau was run by the Ministryo Social Welare, which was held bythe JIB rom 2001-2006.
42
Given theclaims that JIB has links to the JMB,there is speculation that some o the473 local and 25 oreign NGOs licensedduring this period were not properlyregulated.
Conclusion
Curtailing inancing or Bangladeshiterrorist groups is a signiicant challengeor the authorities. Given groups suchas HuJI’s growing reach in South Asia,and links to expatriates as ar awayas the United Kingdom, the issue isincreasingly o international concern.Tackling terrorist inancing is but one o the multipronged techniques needed onthe ground. Yet, with a weak state it isproblematic unless substantial inancialand proessional assistance is providedto the central bank to implement a moreproactive AML and CTF regime and better regulate the inancial sector.The mutiny by the BDR suggests that thedemocratically-elected government o Sheikh Hasina aces an uphill strugglein retaining power. The mutiny hasshaken the military establishment and
41 Zaman.42 “Terror-Financing NGOs Remain Unscathed,”
The Daily Star 
[Dhaka], November 26, 2005.
May 2009
. Vol 2 . Issue 5

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