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[ when? ], 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 laundered money for numerous criminal networks. In total, the exchange office has laundered more than 200 million Swedish krona. [12]

Related Research Articles

Hawala or hewala, originating in India as havala, also known as havaleh in Persian, and xawala or xawilaad in Somali, is a popular and informal value transfer system based on the performance and honour of a huge network of money brokers. They operate outside of, or parallel to, traditional banking, financial channels and remittance systems. The system requires a minimum of two hawaladars that take care of the "transaction" without the movement of cash or telegraphic transfer. 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. Hawala follows Islamic traditions but its use is not limited to Muslims.

<span class="mw-page-title-main">Hamid Karzai</span> President of Afghanistan from 2002 to 2014

Hamid Karzai is an Afghan politician who served as the fourth president of Afghanistan from July 2002 to September 2014, including as the first elected president of the Islamic Republic of Afghanistan from December 2004 to September 2014. He previously served as Chairman of the Afghan Interim Administration from December 2001 to July 2002. He is the chief (khān) of the Popalzai Durrani tribe of Pashtuns in Kandahar Province.

<span class="mw-page-title-main">History of Afghanistan (1992–present)</span> Fall of Najibullah to present

This article on the history of Afghanistan covers the period from the fall of the Najibullah government in 1992 to the end of the international military presence in Afghanistan.

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.

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.

<span class="mw-page-title-main">Northern Alliance</span> 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 early 1992 and 2001 following the dissolution of the Soviet Union. At that time, many non-Pashtun Northerners originally with the Republic of Afghanistan led by Mohammad Najibullah became disaffected with Pashtun Khalqist Afghan Army officers holding control over non-Pashtun militias in the North. Defectors such as Rashid Dostum and Abdul Momim allied with Ahmad Shah Massoud and Ali Mazari forming the Northern Alliance. The alliance's capture of Mazar-i-Sharif and more importantly the supplies kept there crippled the Afghan military and began the end of Najibullah's government. Following the collapse of Najibullah's government the Alliance would fall with a Second Civil War breaking out however following the Islamic Emirate of Afghanistan's (Taliban) takeover of Kabul, The United Front was reassembled.

<span class="mw-page-title-main">Remittance</span> Money transfer by a foreign worker to their home country

A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries. Workers' remittances are a significant part of international capital flows, especially with regard to labor-exporting countries.

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

<span class="mw-page-title-main">Opium production in Afghanistan</span> 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.

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

<span class="mw-page-title-main">Dahabshiil</span> Bank based in Dubai

Dahabshiil is a Somali funds transfer company, and is the largest money-transfer business in Africa. It's headquartered in Burao, Somalia. Formed in 2004, 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 Somalia.

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.

The following lists events that happened during 2002 in Afghanistan.

<span class="mw-page-title-main">Abdullahi Sudi Arale</span> 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.

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.

<span class="mw-page-title-main">Haqqani network</span> Afghan Islamist guerrilla insurgent group

The Haqqani network is an Afghan Islamist group, built around the family of the same name, that has used asymmetric warfare in Afghanistan to fight against Soviet forces in the 1980s, and US-led NATO forces and the Islamic Republic of Afghanistan government in the 21st century. It is recognized as a terrorist organization by the United Nations. It is considered to be a "semi-autonomous" offshoot of the Taliban. It has been most active in eastern Afghanistan and across the border in north-west Pakistan.

<span class="mw-page-title-main">Baba Jan zahid</span> Afghan politician

Baba Jan zahid, is a former senior security official of the Afghanistan government. He was a general of the Democratic Republic of Afghanistan, but during the collapse of Najib's government, he entered Kabul with Ahmad Shah Masoud's forces and served in various departments of the Islamic State of Afghanistan under the leadership of Ustad Burhanuddin Rabbani.

<span class="mw-page-title-main">United Nations Security Council Resolution 1974</span> United Nations resolution adopted in 2011

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.

<span class="mw-page-title-main">Corruption in Afghanistan</span>

Corruption in Afghanistan is a widespread and growing problem in Afghan society. Transparency International's 2023 Corruption Perceptions Index ranks the country in 162nd place out of 180 countries. The 180 countries of the Index are scored on a scale from 0 to 100 according to the perceived corruption in the public sector, and then ranked by their score. Afghanistan's 2023 ranking is based on a score of 20. For comparison with worldwide scores, the best score was 90, the average score was 43, and the worst score was 11. For comparison with regional scores, the highest score among the countries of the Asia Pacific region was 85, the average score was 45 and the lowest score was 17. In this region, only North Korea had a lower score than Afghanistan. The Taliban significantly tackled corruption upon taking power in 2021; Afghanistan was ranked in 150th place in the 2022 Corruption Perceptions Index, following a ranking of 174th in 2021.

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. ↑ Rundberg, Hampus (11 February 2022). "Tolv personer döms för omfattande penningtvätt i växlingskontor". SVT Nyheter (in Swedish).
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