Terrorist plot scrapped after day-trading loss sapped funding

Scheme to detonate backups in U.K. abandoned after big hit on forex bets; down 62%

Apr 23, 2013 @ 11:02 am

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((Photo: Bloomberg News))

From a suburban house in the central English city of Birmingham, Rahin Ahmed traded dollars and euros to raise money for what prosecutors said could have been the biggest terrorist attack on U.K. soil.

Over four weeks in 2011, his group's plan to use backpacks to plant bombs around the country fell apart as he lost 62 percent of his 14,550 pounds ($22,000) on small-volume currency trades.

Ahmed, 26, will be sentenced to as much as life in prison this week in London after pleading guilty to terror-related offenses in August. Eleven men have either admitted or been found guilty of a range of terror offenses in connection with the planned attacks, West Midlands Police said on its website.

Ahmed's dabbling in complex financial trading, which included ill-thought-out forays into currency, oil and U.K. and U.S. stocks, shows the difficulty of monitoring the money raised through stock trades, bank transfers or fake charities.

“Terrorists are like any other criminals who are trying to get money as easily as possible while minimizing the risk of discovery,” Richard Barrett, formerly the coordinator of the al-Qaeda Taliban monitoring team at the United Nations and now working independently, said in an interview while still at the UN. “There are no set rules or practice.”

U.K. courts are grappling with terrorist cases as U.S. authorities deal with the aftermath of the Boston Marathon bombings, which left three people dead last week.

The Ahmed incident is the first case of its kind in the U.K. involving financial markets, West Midlands Police said.

Inflated Income

In a house on a tree-lined road of the Moseley area of Birmingham, where the average price of a four-bedroom property is 364,713 pounds, according to the Zoopla property website, prosecutors say Ahmed plotted how to amass the terror cell's fortune.

Ahmed, a law graduate from Coventry University, was able to make the trades by applying for an account at Forex Capital Markets Ltd. by over-inflating his experience, annual income and net worth.

FXCM, the London-based unit of FXCM Inc. (FXCM), hasn't been accused of any wrongdoing, police said. The company cooperated with the authorities and provided information as requested, Brendan Callan, chief executive officer of FXCM Europe in London, said in an e-mailed statement.

After getting the trading account posing as an economics graduate with earnings of 99,000 pounds a year, he lost most of his money and the trust of his accomplices and was eventually cast adrift from the group, prosecutors said in court filings.

Training, Salaries

Keeping a terrorist network running can be a costly business, while the cost of the terror act itself is relatively small compared to any damage, according to a 2008 report from the Financial Action Task Force, an inter-governmental body that sets the benchmarks for effective implementation of measures to combat money laundering and terrorist financing.

Al-Qaeda spent as much as $30 million a year up until the Sept. 11 bombings on training, military equipment, salaries and operations according to the report from the Paris-based task force. Terror groups use a variety of ways to raise and distribute money, including the financial industry.

Ahmed and his cohorts, all from Birmingham, were more successful raising thousands of pounds posing as fake Muslim Aid charity workers, shaking buckets on street corners accumulating money coin-by-coin, prosecutors said at the four-month trial that ended in February.

Old Fashioned

“The old-fashioned methods are still in use,” Paul Beattie, detective sergeant in charge of the West Midlands Police counterterrorism financial investigations team, said in a telephone interview. “Shaking a bucket is a tried and tested method of getting money. It isn't sophisticated but it is quite clever.”

Financial analysts at law enforcement agencies have become an integral part of terror investigations over the last decade and each regional force in the U.K. has a team dedicated to the area.

“Had the U.K. been looking into Muslim charities more vigilantly they could have had the opportunity of stopping some, if not all of this,” Rachel Ehrenfeld, director of the American Center for Democracy and author of “Funding Evil: How Terrorism is Financed,” said in a telephone interview from New York. “To curtail further disasters, this attitude has to be changed. Our governments should have realized by now that the best defense is offense.”

Blurred Lines

The lines between organized crime and terrorism have now become blurred, where before they had remained separate for idealistic and religious reasons, said Barrett, the former UN official.

“As terrorists have found it harder to finance their operations, and criminals have needed protection in some of the wilder parts of the world where terrorists now operate, the two groups seem to have found some complementarity,” Barrett said.

The four main groups funding counterterrorism operations are the UN, the World Bank, the International Monetary Fund and the FATF, said Elizabeth Joyce, section chief of the UN's Counter-Terrorism committee executive directorate in New York.

The UN task force has visited 80 of its 193 member states in the last five years to provide support, technology and personnel to ensure countries have everything they need to fight terrorism, she said.

Following the Sept. 11 attacks on New York, the UN Security Council passed resolution 1373 which called for international cooperation in suppressing the financing of terrorism.

One of the biggest changes since the resolution was put in place is there are now more than 120 financial intelligence units embedded in governments worldwide which weren't there a decade ago, said Rick McDonell, executive secretary at the FATF.

“Counterterrorism funding is becoming more sophisticated and more challenging to detect, but it is not impossible.” McDonell said in a phone interview. “We are making progress but there is a lot to be done”

--Bloomberg News--

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