IRS Operational Priorities: Counterterrorism Financing
IRS Operational Priorities
There have been cases in which nonprofit organizations misrepresent themselves in order to funnel proceeds as funding for terrorist groups. Through these organizations, terrorist groups raise large sums of money, avoid paying taxes on illicit funds and even allow donors to deduct donations on tax returns.
United States Law
Nonprofit organizations found to be in support of a terrorist organization face prosecution by agencies of the U.S. government’s executive branch, including the Joint Terrorism Task Force and the FBI. They are also likely to face prosecution under the Patriot Act and other Executive Orders.
The United States tax laws specifically prohibit the redirection of assets intended for a charitable purpose to any non-charitable purpose. This clearly includes the purpose of providing material or financial support to terrorist groups.
Violating this law could result in the complete revocation of an organization’s tax-exempt status. It also means donors can no longer claim charitable donations as income tax deductions.
The IRS & Counterterrorism Financing
Counterterrorism financing is the newest addition to the IRS’s list of operational priorities. This list also includes legal-source tax crimes, illegal source financial crimes, and narcotics-related financial crimes.
From the U.S. government’s perspective the burden of conduct and proof is on the nonprofit organizations, to take affirmative steps to ensure funds and other means do not find their way to terrorist organizations.
Often extremist groups will be forced to commit tax evasion, in addition to money laundering and currency violations, in order to avoid detection. Tax-exempt nonprofit organizations are frequent “dummies” for illegal activities involving complex and tangled money transactions. With a proven record of experience regarding the “trail” of money, the IRS is invaluable in the joint effort to combat terror.
Criminal Investigations Division (CID)
The Criminal Investigations Division (CID) of the IRS is part of the joint effort to trace and recover assets in the aftermath of the Iraqi conflict. These include the official assets of the former Iraqi regime, as well as those assets looted by Saddam Hussein and his organization. The process involves experienced investigation, sorting through tax schemes, narcotics money laundering, and mazes of layered transactions executed for the purpose of concealing illicit funds.
The CID and Other Government Agencies
The CID works with a host of other agencies, including the FBI, the Treasury Department, and the Department of Justice.
The FBI’s Joint Terrorism Task Force is a huge part of the counterterrorism effort. With well over 100 offices, it is designed to combat terror and increase communication between federal and state law enforcement. A recent Nevada Joint Terrorism Task Force arrested four members of an anti-government group on charges of federal money laundering, tax evasion, and weapons offenses.
Its Terrorism Financing Operations Section works closely with the IRS as well. And its National Domestic Terrorism Squad utilizes state law enforcement officers and resources in the fight against terror.
The Treasury Department has several resources active in the counterterrorism effort: The Office of Terrorism and Financial Intelligence and The Office of Terrorist Financing and Financial Crimes offer key support on the intelligence and enforcement fronts. The Office of Foreign Assets Control plays a role, maintaining intelligence on foreign assets and issuing trade sanctions strategically. The Financial Action Task Force develops national policies to combat terrorist financing.
The Department of Justice’s Anti-Terrorism Advisory Council enlists and organizes approximately 5,300 state and local law enforcement officers to support the federal effort to combat terror.
In the News . . .
A former Detroit Public Schools assistant superintendent recently had his appeal to the U.S. Supreme Court denied.
Kifah W. Jayyousi, currently serving a 12-year, 8-month sentence, was convicted of providing material support to terrorists, as well as conspiring to commit murder and kidnapping outside the U.S. The charges stemmed from aiding convicted “dirty” bomber Jose Padilla. Prosecutors characterized him as the person who provided financing and equipment to the American Islamist Group, a terrorist organization he had founded.
Accused terrorist Khalid Ali-M Aldawsari is accused of gathering bomb components and plotting to use them against sites across the U.S., including dams, nuclear plants, and former President George W. Bush’s Dallas home.
Legally in the U.S. on a student visa, he was arrested after federal agents searched his apartment and found bomb-making chemicals, wires, and clocks.
Aldawsari is charged with attempted use of a weapon of mass destruction. If convicted, he faces up to life in prison. Jury selection is set to start.
A Brooklyn, NY man, Wesam El-Hanafi, pled guilty to providing material support to a foreign terrorist organization, as well as conspiracy to provide material support.
He did this by delivering assistance, including money, computer software, and digital watches, to al-Qaeda. Swearing his allegiance to the group, he received assignments from the group and advised its members on how to communicate secretly over the internet. He sent money via wire transfers and couriers to the terrorist organization.
El-Hanafi faces up to 20 years in prison.