Hawala — another word we really didn’t want to know
The “hawala” system of money transfer is mentioned in this article in the NY Sun about al Qaeda cells operating in the US:
intelligence gleaned from last month’s British “doctors plot” of car bombers suggests that a Qaeda cell is on the loose in the American homeland.
E-mail addresses for American individuals were found on the same password-protected e-mail chains used by the United Kingdom plotters to communicate with Qaeda handlers in Europe, a counterterrorism official told The New York Sun yesterday. The American and German intelligence community now believe the secure e-mail chains used in the United Kingdom plot have provided a window into an operational Qaeda network in several countries.
“Because of the London and Glasgow plot, we now know communications have been made from Al Qaeda to operatives in the United States,” the counterterrorism official said on condition of anonymity. “This plot helps to connect a lot of stuff. We have seen money moving a lot through hawala networks and other illicit finance as well.
The hawala system functions by using proxies at both ends of the transaction to make a long distance exchange a local exchange of money, and further uses no documentation of the transfer, except whatever records of verbal or email communications might exist. Interpol has a lengthy explanation of the system, in the “Money Laundering” section of its website that appears to us somewhat Politically Incorrect. The premise is the following, according to Interpol:
“Abdul is a Pakistani living in New York and driving a taxi. He entered the country on a tourist visa, which has long since expired. From his job as a taxi driver, he has saved $5,000 that he wants to send to his brother, Mohammad, who is living in Karachi.” He calls a “Music Bazaar and Travel Services Agency” in Brooklyn, advertised in an “Indo-Pak” newspaper, and asks for Yasmeen:
Abdul calls the number, and speaks with Yasmeen. She offers him the following deal: A fee of 1 rupee for each dollar transferred; 37 rupees for a dollar; and Delivery is included.
Under these terms, Abdul can send Mohammad Rs 180,000. He decides to do business with Yasmeen.
The hawala transaction proceeds as follows: Abdul gives the $5,000 to Yasmeen; Yasmeen contacts Ghulam in Karachi, and gives him the details; Ghulam arranges to have Rs 180,000 delivered to Mohammad.
This diagram summarizes the transaction:
Of course what the Interpol example does not illustrate is a flow of funds going in the other direction, from Pakistan to New York, in order to fund clandestinely the operation of a cell and plot or two in the United States, which would be today’s concern.
We had been wondering why the Democratic Congress — seemingly a little out of character — went along with the extension of the approval of warrantless surveillance that the President just signed. Now perhaps we know. And we are reminded yet again of the harm done to the United States by the New York Times in its scandalous reporting on the monitoring of the SWIFT money transfer system.