Islamic Charities: Facing facts by Dave Clark, Q Society Vice President for Islamic Finance and Islamic Charities

On 10 February this year, Nicola Roxon MP, Attorney General and Jason Clare MP, Minister for Home Affairs and Minister for Justice issued a media release titled “Reports Highlight Risks of Money Laundering and Terrorism Financing” along with three reports produced by the Australian Institute of Criminology. One of these reports “Money laundering and terrorism financing risks to Australian non-profit organisations” touches on the issue of Islamic charities in Australia and the risk of them funding terror.

If you haven’t time to review the report, then it’s worth reflecting on the following comments from the media release:
  • The report found that smaller, local, community-based NPOs, especially informal ethnic and faith based charities, often fall outside regulatory scrutiny and could be especially vulnerable to money laundering and terrorism financing.”
  • This is particularly the case for organisations that regularly use informal methods of funds transfer – such as alternative remittance services.”
  • The report found that organisations that have overseas offices in less-regulated countries, their structure may make them more vulnerable than their size suggests.”
This is, of course, PC talk for “we know that Islamic charities may fund terror”.

As for the report, while it’s not my intention to analyse its full 60 pages, I would like to point out key sections for readers to review, in particular “Faith-based giving and the targeting of Islamic charities” starting on pg. 10 and “Vulnerabilities in the Australian non-profit sector” starting on pg. 51.

It is difficult to provide a clear analysis anyway because of the Government’s blatant obfuscation and the report being so hedged, counter-intuitive, contradictory and circular – simply due to the Government struggling to face the obvious implications from its own research.

The following is typical of the report:  Pg. 10 states that “The Qur’an notes (9:60) that eight categories of people are entitled to receive zakat including the poor, the needy and the wayfarer“, conveniently leaving out here that one of those categories is for those “fighting in the cause of Allah” and another two can be construed as supporting jihad activity.  This fact is given a whitewash though on pg. 12: The Qur’an also stipulates that ‘charity shall go to the poor who are suffering in the cause of God…’ (2: 273). Thus, the recipients of charity are broadly drawn and subject to a degree of interpretation which has impacted perhaps negatively upon the manner in which charitable donations have been directed and which may have exacerbated the perception that Islamic charities provide succour to terrorist organisations (Ndiaye 2007).

So the benign categories of zakat are stated as fact while the jihadist categories are a matter of “interpretation” which “exacerbate perceptions”.  Only in Islamic apologetics do authors not only qualify statement of fact with words like “interpretation” and “perhaps” but then say it’s only your “perception” anyway!  Then there’s this quote on pg. 11 “It has beensuggested that the obligatory charitable donations of zakat represent the largest single source of [charitable] revenue diverted to terrorist groups (Rudner 2006)” .

It’s worth noting at this point that the “academics” consulted for the report were Professor Abdullah Saaed, Director of the National Centre of Excellence for Islamic Studies at the University of Melbourne.
And let’s not discuss zakat without a summary of Jewish Tzedakah too, despite there being no relevance to the topic of terror funding or implications which can be, or are, drawn.  Better keep the reader honest though, it might be religious charity-giving which is the problem..

But there are some frightening admissions from the Australian Government too:

  • “The risk of an NPO falling victim to terrorist exploitation may be greater for groups that…are closely aligned to particular religious or cultural movements” pg. 14


  • “AUSTRAC (2010a: 8) lists ‘financial contributions through formal charitable donations’ as one of the three most common methods by which terrorism funds are raised in Australia.” pg. 19



  • It was reported in the 2010 typology report from the Asia-Pacific Group on Money Laundering that the most ‘significant’ cases of non-profit abuse for terrorism financing detected in Australia involved the collection of donations, often following a visit by an overseas speaker that was organised by local leaders (APG 2010). In these cases, the funds raised were wire transferred to overseas accounts but usually over a period of time in amounts of less than $10,000. These funds were generally sent to third parties who were suspected of having a connection with a terrorist organisation.” pg. 19

  • Those organisations identified as most susceptible are charities, and in particular faith-based charities, and smaller entities that do not necessarily have the resources (or the inclination) to commit to due diligence and similarly recommended procedures.” pg. 50



  • Related to this concern about the vulnerability of smaller NPOs, especially the less formal charities formed around ethnic and faith-based communities, was the preferred or common use of informal methods for the collection and transfer of funds. The identity of donors may not necessarily be pursued by the charity for cultural or other reasons and funds are known to be relayed to overseas locations using remittance services or similar methods of informal funds transfer.”…”Risk primarily lies with that subset of entities that collected and dispersed donations, used informal methods of funds transfer and/or were unregulated.” pg. 51


And although these are generally met with the response “but we have no proof though that Islamic charities are funding terror”, at least there is an acceptance that this may be because of the lack of oversight, transparency and regulation which the report is trying to address.

