In the United States today, a person can donate money to a group that publicly transfers money to Hamas, a U.S.-designated terrorist organization, and the donor can take a tax deduction for the gift.
"Viva Palestina raises money in the U.S. to give cash and trucks and other equipment to Hamas," said U.S. Rep. Brad Sherman, D-CA. "They are still receiving contributions from American donors, and the contributions are tax deductible."
Congressman Sherman has written to the State Department, the Department of Justice and the IRS, informing them that Viva Palestina is soliciting funds for a terrorist organization in the United States, a practice that is supposedly illegal under the Patriot Act and other related laws.
The State Department, in replying to Sherman, noted the possible illegality and said they were forwarding his letter to the DOJ. The DOJ has yet to reply.
"From the IRS, I got a form letter," Sherman said. "They said they're taking a look."
Congressman Sherman sent his letters last December.
Viva Palestina was formed in January 2009 by George Galloway, a former British Member of Parliament and an outspoken supporter of a Palestinian state. The expressed purpose of VP was to provide humanitarian assistance to the Palestinian people.
"But the organization has openly used its resources to prop up Hamas' government in the Gaza Strip," Stephen Landman, from the Investigative Project on Terrorism, told a House subcommittee on Tuesday.
According to Sherman and Landman, Viva Palestina has a sister organization in the U.S. called Viva Palestina USA, which claims that it does not give money to terrorists, although there is clear evidence that it does. VP USA partners with the Interreligious Foundation for Community Organizations, or IFCO, which is an American 501(c)(3) organization and can, therefore, receive charity contributions.
As Sherman has pointed out VP USA said on its website that it was raising money for a "North American Aid Convoy to Gaza."
In March 2009, Galloway, who is the head of both VP and VP USA, led an aid convoy to Gaza. At a Hamas rally in Gaza City, in a video recorded event since available on YouTube, Galloway presented Ismail Haniyeh, the leader of Hamas, with 25,000 pounds sterling and 100 vehicles.
Galloway flouted the restrictions on aiding Hamas, saying he was breaking "the sanctions on the elected government of Palestine."
Galloway is also on record as saying that, since donations in the U.S. are given through the IFOC, no U.S. laws are broken.
Sherman thinks otherwise, but is having difficulty convincing U.S. authorities.
"I will keep knocking on those doors," he said.
Landman told the House Financial Services Subcommittee on Oversight and Investigations, in its hearing on terrorist financing, that over the past two years, "VP has continued to flout U.S. terror-financing laws, raising over $200,000 for 'humanitarian efforts' at events" in Dallas, Houston, Orlando, Brooklyn, Boston, Washington, D.C. and Overland Park, Kansas.
"There is overwhelming evidence that the organization has donated funds raised on American soil to a non-governmental organization tied to a designated Hamas support entity," Landman said.
While VP's fundraising for Hamas was "the most brazenly seen" violation of anti-terrorist financing in the U.S., Landman said that several other terrorist organizations are receiving money from U.S. sources through a number of different organizations and methods.
Landman said U.S. financial institutions were much improved since 9/11 in combating the transfer of money to terrorist organizations, and that the government's effort to deny terrorist groups funding for their nefarious projects was having an effect.
"Financially, terrorist groups from al Qaida in the Arabian Peninsula to Hamas in the Gaza Strip and al-Shabaab in Somalia are on the ropes," he said. "By one account, al Qaida is in the 'worst financial shape it has been in years.'"
But "much work remains to be done," he said.
Terrorist groups have taken to criminal activities - drug dealing, organized retail theft and black market smuggling, the production and sale of counterfeit name-brand goods, and car theft rings-- to raise funds. They have also returned to traditional methods of financing their activities, he said.
"Terrorists continue to abuse the charitable sector by raising funds under the guise of zakat and surreptitiously funnel money to terrorist groups around the world," Landman said.
Zakat is the Islamic term for almsgiving.
Landman referred to the August 2010 federal indictments against 14 people, American citizens among them, for providing money, services, and personnel to al-Shabaab in Somalia.
"Two of those indicted -- Amina Farah Ali and Hawo Mohamed Hassan -- of Rochester, Minnesota, stand accused of raising funds for the group while claiming it was for humanitarian purposes," he said, noting that Ali and Hassan lied to both local media and law enforcement officials about the ultimate destination of the money they were raising.
"Ali said she would never support any group that would carry out violent attacks in Somalia or the United States," Landman said.
Yet, at an al-Shabbab teleconference fundraiser hosted by Ali, a co-conspirator "told the listeners that it was not time to help the poor and needy in Somalia; rather, the priority was to give to the mujahidin."
Landman said that terrorist financiers still use the hawala system to fund activities. Hawala is a system for transferring funds from workers in the U.S. to family in Arab nations overseas. Since the system functions outside the law and traditional financial systems, and is "reliable, efficient, anonymous and available 24 hours a day, seven days a week," terrorist financiers often make use of it.
The failed terrorist bombing in Manhattan earlier this year was funded through hawala, Landman said,
Terrorists are using the Internet as well to transfer money and, Landman warned, they have begun to use stored value cards, or SVCs.
"Technology has now made bulk cash smuggling easier in the form of stored value cards," he said.
Similar to gift cards, SVCs are charged with an electronic monetary value and can be obtained in a variety of locations, often without verification of identities, making them ideal as conduits for the global movement of funds, he said.
"The implications of this development in terms of terror financing and our government's ability to combat it are simply daunting," Landman said. "This threat is exacerbated by the fact that while the Treasury Department is currently reviewing these new products, SVCs are not currently considered 'monetary instruments' for reporting and recordkeeping purposes."
Among the recommendations he made to the panel, Landman said that Treasury should waste no time in designating SVCs as monetary instruments.