Written evidence from Ministry of Defence (SIF0006)

 

MINISTRY OF DEFENCE ADDITIONAL WRITTEN EVIDENCE TO THE FOREIGN AFFAIRS SUB COMMITTEE ON ISIL FINANCING FOLLOWING THE ORAL EVIDENCE SESSION ON 26 APRIL 2016

 

 

Regional FundingOur partners in the region share our view that Daesh presents a critical threat to our collective security, as well as to regional stability. They recognise that coordinated international action is the best way to defeat Daesh, and that there is no long-term answer without a political solution to the Syria conflict and a more inclusive political settlement in Iraq.  We have no evidence that Governments in the region are currently funding Daesh or, with the exception of the Assad regime, buying its oil.

 

Regional countries have suffered from Daesh attacks and many host large numbers of refugees driven from their homes by Assad and Daesh’s actions. These countries are also key members of the Global Coalition; many having participated in the air campaign against Daesh in Syria and Iraq, including: Bahrain; the UAE; Jordan; and Saudi Arabia.

 

The issue of countering Daesh finances is regularly raised at meetings with officials and ministers around the region, including at the recent Coalition Counter-ISIL Finance Group and the Financial Action Task Force FATF meeting in Paris on 14 February, and at the Chatham House Counter Terrorism Funding conference on 8 February.

 

Whilst there may be individuals within countries in the region supporting Daesh, regional governments, many of whom are members of the Counter-ISIL Finance Group and the FATF, have been encouraged to significantly tighten their Counter Terrorist Finance CTF environment and stop Daesh gaining access to the international financial system.

 

It is accepted amongst FATF members that the overall value of external donations to Daesh is minimal in relation to the revenue it generates from other sources, such as oil and taxation. However, there is historical evidence of instances of financial donations to Daesh from within Gulf States[1].  Furthermore, it is understood that family donations are being made to Daesh, through the unregulated Alternative Value Transfer Systems.  However, reporting indicates this no longer constitutes’ a major revenue stream for Daesh.

 

Saudi Arabia.  With the threat of Daesh close, the Saudi Arabian Government has been at the forefront of international efforts to defeat Daesh, including through joint leadership of the Coalition’s work to cut Daesh’s resources.  Saudi Arabia has a comprehensive set of laws in place to prevent terrorist financing, which are enforced vigorously.

 

The Saudis are a co-chair of the CIFG, which is the Coalitions mechanism for monitoring Daesh funding. Alongside their work with CIFG, Saudi Arabia has worked to cut Daesh off from the international financial system.  They are also implementing UN Security Council Resolution 2253/2199 on top of 1267/1989 Isil and Al-Qaeda sanctions regime and list.

 

No substantive evidence exists to support accusations of Saudi government financial support to Daesh. The Saudi Interior Ministry passed laws in March 2015, making it illegal for Saudi residents to provide support to Daesh, by designating it as terrorist entity[2]. Saudi Arabia has taken active measures to deny private Saudi financing of terrorist groups, inclusive of Daesh and its affiliates. This includes monitoring the formal financial sector through Suspect Activity Reports SARs in order to identify and block suspected terrorist donations.  This is complicated by the use of Alternative Value Transfer Systems and the difficulty in monitoring the movement of funds in a largely unregulated environment.

 

Despite these measures Saudi citizens continue to represent a significant funding source for Sunni groups operating in Syria. Arab Gulf donors as a whole have funnelled hundreds of millions of dollars to Syria in recent years, including to ISIS and other groups. There is support for ISIS in Saudi Arabia and the group directly targets Saudis with fundraising campaignsWashington Institute.

 

Saudi Arabia has taken further steps by advising its religious establishments against engaging on Syria related issues, aside from humanitarian relief efforts, and introducing a whistle blower system. This provides financial incentive for the reporting of money laundering and terrorist financing operations[3].  The difficulty of facilitating donations from Saudi Arabia is evidenced in Daesh social media fundraising campaigns.  In these campaigns donors are requested to send their donations through Kuwait as it is considered easier for the finances to be utilised for terrorist fundraising.

