Consortium Against Terrorist Finance Sep. 10, 2015, 4:44pm

Since 1982, when Qatar Islamic Bank (QIB) was established as the very first Islamic financial institution in the country, Qatar has hosted some of the most prominent Sharia-compliant financial giants. In fact, Qatar was one of the first countries to intuit the significance and the potential of Islamic finance, and over the last several decades the country has developed resources and advanced expertise in Sharia-compliant products and services, making it a major global platform for Islamic finance worldwide. As the oldest and one of the most reputed actors in the field, Qatar Islamic Bank makes a good case study: its strong financial performance over the last two years confirms the enormous potential of Qatar’s Sharia-based banking industry; yet the bank’s affiliations with financial institutions investigated for alleged or proven ties to terrorist financing call attention to its international credibility, which is well established but far from being “indisputable.”

For three years in a row, Qatar Islamic Bank (QIB) has been awarded the title of “bank of the Year 2015 in the Middle East” by The Banker, a London-based international publication on finance owned by the umbrella of The Financial Times Ltd. According to The Banker’s data, Qatar Islamic Bank was the fastest growing financial brand in the world, with its value increasing 91% over the last year. The Banker’s recognition of QIB’s stature in the MENA region - “one of the top 50 most valuable brands of all industries in the MENA region” - is only one example of the extensive recognition the bank has received so far in 2015. In addition, Global Banking and Finance Review celebrated the bank’s effort towards Sharia compliance as well as its financial performance in Qatar in 2015. Yet a glance at the bank’s profile calls for a deeper analysis of QIB’s correspondents, some of which have controversial histories of affiliation with or support of terrorist or extremist activities.

Al-Rajhi Bank - the largest Saudi Islamic Bank and the world’s largest Sharia-compliant lender - immediately stands out among QIB’s correspondents. The connection seems obvious given QIB’s stature in Sharia-compliant Qatari bank industry. However, shortly after 9/11, U.S. Government reports, criminal and civil legal proceedings, and media reports started to uncover irrefutable evidence of links between al-Rajhi Bank and organizations associated with terrorism financing. Serious terrorist financing concerns caused many banks to sever ties with al-Rajhi Bank, including HSBC in 2010 and JPMorgan in 2014. Despite these actions from global financial leaders, Qatar Islamic Bank did not follow suit. Not only does QIB regularly correspond with the Saudi bank; based on QIB’s Investor presentation for Fiscal Year 2014, QIB senior executives and department directors have a long history with the Saudi bank.

The Saudi bank became known to the public in 2002, when the name of Sulaiman bin Abdul Azis Al Rajhi, one of al-Rajhi Bank senior officials, appeared on a list of al-Qaeda benefactors. A report released by the U.S. Senate in 2012 on HSBC’s ties to the most controversial actors in global finance confirmed that al-Rajhi Bank was a member of Osama Bin Laden’s “Golden Chain” of al-Qaeda’s financiers. According to the report, “some Al Rajhi family members were major donors to al-Qaeda or Islamic charities suspected of funding terrorism, established their own nonprofit organizations in the United States that sent funds to terrorist organizations, or used Al Rajhi Bank itself to facilitate financial transactions for individuals or nonprofit organizations associated with terrorism.” The report also highlighted that al-Rajhi Bank provided financial services to Abdulaziz al-Omari, one of the 9/11 hijackers.

An article by Glenn Simpson that was published in The Wall Street Journal in July 2007 provided further reasons for concern. According to the reporter, one year after 9/11 Mr. al-Rajhi ordered the bank’s board to “explore financial instruments that would allow the bank’s charitable contributions to avoid official Saudi scrutiny.” In addition, the report confirmed circumstantial evidence that some al-Rajhi Bank executives are aware that the bank was used by extremists worldwide. Moreover, the article pointed out that al-Rajhi Bank maintained at least 24 accounts and handled unusual transactions for an al-Qaeda front in 13 countries - Al-Haramain foundation - until 2004, when Saudi authorities ordered the charity shut down.

