Legitimate Hawala Banking Or Money Laundering?

Hawala Banking is an overused term given to an area of money transmission activity that predates conventional Western style banking. It is responsible for the global movement of funds on a massive scale, measured annually in £100s of billions. Therefore, Hawaladars and their customers are targeted by the organised money laundering gangs in exactly the same way as conventional banks.

All authorities have failed to establish the scale of money laundering, either nationally or on a global scale.  Consensus is that underground economic activity represents a substantial proportion of worldwide GDP, several £trillion at least.  It is no wonder that the regulators have a hard task policing money laundering activity, with London now deemed by many to be the money laundering capital of the world.

There is an underlying framework by which criminals collate their proceeds of crime, a large proportion being “street cash” from the sale of drugs, in order that it can be stashed away as seemingly legitimate funds in offshore jurisdictions and available for spending or investing in further criminal activities.  Unfortunately, the often informal approach to money management and a preference for cash by some Hawala businesses means that it is often a target for the criminal gangs.  The law enforcement bodies recognise this  and are uncompromising in their treatment of suspected Hawaladars and their customers alike.  Yet a Hawala business when properly established must comply with strict anti-money laundering regulations and is monitored by both HMRC and the Financial Conduct Authority.

As a result, Mark Jenner & Co Limited is frequently asked to examine Hawala transactions or whole businesses to determine the extent of legitimate trading taking place.  Very often, the authorities assume simply because a transaction is Hawala based, it must be criminal.  Yet Hawala Banking is responsible for the safe and cost effective movement of vast amounts of money being legitimately transferred around the world for a large proportion of the population.  It is often necessary for an Independent Hawala Expert to provide an explanation of the process to the Court, in order that the important issues can be dealt with – the reason for the underlying money transfers.

As a recognised independent Hawala Banking Expert, Mark Jenner has been able to provide an acceptable explanation to the Court of the Hawala framework on many occasions, irrespective of the nature of the actual money laundering offences. In many cases he has investigated and reported on the legitimate aspects of the Hawala banking activities and is often asked to trace and explain the alleged money laundering transactions.  Recent examples of expert forensic accounting cases include:

  • A London based Hawaladar with connections to a Birmingham money launderer was accused of laundering £90,000,000 to Afghanistan via China over a five year period.  Although he was convicted in 2014, the scale of the illegal operations was shown to be relatively small, hidden within a large quantity of legitimate and properly regulated business;
  • A Bradford based Hawaladar ran his business from home and transmitted £40 million over 4 years to India, Pakistan and Hong Kong. HMRC had assessed the (legitimate) profit margin at around £500,000 over the four year period but this was reduced according to Expert Evidence at trial to a small proportion of this figure;
  • A Bradford based business that transferred several £millions every year both into and out of the UK alongside a travel agent business, became connected to an operation to import drugs from Pakistan. Expert accountancy work established the underlying legitimacy of the Hawala business and the smaller scale of the drug dealing;
  • A Birmingham based Hawaladar with agents around the UK sent money via Dubai to customers’ families in Somalia. The forensic accounting work established the legitimacy of funds flowing from a separate UK business involved in an unconnected fraud through the Hawala route;
  • Due to Indian currency regulations, a listed company used the Hawala system to send large sums of money to the UK in 2012 to fund its global expansion programme. Forensic accountancy work confirmed the legitimacy of the funds sent from India, but indicated how Hawala organisations in the UK can be hijacked or even impersonated in order to distribute tainted funds within the UK;
  • Between 2009 and 2012 an individual purchased UK property on behalf of a Saudi businessman. Funds were transmitted to the UK using the Hawala system via intermediary destinations including Turkey and the Lebanon. The individual was accused of laundering money.  Expert oral evidence included a detailed explanation of the Hawala principles and a comparison with conventional Western banking and assisted with an acquittal in 2015 by the jury;
  • In addition to these and other legitimate Hawala businesses (that had become connected to other aspects of criminality)  the forensic accounting work undertaken by Mark Jenner & Co Limited has also examined many cases of money laundering where Hawala banking has been presented as an explanation for criminal activity – thus observing both legitimate and criminal aspects of Hawala banking;
  • Mark Jenner & Co Limited has considered and responded to the Crown expert’s reports (including from the Metropolitan Police) on many occasions. Additionally, Mark Jenner has attended meetings as an Independent Expert, and prepared joint agreed statements with the Crown’s money laundering experts.

Mark Jenner & Co Limited supports the regulatory authorities’ seemingly uphill struggle against money laundering, and has recently provided Expert Forensic input into major money laundering investigations being conducted by the Police. As a provider of Independent Hawla Banking or Money Laundering Expertise, our aim is to prove a robust, balanced and fair appraisal of any case on behalf of either the Prosecution or the Defence.

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About Mark Jenner

Mark Jenner is an experienced forensic accountant specialising in fraud and white collar criminal matters. He provides independent financial investigation and expert accounting witness services to police forces, fraud regulators and criminal defence lawyers, also providing assistance and solutions to organisations embroiled in financial disputes.

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