Role of Hawala in Terrorism Financing and Money Laundering

Hawala (also known as hundi) is an informal value transfer system based on performance and honor of a huge network of money brokers which are primarily located in the Middle East, Africa and Asia.

In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladars.

• A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually foreign, city.
• The hawala broker calls another hawala broker in the recipient's city, gives disposition instructions of the funds (usually minus a small commission), and promises to settle the debt at a later date.
• The unique feature of the system is that no promissory instruments are exchanged between the hawala brokers; the transaction takes place entirely on the honor system.
• As the system does not depend on the legal enforceability of claims, it can operate even in the absence of a legal and juridical environment.
• No records are produced of individual transactions;
• Only a running tally of the amount owed one broker by the other is kept.
• Settlements of debts between hawala brokers can take a variety of forms, and need not take the form of direct cash transactions.

The practice of Hawala has been a way of funding Islamic business for at least 1200 years.

-Wikipedia

Some Halawadars (Halawa Operators) were shut down after 911, like the Al-Barakat company. Opened in Somalia, and operating in 40 countries worldwide. It was formed byAhmad Ali Jimale, from his office in Dubai .

It was estimated in 2001 that in an average year, US $200 million to $500 million was being transferred into Somalia through the Hawalad system.

New Hawala companies filled the gap, after al Barakat shut down, and some Halawadars though most seem to operate legitimately , some are involved in corrupt and illeagel activities.

The Halawa system's lack of individual transaction and record keeping makes a legitimate system vulnerable to terrorist use. The system is so frequently used by terrorists that the US Council on Foreign relations made the following recommendation in this 2002 report:

Encourage Hawaladar Registration: A comprehensive plan to
enforce the registration of hawaladars in the United States should
be adopted and a system of incentives (tax breaks, etc.) should
be developed to encourage registration of hawaladars. Incentives
are likely to diminish the reluctance of standard hawaladars to adhere to the new law and, in the process, those hawaladars who traffic funds for terrorist groups will be more isolated and easier for law enforcement officials to identify.

-Council on Foreign Relations 2002 Report on Terrorism Financing

Since then, registration has happened in various places, though I do not believe this has made any difference.

• The Halawadar simply accepts the funds and transfers the value to another broker-there is no crime or hint of wrongdoing. The Halawadar in the target country simply provides the cash, and commits no crime. He will be none the wiser if the receiver uses the funds to arm or equip terrorits, but they have by passed the banking system.
• Requiring registered Halawadars to correctly ID users and monitor the various terrorist watch lists, would be a start.
• The Bush administration now seems to be moving toward a money laundering approach

Victor Comras wrote recently in an article in the Counterterrorism Blog that the emphaisis seems to be shifting toward Anti-money Laundering (AML) strategies. He suggests that Terrorism finacing stratgies which are in place, need to be maintained as well. He said:

"The new AML strategy places increased emphasis on the international aspects of money laundering. It is now clear that foreign banks are being used regularly to introduce illegally obtained proceeds into US banks and other depository institutions. This includes using “correspondent,” “payable through,” and “nested” accounts to conceal the customer’s true identity.

The Rest

The point is, we must not forget Halawa when we try new AML strategies, or it will continue to be a shell game, with funds slipping out of banks and into Halawa transactions.

East African Community Responding to Terrorist Attack in Keny

• On Monday, 11 June, a bomb killed one and wounded 31, including loss of site and hearing.
• At the current state of the investigation, it appears that a group of men and women assembled the bomb in a hotel room in Mombasa. There are 5 under arrest, and police are seeking 4 more.
• It appears they were aiming at a bus going to the aiport, or t0 the airport Nairobi Airport

this story will go on for sometime, but it is interesting to see responses from the emerging East After Community

Money Laundering Conference in the Gambia

Ministers of the Interior of Fifteen West African Countries met on June 11th for their fifth annual meeting to discuss Money Laundering.

There is real irony in where they chose to meet:
the Kairaba Beach Hotel, in Kololi, The Gambia.
Irony, becasue the Gambia has been a hotbed of Money Laundering.

• The Gambia is a base of Operations for Victor Bout on Africa (and the World)'s busiest Arms dealers, among other things
• Baba Jobe , the New Millennium Air Company, were named as transiting companies for the weapons.
• This page is a listing of how to transfer funds in and out of the Gambia

Though It appears that some modest steps have been taken to stop money laundering, The Gambia has historicaly been a transshipment point for everything from Slaves to Blood diamonds.

-Shimron


The Secretary of State for Interior, Mr Ousman Sonko, in a plennary session on Tuesday 12 Junehas stated that money laundering is one of the most notorious economic crimes in any state. He said that money laundering is negative for economic growth and could affect a nation both domestically and internationally.

Speaking at the inter-government Action Group Against Money Laundering and terrorist finance in West Africa (GIABA) plenary session and 7th technical commission held at the Kairaba Beach Hotel on Monday, June 11, Secy Sonko said that money laundering is luxurious to criminals but very negative to the economy of any nation.

“The negativity of money laundering in national economies cannot be overemphasised and therefore all the ten member states of GIABA should come together to fight money laundering and terrorist financing in our sub-region,”


...SoS Sanyang also said in October 2006, the government gave the Central Bank of The Gambia the mandate to establish a Financial Intelligence Unit which will be responsible for receiving, analyzing and scrutinizing of data on suspicious transactions relating to money laundering and terrorism financing.

"The staff of the Unit is currently undergoing relevant training to capacitize the unit to have it operationalised by September 2007, Mr. Sanyang revealed.

