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Police and security personnel closed down an office yesterday in the northern town of Umm al-Fahm reputedly affiliated with the Islamic Movement and linked to Islamic organizations abroad. The closure order, drafted by Defense Minister Ehud Barak, described the organization operating there as an "unrecognized association."

Police in the Jezreel Valley District said yesterday they suspect the Al-Aqsa Institute, founded in 2000 by movement leader Sheikh Ra'ad Saleh, to have been operating from the location.

Documents, money, computers and other equipment were seen being removed from the edifice, which were later transferred to the Shin Bet ecurity service. The Defense Ministry also issued instructions to freeze the organization's bank accounts.

The police sources said that the group was operating in cooperation with the Hamas leadership in Jerusalem. Its activity was allegedly was funded in part by the "Charity Coalition," an umbrella group of hard-line Islamic foundations from around the world.

Police also said that the coalition transferred to Hamas and Al-Aqsa large sums of money without proper documentation, through money changers, laundering and bank transfers.

Al-Aqsa allegedly functions as the operational arm of Hamas's "Dawa" organization, providing financial and logistical support to operatives of the Islamist group in and around Jerusalem.

"The cooperation with Hamas is expressed in cooperative action in Jerusalem and funding from illegal Hamas bodies," the police sources said.

The leaders of the Islamic Movement's northern branch were convicted in 2003 of association with a terrorist group.

The Movement's international links are at the center of a joint Shin Bet and police investigation that has been under way for several years.

Sources in the organization denied the allegations against them yesterday, claiming that any actions they have undertaken were entirely legal. They told Haaretz that the group's links do indeed extend beyond the domestic political arena, a fact that they claim worries the Israeli ruling establishment.

"The movement's deviance from the 'rules of the game' determined by the establishment is what is irritating Israel. We don't see the Knesset as our loftiest ambition, but are working far beyond that," said one member of the group.

Sheikh Ra'ad Saleh likened the decision to ban the Al-Aqsa Institute to the ban levied on 36 Islamic foundations and organizations two months ago.

"If you think that by closing 36 Arab and Muslim institutions, you will cut our links to the Muslim world you are wrong," he said.

"We are an inseparable part of the Palestinian people, of the Arab world and of the Islamic umma [nation], and we will stay on our lands and in our homes."