After all, QIB’s solid affiliation with the Saudi bank is far from being exclusive. QIB is also affiliated with Islami Bank Bangladesh Limited (IBBL) despite evidence suggesting they have also engaged in terrorist financing. The presence of IBBL among QIB’s financial partners is not surprising given that Al Rajhi Bank had a 37% direct ownership in IBBL. Recently, Islami Bank has been under international pressure after a 2012 U.S. Senate committee report pointed out its connection with terrorist financing channels – from Shaikh Abdur Rahman of Jamatul Mujahideen Bangladesh (JMB) to IIRO, a charity uncovered to be funding al-Qaeda, the Abu Sayyaf group, the Moral Islamic Liberation Front, Hamas, Algerian radicals, Al-Gama’a al-Islamiyya, Ramzi Yousef, and six militant training camps in Afghanistan. This information, however, was not new; IBBL has been under scrutiny since 2006, when an investigation by the Bangladesh Bank found out that Islami Bank was guilty of carrying out suspicious transactions and that its branches were used to funnel funds to suspected Islamist militants.

Moneyjihad reported that in 2011 “the Bangladeshi home ministry intelligence revealed that 8 percent of the bank’s profits were diverted as corporate zakat to support jihad in Bangladesh.” Furthermore, in 2012 Abu Bakr Rafique, the secretary of Islami Bank Bangladesh Limited’s sharia advisory board, was arrested due to suspicions over his involvement in a terrorist attack by Jamaat-e-Islami against Bangladeshi police officers. In December 2014, the bank was fined for not informing the authorities of suspicious transactions in time and penalized under the money laundering act with the largest possible fine - Tk 2 million.

Other sanctioned entities that Qatar Islamic Bank is affiliated with and/or corresponds with are Myanmar-based DBS Bank Ltd and Abu Dhabi Islamic Bank, which both appear on OFAC and the World Bank sanction lists, and Jordan Islamic Bank and MashreqBank PSC, which were both placed on the prohibited investment list of the Illinois State Board of Investments in 2013. Another one of QIB’s correspondents, Faisal Islamic Bank, deserves mention as well: several of the founders of the first Egyptian Islamic and commercial bank are leading members of the Muslim Brotherhood and one of its subsidiaries, Faisal Private Bank, was investigated during the 1990s for alleged terror financing links.

Interestingly, the name of the prominent radical Islamist ideologue Youssef al-Qaradawi appears on the bank’s Corporate Governance Report for Fiscal Year 2010, where Qaradawi was listed as the chairman of the Shariah supervisory board. Well-known to the public for his popular TV show (“al-Shar??a wa al-?ay?h,” “Sharia and Life”) hosted by al-Jazeera for over 20 years, Qaradawi is the founder and one of the major contributors to the online platform Islamonline, through which extreme fatwas have been disseminated.

Qaradawi has been one of the most prominent actors in the Islamist arena over the last several decades, where he has articulated controversial religious pronouncements while addressing the modern dilemmas confronting Muslims. As The Guardian aptly specified, Qaradawi “does not fit into the common stereotype of fundamentalist, militant preacher,” yet the preacher has been banned from entering the United States, the UK and France for his supposed ties to terrorist organizations. Qaradawi has held leadership positions in at least two groups that have been internationally sanctioned for their support of terrorist organizations. Qaradawi served as the chairman of the Sharia-advisory board of Bank al-Taqwa, shut down by the U.S. government after 9/11 for fundraising, laundering money and transferring military equipment to al-Qaeda operatives as well as other terrorist groups worldwide. He also chaired the Union of Good, an organization created by Hamas to facilitate transfers of funds to the terrorist group which was sanctioned by the U.S. Department of the Treasury in 2008.

While Qaradawi’s name does not appear on Qatar Islamic Bank’s records after 2013, the bank itself was placed on a prohibited investment list by the U.S. Illinois State Board of Investments. This prohibits Qatar Islamic Bank from bidding on, submitting a proposal for, entering into, or renewing a contract with an agency or local governmental entity for goods or services.

Overall, Qatar Islamic finance seems to be “unharmed by the FIFA scandal.” In fact, Qatar Islamic Bank has predisposed structural conditions to take advantage of the long-term benefits that the investment plans for the 2022 World Cup will bring to the Gulf country. Consistent with its growing reputation, Qatar Islamic Bank is said to be preparing Sharia compliant bonds and to have raised 2 billion riyals ($550 million) with Tier 1 sukuk (Sharia-compliant bonds). Given its extensive track record of questionable connections and activities, it may be time for closer scrutiny.

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