Hawala and crime

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Hawala and crime describes notable examples of hawala used in money laundering.

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By country

USA

Post-9/11 money laundering crackdowns

Some government officials [ which? ] assert that hawala can be used to facilitate money laundering, avoid taxation and move wealth anonymously.[ citation needed ] As a result, it is illegal in some U.S. states, India and Pakistan. [1]

After the September 11 terrorist attacks, the American government suspected that some hawala brokers may have helped terrorist organizations transfer money to fund their activities, and the 9/11 Commission Report stated that "Al Qaeda frequently moved the money it raised by hawala". [2] As a result of intense pressure from the U.S. authorities to introduce systematic anti-money laundering initiatives on a global scale, a number of hawala networks were closed down and a number of hawaladars were successfully prosecuted for money laundering. However, there is little evidence that these actions brought the authorities any closer to identifying and arresting a significant number of terrorists or drug smugglers. [3] Experts emphasized that the overwhelming majority of those who used these informal networks were doing so for legitimate purposes, and simply chose to use a transaction medium other than state-supported banking systems. [4] Today, the hawala system in Afghanistan is instrumental in providing financial services for the delivery of emergency relief and humanitarian and developmental aid for the majority of international and domestic NGOs, donor organizations, and development aid agencies. [5]

In November 2001, the US administration froze the assets of Al-Barakat, a Somali remittance hawala company used primarily by a large number of Somali immigrants. Many of its agents in several countries were initially arrested, though later freed after no concrete evidence against them was found. In August 2006 the last Al-Barakat representatives were taken off the U.S. terror list, though some assets remain frozen. [6] The mass media has speculated that pirates from Somalia use the hawala system to move funds internationally, for example into neighboring Kenya, where these transactions are neither taxed nor recorded. [7]

In January 2010, the Kabul office of New Ansari Exchange, Afghanistan's largest hawala money transfer business, was closed following a raid by the Sensitive Investigative Unit, the country's national anti-political corruption unit, allegedly because this company was involved in laundering profits from the illicit opium trade and the moving of cash earned by government allied warlords through extortion and drug trafficking. Thousands of records were seized, from which links were found between money transfers by this company and political and business figures and NGOs in the country, including relatives of President Hamid Karzai. [8] In August 2010, Karzai took control of the task force that staged the raid, and the US-advised anti-corruption group, the Major Crimes Task Force. He ordered a commission to review scores of past and current anti-corruption inquests. [9]

Between October 2010 and June 2012, the U.S. government charged four Somali defendants with laundering $10,900 for al-Shabaab using hawalas. The defendants were Basaaly Saeed Moalin, Mohamed Mohamed Mohamud, Issa Doreh and Ahmed Nasir Taalil Mohamud. The indictment relied upon illegally collected metadata under the Foreign Intelligence Surveillance Act. The convictions were upheld by the U.S. 9th Circuit Court of Appeals. [10]

Germany

In 2021, 75 tons of gold worth 1.6 billion euros was smuggled by a gang from Germany to Turkey using hawala. [11]

Sweden

In February 2022, An exchange office on Södermalm in Stockholm has been the basis for the business that laundered money for numerous criminal networks. In total, the exchange office has laundered more than SEK 200 million [$21,472,700 at] for criminal networks. [12]

Related Research Articles

Hawala or hewala, also known as havaleh in Persian, and xawala or xawilaad in Somali, is a popular and informal value transfer system based not on the movement of cash, or on telegraph or computer network wire transfers between banks, but instead on the performance and honour of a huge network of money brokers. While hawaladars are spread throughout the world, they are primarily located in the Middle East, North Africa, the Horn of Africa and the Indian subcontinent. They operate outside of, or parallel to, traditional banking, financial channels and remittance systems. Hawala follows Islamic traditions but its use is not limited to Muslims.

Money laundering Process of transforming profits of crime and corruption into ostensibly legitimate assets

Money laundering is the process of concealing the origin of money, often obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions with varying definitions. It is usually a key operation of organized crime.

Hamid Karzai President of Afghanistan from 2001 to 2014

Hamid Karzai is an Afghan statesman who served as President of Afghanistan from 22 December 2001 to 29 September 2014. He is also the khan (head) of the Popalzai Durrani Pashtun tribe of Kandahar Province.

