As with all crime, we know that you can earn a living by both being in crime and anti-crime (both at the same time is somehow difficult although not unheard of). The anti-pirating business has been reported to have a marketing interest to blow the seriousness of the pirating problem out of the water. Pirating consultants and soldiers of fortune target Somalia as the domain of their new lucrative business.

How about the “big time money laundering”? The BBC cited a UN report without some interesting facts:

• Maritime militia, pirates involved in actual hijacking – 30%

• Ground militia (armed groups who control the territory where the pirates are based) – 10%

• Local community (elders and local officials) – 10%

• Financier – 20%

• Sponsor – 30%

The UN report found the payments are shared virtually equally between the maritime militia, although the first pirate to board the ship gets a double share or a vehicle. And compensation is paid to the family of any pirate killed during the operation.

So if 50% of the proceeds go the sponsors and financiers; who are they? What is their exact role? These questions remain unanswered but are extremely important to tackle this type of crime effectively. Where the “hawala” system in Somalia will absorb most of the cash, the financiers and sponsors are probably the ones who will do more operations at the same time and are likely candidates to launder the money instead of just spending it locally. As with all crime combatting; an effective operation should ‘cover all bases’ and not just target the foot soldiers. There will be enough of them to replace them.

Some analysts – such as the Kenyan-based security consultant Bruno Schiemsky – say pirates have given as much as 50% of their revenue to the Islamist al-Shabab militia in the areas it controls. Al-Shabab denies these allegations.

We reported earlier on money trails via Dubai. Although there was only limited evidence to suggest that Dubai is the laundering gate to the rest of the world, there is no other publicly available information on these money trails. We will keep you posted.

http://news.bbc.co.uk/1/hi/world/americas/8061535.stm

http://financialcrimeonline.com/archives/213

http://financialcrimeonline.com/archives/25

In previous posts we described the desire to also fight pirates on the ground, not just on the wild seas (use tag: pirates). Get the money, disrupt their structures and make life unattractive for them. Where did it take us? Somalia ofcourse, and some fingers pointed towards Dubai. According the The Independent organized piracy syndicates operating in Dubai and other Gulf states are laundering vast sums of money taken in ransom from vessels hijacked off the Horn of Africa.

 Investigators hired by the shipping industry mentioned that around $80m has been paid out in the past year alone – far more than has previously been admitted. But while some of this money has ended up in the pirate havens of Somalia, millions allegedly have been laundered through bank accounts in the United Arab Emirates and other parts of the Middle East.

The so-called “godfathers” of the illicit operations, according to investigators, include businessmen from Somalia and the Middle East, as well as other nationalities on the Indian sub-continent. There have also been reports that some of the money from piracy ransoms has gone to Islamist militants.

The Dubai police called the allegations baseless and referred to the strict anti money laundering legislation in Dubai. Even though the allegations were not supported by solid evidence, the suggestion that an anti money laundering law itself will ban money laundering is an argument not many police chiefs will dare to use.

The UN rightfully suggests to fight pirates on land; not just after the piracy act on sea. But even if you are determined to have that approach, you will encounter the same mandate/jurisdiction issues that you do in regular organized crime investigations. A strong deterrent as shown by the US Navy does not seems as a bad addition to the anti piracy toolbox.

 http://www.huffingtonpost.com/2009/04/20/how-pirates-help-mideast-_n_189261.html

http://www.independent.co.uk/news/world/africa/pirates-the-80m-gulf-connection-1671657.html

http://www.google.com/hostednews/ap/article/ALeqM5jC_dDOXK55WuJyN8GtWtTpZf7H8AD97O64D01

 http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=248851

http://www.foxnews.com/story/0,2933,517311,00.html

http://news.bbc.co.uk/2/hi/africa/8019084.stm

In reality I have seen ransom payments of different nature (not maritime piracy), but never was a bank in trouble for ‘facilitating’ the payment. In most cases, banks cooperated with law enforcement to follow the money. But banks who attract government attention for these ransom payments and do not have a strong anti money laundering program in place could be in trouble. Rest assured; most pirates would not think of using a bank account in a country with a strong anti money laundering network.

According to experts, the typical pirate ransom is being paid in bags of cash. The bags are handed over to an ‘intermediairy’ on shore, who will pass the bags to the next person in the chain. Hawala type networks come in to play. Some firms have specialized in dealing with all angles of the piracy business.

Leaves the question unanswered where the ransom dollars end up. Somalia, Indonesia and Kenya are mentioned as countries were the money piles up. The average ransom is between $1 million and $2 million.

And in some occasions, the cash is actually taken to the pirates. Just like the good ol’ days ?

http://www.icc-ccs.org/index.php?option=com_fabrik&view=visualization&controller=visualization.googlemap&Itemid=89
http://www.world-check.com/articles/2008/11/23/where-somali-piracy-ramson-going/
http://www.state.gov/documents/organization/102588.pdf
http://article.wn.com/view/2008/11/19/Piracy_and_ransom_payments_Risky_business_safe_transactions/
http://www.dawn.com/2008/11/20/int20.htm
http://abcnews.go.com/International/story?id=6298733&page=1
http://www.guardian.co.uk/world/2008/oct/05/somalia