 

Other Gulf StatesKuwait has taken steps to address the perceived gaps in private donations. Legislation that criminalises terrorist financing has been passed and a Financial Investigation Unit has also been created.

 

“However, Kuwait has emerged as a financing and organisational hub for charities and individuals supporting Syria’s myriad rebel groups. These donors have taken advantage of Kuwait’s unique freedom of association and its relatively weak financial rules to channel money. The Brookings Project.

 

It has been reported by the Independent newspaper[4] that until recently financial support has been provided by Gulf States to the opposition in Syria, and groups such as Jabhat al-Nusra who have affiliations with Daesh. It is perceivable that this indirect support from Gulf States to Sunni positions in Syria and beyond could have contributed to a transfer of funds from Saudi-supported rebels to Daesh.

 

Although Saudi donors and other private contributors were believed to be the most significant funding source for the original forerunner to Daesh, the importance of such donations has been marginalized by the group's independent sources of income.” Washington Post.

 

Qatar is supporting the fight against Daesh, through the Global Coalition.  They are also members of the Coalition’s Working Group squeezing Daesh’s Finances and have taken steps to prevent the transfer of funds to Daesh such as freezing assets and bank accounts of key individuals who have been accused of facilitating the funding of terrorists.

 

TurkeyTurkey continues to make a critical contribution to the international campaign against Daesh as a key member of Global Coalition and co-chair of the Foreign Terrorist Fighters working group. They have also detained over 2500 Daesh suspects and play a key part in the military campaign, including taking part in airstrikes.

 

Turkey is a critical part of the international stabilisation effort for Syria, supporting programmes operating from their soil and cross-border activity. We regularly engage Turkey on the issue of Daesh’s finances. Turkey has told us that they have greatly increased the number of border guards to tackle oil smuggling with Syria. They have also told us that in 2014 79 million litres of smuggled oil were intercepted and in the period Jan – October 15 that had dropped to 1.22 Million Litres. [To note, these figures all come from Turkey. We do not have separate evidence to corroborate.]

 

Current MonitoringThe Coalition and the FATF/CIFG continue to monitor through the individual and collective financial structures and via intelligence agencies any donations that may be made to Daesh.  Whilst there may be individuals within countries in the region supporting Daesh, the Government has no evidence that governments in the region are currently funding Daesh.  Gulf States are key members of the Global Coalition and are playing an increasingly active role in countering Daesh’s finances, including through enforcing of comprehensive terrorist finance laws and implementing asset freezes.

 

The efforts of regional countries to squeeze Daesh’s finances are not limited to the Coalition.  They have played important roles in backing and implementing UN Security Council Resolutions, and in the work of bodies such as the Financial Action Task Force and Egmont Group, all aimed at cutting Daesh off from the international financial system.  They are also key partners in the international effort to stop Daesh smuggling and cross border financial activity in the region.  The UK Government has supported them in these efforts, for example through providing training for customs personnel in Lebanon and Jordan.

 

UK ResponseOn receipt of robust evidence that an individual or group is linked to financing terrorist activities (Daesh), the UK will consider listing (UNSCR) that entity.  The UK applies rigorous standards to new proposed listings, in order to ensure sanctions are robust and fair. As part of this process, assessment will be carried out in consultation across domestic government departments.

 

Military AssessmentThe evidence documented above originates from both open source and cross HMG, it is our opinion that from an intelligence perspective the assessment is accurate.

 

May 2016


[1] E.g., On 24 September 2014, a Daesh official was listed and sanctioned by the US Department of the Treasury after receiving a 2 million USD donation emanating for the Gulf (http://www.fatf-gafi.org/media/fatf/documents/reports/Financing-of-the-terrorist-organisation-ISIL.pdf).

[2] https://www.washingtoninstitute.org/policy-analysis/view/saudi-funding-of-isis.

[3] Playing with Fire: Why Private Gulf Financing for Syria’s Extremist Rebels Risks Igniting Sectarian Conflict at Home. Elizabeth Dickinson. The Brookings Project on US Relations with the Islamic World.

[4] http://www.independent.co.uk/news/world/middle-east/isis-has-made-many-enemies-but-it-may-be-saved-by-their-inability-to-unite-10061739.html