An informal value transfer system (IVTS) is any system, mechanism, or network of people that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location, whether or not in the same form. Informal value transfers generally take place outside of the conventional banking system through non-bank financial institution or other business entities whose primary business activity may not be the transmission of money. The IVTS transactions occasionally interconnect with formal banking systems, such as through the use of bank accounts held by the IVTS operator.

The Financial Action Task Force (FATF), also known by its French name, Groupe d'action financière (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001, its mandate was expanded to include terrorism financing.

Al-Barakat, or Al-Barakaat, which means "Blessings" in Arabic, is a group of companies established in 1987 in Somalia. The firm is involved in the modern form of hawala, an informal value transfer system and remittance method. By 2001, Al-Barakat had outlets in 40 countries, and was the country's largest private employer. It handled about $140 million USD a year from the Somali diaspora, and also offered phone and internet services.

Northern Alliance 1996–2001 anti-Taliban military front in Afghanistan

The Northern Alliance, officially known as the United Islamic National Front for the Salvation of Afghanistan, was a military alliance of groups that operated between late 1996 to 2001 after the Islamic Emirate of Afghanistan (Taliban) took over Kabul. The United Front was originally assembled by key leaders of the Islamic State of Afghanistan, particularly president Burhanuddin Rabbani and former Defense Minister Ahmad Shah Massoud. Initially it included mostly Tajiks but by 2000, leaders of other ethnic groups had joined the Northern Alliance. This included Karim Khalili, Abdul Rashid Dostum, Abdullah Abdullah, Mohammad Mohaqiq, Abdul Qadir, Asif Mohseni, Amrullah Saleh and others.

United States invasion of Afghanistan 2001 military invasion of Taliban-ruled Afghanistan by the United States and its allies

In late 2001, the United States and its close allies invaded Afghanistan and toppled the Taliban government. The invasion's aims were to dismantle al-Qaeda, which had executed the September 11 attacks, and to deny it a safe base of operations in Afghanistan by removing the Taliban government from power. The United Kingdom was a key ally of the United States, offering support for military action from the start of invasion preparations. The invasion came after the Afghan Civil War's 1996–2001 phase between the Taliban and the Northern Alliance groups, resulting in the Taliban controlling 80% of the country by 2001. The invasion became the first phase of the 20-year-long War in Afghanistan and marked the beginning of the American War on Terror.

Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors.

Opium production in Afghanistan Overview of illicit drug production in Afghanistan

Afghanistan has long had a history of opium poppy cultivation and harvest. As of 2021, Afghanistan's harvest produces more than 90% of illicit heroin globally, and more than 95% of the European supply. More land is used for opium in Afghanistan than is used for coca cultivation in Latin America. The country has been the world's leading illicit drug producer since 2001. In 2007, 93% of the non-pharmaceutical-grade opiates on the world market originated in Afghanistan. By 2019 Afghanistan still produced about 84% of the world market. This amounts to an export value of about US$4 billion, with a quarter being earned by opium farmers and the rest going to district officials, insurgents, warlords, and drug traffickers. In the seven years (1994–2000) prior to a Taliban opium ban, the Afghan farmers' share of gross income from opium was divided among 200,000 families. As of 2017, opium production provides about 400,000 jobs in Afghanistan, more than the Afghan National Security Forces. In addition to opium, Afghanistan is also the world's leading producer of hashish.

Mohamed Saleban Bare is a Somali refugee who was held in extrajudicial detention in the United States Guantanamo Bay detention camps, in Cuba.

Dahabshiil Bank based in Dubai

Dahabshiil is an international funds transfer company headquartered in Burao, Somaliland. Formed in the early 1970s, the firm operates from over 24,000 outlets and employs more than 2,000 people across 126 countries. It provides financial services to international organisations, as well as to both large and small businesses and private individuals. The company is also involved in community building projects in Somaliland. It is the largest money-transfer business in Africa.

New Kabul Bank is a bank in Afghanistan that has its main branch in the capital city of Kabul. It was established in 2004 as the Kabul Bank, the first private bank in Afghanistan. After corruption and scandals it was re-established in 2011 as the New Kabul Bank.

Abdullahi Sudi Arale Citizen of Somalia (born 1964)

Abdullahi Sudi Arale is a citizen of Somalia who was held for two and a half years in extrajudicial detention by the United States. Arale's transfer to the United States Guantanamo Bay detention camps, in Cuba, was confirmed on Wednesday, June 6, 2007.

This article deals with activities of the U.S. Central Intelligence Agency related to transnational crime, including the illicit drug trade.

