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Kuwait faces challenge in curbing terror financing

KUWAIT CITY : Talal Al Sayegh is at the forefront of Kuwaiti government efforts to convince its international partners that donations from private citizens will stop going to extremist militants in Syria.

A technocrat with 20 years of experience at Kuwait’s central bank, Mr Al Sayegh was appointed to head the country’s newly empowered Financial Intelligence Unit in January.

The unit faces its first major test on October 24 when the Financial Action Task Force, an intergovernmental policy group that sets standards for fighting terror funding and money laundering, is expected to update its outlook on Kuwait.

The unit existed in the past, but only began operating in compliance with the task force’s requirements in June, said Mr Al Sayegh.

In its latest statement on Kuwait, the group said “deficiencies remain”, making the upcoming review an important indicator of the country’s efforts to combat terror funding.

Even if the appraisal goes well, the country faces the longer term challenge of prosecuting funders of extremist groups, with Mr Al Sayegh’s efforts stuck between Kuwait’s obligations to the international community and relatively popular, well-connected donors.

“You cannot make a system immune to everything,” he said. “But once you find [suspicious activity] you have to take action.”

After peaceful protests that began in 2011 calling for the end of Bashar Al Assad’s regime in Syria descended into war, Kuwaiti citizens became some of the main sources of funds for both humanitarian aid and arms for rebel groups.

Some of the funding ended up with Jabhat Al Nusra, Al Qaeda’s Syria affiliate, and, later, its more extreme rival ISIL.

Kuwait only criminalised the funding of terror groups last year. The change in law also allowed for the establishment of the Financial Intelligence Unit.

Recently, the United Nations designated several Kuwaitis — including popular cleric Shafi Sultan Mohammed Al Ajmi — as backers of Al Nusra, placing the country under further scrutiny as a source of extremist funding.

“They were sleeping at the wheel for 13 months,” said Aimen Dean of Five Dimensions Consultants, a Dubai-based private research firm focused on the Middle East, describing Kuwait’s efforts to crack down on extremist financiers.

“Only as momentum built before the US-led airstrikes [against ISIL in Iraq and Syria] did things really change. It is important to note that Kuwait became an important conduit for terror financing after Saudi Arabia clamped down hard on such activities. Many financiers in the region moved to Kuwait where legislation is more lax regarding money transfers.”

Mr Al Sayegh said: “The necessity was there, everyone acknowledged this.”

The Financial Intelligence Unit is currently located within the finance ministry, but there are plans to move next year, in a bid to retain its independence.

Annual reports will be submitted to the finance minister, who provides oversight, but the unit will otherwise remain removed from the ministry’s bureaucracy, Mr Al Sayegh said.

Currently, it has about 20 employees and he eventually plans to hire about 80 more.

The unit’s goal is to investigate suspicious transactions by gathering information from banks, customs, the judiciary and the real estate and commercial sectors to decide if they warrant being passed onto a prosecutor.

Information about transactions not sent to the prosecutor are kept in the unit’s database. The transactions are reported by banks, border customs, and exchange houses.

“Any suspicious transaction that’s not within the pattern of the client, the bank’s system should pick it up,” Mr Al Sayegh said.

The unit is not only focused on terror financing. Money laundering is also part of its remit, and cases involving terror suspects don’t necessarily receive special treatment.

Mr Al Sayegh said transactions have been sent to the prosecutor, though the details are classified. “We are now operational,” he said.

Yet, Kuwait’s ability to stop terror funding is complicated by domestic challenges, analysts say.

The country has experienced several years of political turmoil with protests, opposition boycotts, and cabinet resignations stemming from discontent with the government.

Clamping down on the financiers, even if the effort is successful, risks further political unrest and the details that might emerge could have their own repercussions.

Kuwaiti officials may hesitate to put these financiers “on trial because the size of the finance to extremist groups is so large — estimated at around US$210 million [Dh770.7m] — that it would be an embarrassment to Kuwait and its allies,” said Mr Dean.

“In our estimation, JAN receive most of that funding and the Islamic State received about a quarter of it”, he said, using an alternative acronym and name for Al Nusra and ISIL.

Kuwait is among the biggest donors when it comes to legally sanctioned humanitarian aid for Syrians, with the government in January pledging US$500 million in assistance.

When it comes to terror financing, some of the individuals making donations might not even know where their money is going, said Shamlan Al Essa, a Kuwaiti political analyst.

Only small numbers of Kuwaitis “here and there”, he said, sympathise with ISIL.

“People are naive. Mention a charity and helping the poor. They give money like crazy. They are rich. Who knows where the money goes?”

Those who arrange for funds to be sent to extremist groups have a variety of goals and do not see Al Nusra and ISIL as presenting the same threat that the government and its allies do.

A belief that they are combating Shiite Iran’s influence in the region appears to be a key motivation for the hardline Sunni financiers.

Tehran is an important ally of the Syrian regime and the Iraqi government and has offered vital support to both as they combat insurgent forces.

“Sunni Islamists see it as their right to fund what they see as an anti-Iranian agenda in Syria, even if it means sleeping with the devil to frustrate Iran’s plans in the region,” Mr Dean said.

These fund-raisers have influence within structures such as the judiciary, making putting them on trial difficult, said Mr Al Essa.

“Tomorrow he will be innocent,” he said, explaining how fund-raisers have sympathisers or tribal connections in places of power, making legal action against them unlikely.

The Kuwaiti government is concerned about domestic opposition if they clamp down on the fund-raisers, said Lori Plotkin Boghardt, an expert on Gulf politics at The Washington Institute.

“This is primarily a political issue. That said there are plenty of technical barriers to clamping down on terrorism financing.”

At the Financial Intelligence Unit, Mr Al Sayegh was deciding on a computer programme to help sift through the data on transactions.

“This is the new trend. You go IT. You’ll have the best tools in hand in order to avoid human intervention in this.”

Another goal: to more quickly exchange information with other financial intelligence units in the region.

Now, it can take days or even weeks to get information about transactions.

Impatient, but polite, he appeared focused on implementation, not politics.

“Once you claim that someone is doing something wrong you have to give some justification or proof … the system works here, if you have sufficient information we will act on it. We don’t depend just on statements.”

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