Somali insurgents piling up cash – UN report

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Islamist insurgents in Somalia move millions of dollars through the formal bank system and appear to be investing in businesses and real estate, according to a UN report offering a rare glimpse into their finances.

Al Shabaab is battling Somalia’s internationally-backed government to impose strict Islamic law in the anarchic Horn of Africa nation.

“Al Shabaab remains in a strong financial position and is generating a significant budgetary surplus, some of which is invested in property and businesses in Mogadishu,” said the report by the UN sanctions panel on Somalia.

The report by the group, which monitors compliance with an arms embargo on Somalia, is due to be published this week.

Al Qaeda-linked Somali militants carry out frequent bombings and attacks at home and killed hundreds of civilians in Kenya and Uganda. Earlier this year, al Shabaab killed three Americans at a US military base in Kenya.

The UN report includes details of two bank accounts at Salaam Somali Bank, founded in 2009 as part of the Hormuud group of companies, raising questions about Somalia’s capacity to enforce a 2016 law aimed at curbing terrorist financing.

Somalia’s Financial Reporting Centre, which oversees compliance laws against money laundering and terror financing, is investigating allegations against Salaam.

Nearly $1.7 million moved through one account during a 10-week period to mid-July this year, the report said, noting the account appeared set up to receive Islamic tax called zakat.

‘SUPER EFFICIENT SHABAAB’

With around 5,000 fighters, al Shabaab controls towns and countryside in southern Somalia with its spies and assassins operating nationwide. Its estimated expenditure last year was around $21 million, with a quarter going to the Amniyat intelligence arm.

Al Shabaab runs its own courts. One businessman told investigators the courts summoned him and ordered him to pay more than $100,000 in zakat based on a review of his business, which they assessed before he arrived.

The businessman, who was not named, provided a banking deposit slip and a receipt from al Shabaab to investigators as proof of payment. “Al Shabaab maintains a registry of citizens, which includes financial assessments on individuals and businesses,” the report said.

Another account, which appeared to handle fees levied on businessmen using Mogadishu port, had $1.1 million through it from mid-February until the end of June , the report said. It included a cash deposit of $25,000 by someone calling himself “A B C” on documentation.

In total, the two accounts had 128 transactions exceeding the $10,000 threshold that should trigger automatic reporting to the Financial Reporting Centre.

When asked if the accounts had been shut down, Amina Ali, head of the centre, told Reuters: “All the necessary steps have been taken.”

The report examined a single al Shabaab road checkpoint – one of dozens – former al Shabaab tax officials told investigators made between $1.8 million-$2.4 million per year.

In the government-controlled southern port Kismayo, businesses are forced to pay the insurgency between $300-$600 monthly depending on size, which could earn them nearly $6 million a year from Kismayo alone, the report said.

Businessmen are afraid to refuse al Shabaab for fear of being killed, said Hussein Sheikh Ali, a former Somali national security advisor and founder of the Mogadishu-based Hiraal Institute think-tank. Their own report on al Shabaab finances is due out this month.

US-supported Somali special forces attack al Shabaab checkpoints to cut revenues, he said.

“Shabaab is super-efficient in collecting money throughout industries and the country,” he said.

“We know they have surplus money and we believe they may send some to al Qaeda.”