What to do about it?

The report suggests a number of mitigants and other regulatory responses – some of which are helpful, the rest deliberately miss the point. In particular, there is too much focus on self-regulation and too little attention given to ‘legitimate’ Islamic charities providing ‘legitimate’ Islamic charity (directly or indirectly) to terrorists.  Mostly, the report assumes that Islamic charities will be victims of abuse rather than motivated to circumvent all the mitigation strategies. For example “NPO’s, however, should…continue to avoid engaging with any organisation they suspect of being a terrorist group.” pg. 44.

That said, the establishment of “sham charities” are discussed in some detail and the truth is let slip…“Most notable is that almost all incidents of NPO abuse involved the use of a registered organisation that was either a sham charity or a charity that (knowingly) disbursed funds to a group that supported humanitarian endeavours alongside terrorist activities. The abuse of an unsuspecting charitable organisation does not appear to be the preferred modus operandi.” pg. 58.

And when independent regulation is proposed there’s the extra burden on everyone else: “
It has been suggested that rather than enhancing the ability of NPOs to mitigate the risks deemed to exist in relation to money laundering and terrorist financing, proposed measures to stem misuse not only place an undue burden on the sector ‘without effectively tackling the terrorist threat’ (Quigley & Pratten 2007: 11) but stigmatises and consequently disrupts non-profit activity (ACLU 2009; Cortright et al. 2008; Crimm 2008; Quigly & Pratten 2007).” pg. 46. So is it all too hard?  Why not impose additional regulation on only those charities that you have identified as being high risk?
The Government admits it knows who they are, are they afraid to do anything about it?  “If members of the Australian non-profit sector that are perceived at greater risk of exploitation can be isolated, then that group would comprise charities and other fundraisers (specifically those that transmit funds out of Australia and to regions which have poorer regulatory oversight), small unregulated organisations and organisations that predominantly use informal (possibly unregulated) methods of funds transfer. Added to this group would probably be NPOs that collect and distribute funds and are connected with cultural or faith-based groups. It’s important to stress here that risk does not equal likelihood, particularly given sensitivities around past targeting of sector constituents, most prominently the Islamic charities. The group cited here are simply characterised by one (or more) of the factors that is accepted at promoting susceptibility.” pg. 57.  This nonsense can be translated as follows: We know it is Islamic charities that are at risk of funding terror. Actually, in this case risk does equal likelihood but we’ll say it doesn’t anyway as the Islamic charities don’t like it when we’re on to them.  Just to confuse you, we’ll also use the word “susceptibility” which we hope you think means something else besides that Islamic charities are at risk of funding terror.

There certainly is none so blind as those that will not see.  The Australian Government knows, through its own work, what the problem with Islamic charities is yet wont do anything constructive about it.  That said, and despite the report’s inadequacies, there are many positives to take from it, not least that the report even “went there” and what the Government was prepared to admit.

The issue of Islamic charity terror funding becomes even more concerning with the Government’s encouragement of Islamic finance and its impending growth in this country.  Islamic finance contributes heavily to Islamic charities through the payment of zakat by the Islamic finance institutions and through the finance contracts themselves.

I have written before on all the issues raised in the report and suggest readers see “Banking on terrorism in Australia, Dave Clark, Australian Islamist Monitor, 24 October 2010” for more information.

 

 

One Response to Islamic Charities: Facing facts (An Australian View from SFW Contributor Dave Clark)

  1. Good review, sir. It sounds like the attitude of the Australian government is similar to the U.S. Treasury Department under Pres. Obama, where the stated desire is to help Islamic charities to prevent themselves from being abused or exploited, without recognizing that some Islamic charities are established for the express purpose of funding terrorism, and have been convicted for as much (ie, the Holy Land Foundation).

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