The legal advisor to the Fund has a minefield of issues to navigate relating to due diligence and disclosure. Beyond the disclosure of the endogenous elements of Shariah the Fund inherits from the DJII, the first and most obvious problem relative to the Fund’s exogenous aspects is the documented evidence provided by the federal government at the largest terror-financing trial in U.S. history. Their evidence makes clear that its client, and the successor to the founder of its client, have been linked to the material support of terrorism. Moreover, NAIT’s founding organization, the MSA, has a public record of embracing the goal of a worldwide Shariah hegemony. In a devastating dossier by the Investigative Project on Terrorism, based wholly on open sources, the MSA is exposed as suspiciously aligned with the goals of the Muslim Brotherhood and Hamas.
Other disturbing connections to the funding of terrorism arise. The Fund’s portfolio manager, Dr. Bassam Osman, who has also been the President and Chairman of the Fund Advisor for the past six years, was a director to another suspect Muslim charity. As Senator Charles Schumer stated during a hearing of the Senate Judiciary Committee on Saudi-funded Islamic terrorism:
Meanwhile, a number of ISNA board members appear to have checkered pasts. One member, Siraj Wahhaj, was named as an unindicted co-conspirator in the WTC, in the WorldTradeCenter, ’93 bombings. Another member, Bassam Osman, was previously the director of the Qur’anic Literary Institute, an Oak Lawn, Illinois, organization that had $1.4 million in assets seized by the Justice Department in June ’98 on the grounds it was used to support Hamas activities.
Finally, it appears that NAIT’s ownership of so many U.S.mosques contributes further to its ties to the material support of terrorism. In April 2004, the founder of an Albanymosque and the imam he had recruited to serve as the spiritual leader of the mosque were arrested for participating in “a plot to import a shoulder-fired missile and assassinate a Pakistani diplomat in New York City.” It turns out that NAIT owned the Albany mosque. Several other NAIT-owned mosques have been named as suspected centers of terrorist activity.
In light of the adverse publicity and constant tension of a client linked so intimately to the material support of terrorism, the twin issues of due diligence and disclosure should be front and center for the Fund’s lawyers. On the due diligence side, the Fund has the obligation to protect against any of the monies coming in or going out of the Fund being exploited in the cause of terrorism. In fact, in the Fund’s prospectus, the Fund promoters make the standard representation of compliance with the Patriot Act’s anti-money laundering provisions:
Anti-Money Laundering. The Fund has established an Anti-Money Laundering Compliance Program (the “Program”) as required by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT ACT”). To ensure compliance with this law, the Fund’s Program provides for the development of internal practices, procedures and controls, designation of anti-money laundering compliance officers, an ongoing training program and an independent audit function to determine the effectiveness of the Program.
Procedures to implement the Program include, but are not limited to, determining that the Fund’s Distributor and Transfer Agent have established proper anti-money laundering procedures, reporting suspicious and/or fraudulent activity and a complete and thorough review of all new opening account applications. The Fund will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT ACT.
Given the documented record creating at least associational ties between the Fund’s principal owner (including the Fund Adviser) and individuals and organizations tied to the material support of terrorism, a pro forma recitation of compliance with the Patriot Act will likely fall well short of the due diligence required by the relevant statutes. For example, what exact monitoring protocols does the Fund have in place to make certain that neither the Fund Advisor nor the Fund’s principal shareholder have utilized any of the Fund’s distributions for criminal activity? Further, has the Fund conducted a thorough investigation into the tens of millions of dollars raised by NAIT in tax-exempt contributions for the purchase of the Fund shares? Were these monies from domestic or overseas sources? Has anyone attempted to source these contributions? While the Fund might argue that sourcing an investment from NAIT is sufficient, given the history of NAIT, its associations, and more importantly its role as a “trust” holding as a fiduciary the funds and property of individual Muslims, associations of Muslims, and Muslim organizations, regulations promulgated under the Bank Secrecy Act will likely require that the Fund verify the source of NAIT’s funds.
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