Reat the Rest @ All Africa.com from the Foroyaa Newspaper

Monzer al-Kassar Stung and arrested in Spain

International arms dealer Monzer al-Kassar was arrested by Spanish police June 7 after a federal indictment was issued against him in New York for conspiring to support terrorists and kill US soldiers. US officials said undercover agents with the Drug Enforcement Administration (DEA) had convinced al-Kassar that they represented the Revolutionary Armed Forces of Colombia (FARC), a guerilla army classified by the US State Department as a terrorist group.

In a series of recorded phone calls, e-mails and meetings, al-Kassar and the DEA agents struck a fictitious $8 million deal for him to supply surface-to-air missile systems, rocket-propelled grenade launchers, thousands of machine guns and tons of explosives obtained in Romania and Bulgaria, officials said. About $400,000 was reportedly wired to Spain from New York as a down payment.

Al-Kassar and his cohorts were told the missile systems were "intended to take down US helicopters," said US Attorney Michael Garcia. Though no weapons exchanged hands, the defendants believed "the arms deal was absolutely real. They demonstrated their willingness to support a terrorist organization and their capacity to do so."

A longtime resident of Spain, the Syrian-born al-Kassar was apprehended at Madrid's Barajas airport after he arrived on a flight from the resort city of Malaga. Police have also searched his palatial home in Marbella, near Malaga. "Someone who considered himself untouchable is now sitting in a jail in Spain," said DEA administrator Karen Tandy.

Two others indicted on the same charges in Manhattan's federal District Court, Tareq Mousa al Ghazi and Luis Filipe Moreno Godoy, were arrested in Romania.

The indictment says al-Kassar has provided weapons to violent factions in Nicaragua, Brazil, Cyprus, Bosnia, Croatia, Somalia, Iran and Iraq.

His customers included known terrorist organizations determined to stage "attacks on United States interests and United States nationals." Al-Kassar also is reportedly on the Iraqi government's most-wanted list for arming insurgents.

Al-Kassar stood trial in Spain in 1995 on charges that he supplied assault rifles used by Palestinian militants in the hijacking of the Italian cruise ship Achille Lauro in 1985, but he was acquitted for lack of evidence.

There have been no immediate details on extradition proceedings, though Spain and the United States do have an extradition treaty that applies in such cases. A court in Bucharest has ordered al Ghazi and Godoy held without bail pending extradition. Ghazi is identified as a Polish citizen of Palestinian origin, and Godoy as a Spanish citizen of Chilean origin.

If convicted, the three could face life sentences. (AP, June 8)

the Rest @ World War 4 Report

Abdullahi Sudi Arale Captured

WASHINGTON (Reuters) - A suspected al Qaeda courier Abdullahi Sudi Arale has been detained in the Horn of Africa and transferred to the U.S. military prison at Guantanamo Bay, the Pentagon said on Wednesday. It said the suspect, Abdullahi Sudi Arale, had also played a leading role in Somalia's Islamic Courts, the movement ousted from control of the Somali capital Mogadishu last year by Somali government and Ethiopian forces.

"We believe him to be an extremely dangerous member of the al Qaeda terrorist network. He served as a courier between East Africa al Qaeda and al Qaeda in Pakistan,"Pentagon spokesman Bryan Whitman said.

"We have significant information that indicates that Arale ... has been assisting various East African al Qaeda-affiliated extremists in acquiring weapons and explosives."

The Pentagon did not disclose Arale's nationality, where he had been detained or who had detained him.

But it said in a statement that he had returned to Somalia from Pakistan in September 2006 and taken a leadership role in the Islamic Courts.

Arale also facilitated terrorist travel by providing false documents for al Qaeda agents and foreign fighters travelling into Somalia, the Pentagon said.

Whitman said Arale was detained "within the last couple of weeks" and arrived at the Guantanamo prison camp on Cuba this week.

The Rest @ Reuters

Kurdistan Turkey Conflict

Nur al-cubicle is a blogsite I have been reading for sometime. I cannot vouch for the reliability of the datasource, she claims to live in Florida and read Italian and French news sources. But he/she reported the following:

• However, Kurdistan President Massoud Barzani has rejected Ankara's conditions last Wednesday
• 600 Turkish commandos, supported by regular Army units and originating from the Turkish town of Cukurca, penetrated 3 kilometers into Kurdistan
• Another 200 regular troops occupied a hilltop in the Iraqi Kurd region of Sizeri
• The Turks have established security zones in the frontier provinces of Sirnak, Siirt and Hakkari through 9 September

Again I cannot vouch for the data, but it is an interesting report none the less.

250,000 troops on the Kurdistan Border

WASHINGTON — American diplomats are quietly urging the Kurdistan Regional Government in Iraq to take steps that would help ease the alarm over the Turkish troops amassed on Iraq's border.
Ankara, Washington, and Baghdad all rushed yesterday to deny an Associated Press dispatch that the Turks had begun an invasion of northern Iraq in pursuit of the Kurdistan Workers' Party, or PKK, a group listed as a terrorist organization by the State Department and blamed by the Turks for suicide blasts in their capital this year.

An Iraqi official who spoke on condition of anonymity explained the delicate American diplomacy as follows: "The Americans want the Kurds to make their lives easier. They need the Kurdish government to show they are willing to do something to tackle terrorism in the north. They are asking for them to be creative. They don't expect them to go after every cell, but maybe alert Turkey of a threat, act on intelligence, arrest some people, make an effort."

The Rest @ New York Sun Times