On March 31, The Times published an extensive article on a United Kingdom criminal network that reportedly obtained an estimated £8 billion from value-added tax (VAT) and benefit fraud, as well as additional money from mortgage and credit card fraud, and allegedly sent £80 million, to al-Qaeda in Pakistan and Afghanistan.
The article, based on leaked police and intelligence files, said that the network – consisting of British Asians based in London, Buckinghamshire, Birmingham, northwest England, and Scotland – conducted the VAT and benefit frauds over more than two decades. It also reported that the network, which has ties with to the July 7, 2005 terrorist suicide bombings in London — sent 1 percent of its income, approximately £80m, to al-Qaeda, where it funded madrasahs, training camps, and other terrorist activities in Pakistan and Afghanistan.
HM Revenue & Customs (HMRC) and the United Kingdom Special Branch first learned in 1995 from an informant that members of the network “were engaged in mortgage fraud with the help of corrupt banking agents and mortgage brokers. The informant reportedly said that “Asian customers are coming in with carrier bags full of cash on a regular basis,” and asserted “that the money was placed in bank accounts under false names before being ‘sent out of the country by an Asian solicitor for terrorist or drugs purposes’.”
The investigation ultimately concluded that the network “was using a network of factories and companies and exploiting their workers for identity and benefit frauds, the sale of counterfeit goods, car crash scams and mortgage and credit card frauds.” HMRC investors learned that the network “used ‘hijacked or altered national insurance numbers to create false records’ and exploited ‘illegal immigrant labour’ before laundering the cash ‘through bogus offshore companies’.”
The Times also reported that it was unable to reveal the identities of certain specific network members because of court orders dating back nearly 10 years. While certain members of the network were defendants in a series of related trials on charges that included fraud and money laundering, judicially imposed reporting restrictions at the start of the first trial “prevent the identification of any of the gang because several kingpins fled the UK before they could be arrested. . . . The Crown Prosecution Service (CPS) continues to insist that nothing can be reported until the masterminds have been returned to the UK to face trial.”
One network member who could be identified was Afra Syab Ilyas. Ilyas, an accountant in England, reportedly left for Afghanistan in the late 1990s to fight for the Taliban, and was killed in an artillery shelling near Kabul. Laptops that Central Intelligence Agency and MI6 officers found in Afghanistan after the 2001 9/11 terrorist attack later established that Ilyas was a part of the network in the United Kingdom and “a key source of funding” that flowed to al-Qaeda before 9/11.
Another identified connection to the network was Shehzad Tanweer, one of the terrorists involved in the July 7 London bombings. Although HMRC intelligence officers found that link at least two years before the attack, “senior HMRC officials declined to use the intelligence to mount prosecutions and take the gang out of operation until after the bombings.”
Note: Chief Compliance Officers and their financial crimes teams should review this article, as well as a related Times article describing the types of criminal activity in which the network engaged, for the details it provides about documented relationships between organized criminal networks and terrorist financing. This information should also be included in internal briefings and training of executives and employees as a prominent examples of the linkages between, fraud, money laundering, and terrorist financing.