U.N. Report: al Qaeda may be trading gold, diamonds, and gems

Stymied in part by global efforts to freeze their bank accounts, members of al Qaeda may be turning to trade in gold, diamonds, and gems to finance their terror network, a United Nations monitoring group said in a report issued Wednesday, The New York Times reported.

The U.N. report also warns that weapons continue to pour into the hands of al Qaeda and Taliban fighters in Afghanistan, and it urges countries to furnish a list of arms dealers operating on the country’s borders, the Times reported.

Its conclusion is based on continuing attacks on American-led forces in Afghanistan by Taliban and al Qaeda fighters who “can no longer rely exclusively on stockpiles stored in caves and other places, since much of it has been seized or destroyed over the past six months,” the Times reported.

Composed of five independent experts from member nations, the United Nations group is charged with monitoring the degree to which countries around the world are meeting a Security Council resolution designed to choke the financing, training, and movement of those associated with al Qaeda and the Taliban.

The report points out that claims related to the gold and diamond trade have yet to be substantiated, the Times reported. But the report also says that the monitoring group is looking into claims that al Qaeda “may be diversifying financial aspects of its logistics support by converting parts of its assets into gold, diamonds, and other precious stones, for example lapis lazuli and sapphires.”

The group said it launched what it calls “detailed investigations” into measures to restrict the illicit transfer of money from the diamond trade, the Times reported. That trade, the report notes, “might be abused to provide a vehicle for money-laundering and moving financial assets around the world” by al Qaeda and its associates.

Among its recommendations are for countries engaged in the diamond trade to adopt a set of international standards governing the import and export of rough diamonds. The Security Council resolution obliges all 189 United Nations members to freeze financial assets and impose arms embargoes and travel bans on individuals and groups associated with Osama bin Laden, al Qaeda, and the Taliban.

The group’s inquiry also refers to what intelligence reports had concluded soon after the Sept. 11 attacks: that al Qaeda relies on the Internet and on an informal money transfer system, known as “hawala” in Arabic, to move its funds, the Times reported. Unofficial money transfer systems, relying on trust and networks of friendship and family, are not restricted to the Islamic world, but it is there that it has come under intense scrutiny since the Sept. 11 attacks.

It is impossible to monitor or freeze an account, the monitoring group’s report points out, if there is no bank account nor any movement of money, the Times reported.

The freezing of conventional accounts seems to have had some impact, though, the Times reported. With 144 countries vowing to block funds associated with terrorist groups, $103.8 million in assets have been frozen between September 2001 and March 2002, the report said.

Roughly half of that is connected to bin Laden and al Qaeda. Still, the report acknowledged, such seizures are a drop in the bucket: Between $500 billion and $1 trillion are laundered every year.

The monitoring group’s report, submitted to the Security Council on May 15 but released today, the Times reported, painted a mixed picture of cooperation with its inquiry.

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