Crime in Afghanistan

Crime in Afghanistan is present in various forms, and includes the following: corruption, contract killings or assassinations, bombings, kidnapping, drug trafficking, money laundering, black marketeering, and ordinary crimes such as theft and assault.

Liban M. Hussein is a Canadian entrepreneur and businessman. He was a stakeholder in the Al-Barakat money transfer firm. In November 2001, Hussein was arrested at the request of the United States government, which accused him of supporting terrorism through the company. His assets were also frozen. Hussein was eventually exonerated of the charges and released, after a court found that neither the Royal Canadian Mounted Police (RCMP) nor the U.S.A authorities were able to provide any evidence of terrorist links. In February 2012, all charges against the Al-Barakat Group of Companies were also dropped.

Crime in the United Arab Emirates

The crime rate in the United Arab Emirates is relatively low compared to more highly industrialized nations. Incidents of petty crime such as pickpocketing are low. The United States Department of State states: "Crime generally is not a problem for travelers in the UAE. However, the U.S. Embassy advises U.S. citizens to take normal precautions against theft, such as not leaving a wallet, purse, or credit card unattended. Although vehicle break-ins in the UAE are rare, U.S. citizens are encouraged to ensure that unattended vehicles are locked and that valuables are not left out in plain sight".

United Nations Security Council Resolution 1974

United Nations Security Council Resolution 1974, adopted unanimously on March 22, 2011, after recalling previous resolutions on Afghanistan, in particular 1917 (2010), the Council extended the mandate of the United Nations Assistance Mission in Afghanistan (UNAMA) for a period of one year until March 23, 2012.

Corruption in Afghanistan Institutional corruption in the country

Corruption in Afghanistan is a widespread and growing problem in Afghan society. Transparency International's 2021 Corruption Perceptions Index ranks the country in 174th place out of 180 countries, on a scale where lower-ranked countries are perceived to have a more honest public sector.

References

  1. ↑ Jost, Patrick M.; Sandhu, Harjit Singh. "The Hawala Alternative Remittance System and its Role in Money Laundering" (PDF). Treasury Financial Crimes Enforcement Network (FinCEN). Archived from the original (PDF) on June 12, 2016. Retrieved September 5, 2016..
  2. ↑ Desrosiers, David A. "Al Qaeda Aims at the American Homeland - A Money Trail?". 911.gnu-designs.com.
  3. ↑ Passas, Nikos (November 2006). "Fighting terror with error: the counter-productive regulation of informal value transfers" (PDF). Crime, Law and Social Change. 45 (4–5): 315–36. doi:10.1007/s10611-006-9041-5. S2CID   153709254 . Retrieved 2011-06-16.[ permanent dead link ]
  4. ↑ Passas, Nikos (2006). "Demystifying Hawala: A Look into its Social Organization and Mechanics". Journal of Scandinavian Studies in Criminology and Crime Prevention. 7 (suppl 1): 46–62. doi:10.1080/14043850601029083. S2CID   145753289.
  5. ↑ Maimbo, Samuel Munzele (August 1, 2003), The money exchange dealers of Kabul – a study of the Hawala system in Afghanistan, The World Bank, p. 1, archived from the original on March 19, 2012, retrieved September 5, 2016.
  6. ↑ "US ends Somali banking blacklist". BBC News . UK. August 28, 2006. Retrieved 2007-02-24.
  7. ↑ "Somali Pirates Take The Money And Run, To Kenya". NPR. 2010-05-05. Retrieved 2010-05-18.
  8. ↑ "Afghan hawala ring tied to Karzai kinh". The Times of India. August 13, 2010. Retrieved September 5, 2016.
  9. ↑ Rosenberg, Matthew (June 25, 2010). "Corruption Suspected in Airlift of Billions in Cash From Kabul". The Wall Street Journal. New York, NY, US. Retrieved September 5, 2016.
  10. ↑ UNITED STATES V. MOALIN, F.3d (D.C. Cir.September 2, 2020).
  11. ↑ Online, FOCUS. "Illegales Finanztransfersystem machte es möglich: Riesige Goldmenge von NRW in die Türkei geschleust". FOCUS Online (in German).
  12. ↑ Nyheter, S. V. T.; Rundberg, Hampus (11 February 2022). "Tolv personer döms för omfattande penningtvätt i växlingskontor". SVT Nyheter (in Swedish).
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