AQIM FUNDING SOURCES

C O N F I D E N T I A L SECTION 01 OF 02 ALGIERS 001001

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/12/2017
TAGS: PTER ASEC CASC PINR AG
SUBJECT: AQIM FUNDING SOURCES

REF: A. JIR 18MAY2006

B. ALGIERS 950 (NOTAL)

Classified By: Charge d'Affaires, a.i. Thomas F. Daughton
for reasons 1.4 (b) and (d).


1. (C) SUMMARY: According to European and Maghreb press
reports, criminal activity if the traditional funding
source for al-Qaeda in the Islamic Maghreb (AQIM). It is
widely reported in the Algerian press that AQIM smuggles
contraband to and from neighboring countries. In addition,
AQIM extorts protection revenue by allowing passage through
various AQIM zones. Journalists that closely follow AQIM
claim that the group's cells engage in larceny in France
and Spain, while kidnapping has become the favorite method
in the wealthier areas of Algeria. Pledging allegiance to
al-Qaeda has increased the number of young Algerian
ideologues and technology-savvy European recruits.
Journalists with good contacts within Algerian security
services tell us that in Europe, these recruits are delving
into sophisticated white collar crime to earn additional
revenue. Journalists who do the best reporting on Islamist
terrorism in Algeria tell us that increased funding has
even allowed AQIM to purchase business enterprises that
generate revenue. In light of that, the USG should
consider assisting the GOA to improve its customs
enforcement processes as well as mechanisms to monitor the
banking sector. END SUMMARY.

Cigarettes, Guns and Kidnapping


2. (C) On July 8, Echourouk el-Youmi editor Anis Rahmani
(protect),who has good contacts among Algerian security
services, recounted that funding networks date back to when
the Salafist Group for Preaching and Combat (GSPC) was
formally known as the Armed Islamic Group (GIA). Their
smuggling networks for contraband involved many Tuareg
tribesmen in southern Algeria and the border areas. GSPC's
most lucrative terrorist act was the 2003 kidnapping of 32
tourists for ransom. (Note: The GSPC spent the USD 6.5
million kidnap ransom on surface-to-air missiles, heavy
machine guns, mortars and satellite positioning equipment
(ref A)). On June 23, Al Jazair News editor Hmida Ayachi
emphasized that Tuareg tribes continue to do business with
AQIM but out of economic necessity, not ideology.


3. (C) On July 9, al-Bilad journalist Faycal Oukaci
asserted that AQIM's five current domestic funding sources
are attacks on convoys, shake-downs/kidnappings, bank
hold-ups, taxing farms, and levies on rich farmers and
successful businessmen. Both Oukaci and Liberte journalist
Mounir Boudjema agree that AQIM targets rich families and
wealthy neighborhoods for kidnappings. Boudjema emphasized
that kidnappings are accomplished with little fanfare or
planning. Having spoken with kidnap victims, Oukaci claimed
that ransoms generally range between USD 1-2 million in the
Boumerdes area and negotiations take 1-2 days. On June 28,
national police (DGSN) Director Ali Tounsi stated in the
press that kidnappings have dramatically increased and
become the main source of terrorist financing in Djelfa and
Tizi Ouzou provinces.


4. (C) Rahmani told us July 8 that he agreed with a July 4
Liberte article that claimed AQIM conducted 89 kidnappings
between March 2006 and June 2007 in the Kabylie region,
garnering over 530 million dinars (USD 7.5 million).
Oukaci and Rahmani disagreed, however, about Liberte's July
7 report that the intelligence service (the DRS)
apprehended AQIM's alleged treasurer, "Rabah R." (aka
Zakaria),and the claim that he collected over 40 million
dinars (USD 5.7 million) in a period of three or four
months. Oukaci stated that he believed that the timing of
the announcement of Zakaria's arrest was too convenient,
coming on the heels of a full-scale military operation in
the area, and that the GOA needed to show it could "catch a
big fish."


5. (C) Hmida Ayachi told PolOffs June 23 that AQIM had
secured enough funds to purchase sand and gravel companies.
Ayachi explained that sand and gravel are useful in
concealing weapons during transport overland and by sea.

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Oukaci claimed to us on July 9 that AQIM has also purchased
fast-food restaurants, real estate (land and buildings) and
agricultural enterprises to earn more revenue. He provided
the example of several buildings in the Boumerdes area
(about 30 miles east of Algiers),where AQIM has become a
landlord and collects rent. Oukaci added that AQIM has
purchased farmland that it loans out to farmers, who pay
back rent and a percentage of their profits.

Jewelry, Cars and Identity Theft


6. (C) The European press has widely reported that
sympathizers in France and Spain provide AQIM with
funding. Oukaci insisted on July 9, however, that the
amounts raised by European cells are small compared to that
raised through AQIM's domestic pursuits. During the GSPC
days, European funding came from charitable organizations.
But according to May 2 French press reports, many AQIM
European fundraising activities now center on the sale of
marijuana and on stealing jewelry and fancy cars. The
Spanish newspaper La Razon reported on June 20 that AQIM
cells steal jewelry from rich residences in both Spain and
Switzerland. On July 8 Rahmani described how the jewelry
is fenced and the money is washed through the Swiss banking
system for a small commission. Rahmani referred to the May
1 Spanish newspaper El Pais report on the discovery of
funds arriving from the Bahamas. The funds, destined for
AQIM, were electronically laundered through shell
companies, one being a Japanese technology company.
Rahmani said that eventually the money filters back to
Algeria in the form of cash. (Note: Given Algeria's
tightly controlled yet antiquated financial sector, it is
easy to believe that these transactions occur in cash. The
large sums of money quoted by some of our contacts must be
viewed with some skepticism. Use of companies for either
bulk cash smuggling or over/under invoicing is a more
likely tool. End Note.)


7. (C) AQIM recruiters in Europe prey on sons of immigrant
families, who are isolated, disillusioned and
impressionable (ref B). Oukaci warned PolOffs July 9 that
today's young Algerian recruits, whom he calls the "third
generation," are more dangerous because they have swallowed
al-Qaeda's ideology whole. He further explained that the
main difference between Algerian-born and European-born
recruits is the level of education. European members often
have day jobs and join sleeper cells that may be rarely
utilized. Rahmani said on July 8 that the younger European
recruits are technology savvy and prefer to carry out white
collar crime. He mentioned that in 2005, the British
expelled nine Algerians, one of whom was caught with fake
credit cards he had used to garner funds. European cells
make use of document forgery and electronic theft to raise
funds. Rahmani added that, on June 8, Italian authorities
arrested several Moroccans operating in Italy. The
Moroccans were allegedly providing funding and false
identification documents to AQIM members in Algiers.


8. (C) None of our contacts could confirm GOA claims first
reported in 2003 by the BBC that AQIM receives funding from
Iran and Sudan.


9. (C) COMMENT: Although our sources' information is
impossible to verify and is likely exaggerated, it seems
clear that AQIM uses a variety of means, ranging from
banditry to white-collar crime (including credit card
crime),to raise funds. Existing USG technical assistance
to enhance the work of the financial intelligence unit in
Algeria will help address the country's immediate financial
problems. We might also want to consider offering
technical assistance in customs enforcement as well as
mechanisms to improve monitoring of the formal banking
sector as a way to fight terrorism.

DAUGHTON