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Expert Evaluation In Alternative Money Transfer Cases

Hawala is the overused title given to the massively popular global alternative money transfer system used by many ethnic communities around the world. Billions are transferred from the West by migrants daily back home, with similar volumes in the opposite direction from companies and individuals preferring to transfer money in this way.

Attempts by many countries to properly police this business are an abject failure, with widespread flouting of financial regulations that have been in place to prevent and detect the abuse of the system by money laundering gangs and those that might be financing terrorism.

The dangers of using a system for transferring money that is so highly abused by criminals are obvious, and are the reasons why I am called to explain Hawala, money laundering methods and other related aspects of cases where the system has been either used or exploited. Anybody using the system to transfer quantities of money risks being targeted during a regulatory criminal investigation.

For example, a businessman in the UK is expecting a £50,000 payment from India for goods that he is exporting. He receives a phone call asking him to collect the money from somebody in a nearby public place. He sets off to the meeting, and is given a bag of cash by somebody he doesn’t know. At this point, the police swoop and arrest him, and he finds that he is being charged with money laundering.

Should he have accepted the money?

No crime has been identified

Nobody knows where the cash came from in the UK

The funds were deposited with an alternative money transfer system agent in India

At this stage, it is uncertain how the case will go. I have had many such problems to examine, though the details do vary from case to case. The problem is that the circumstances do indicate money laundering was probably taking place, but that the recipient may have been unaware. I have seen equal occasions where the jury has given a guilty verdict to the number non guilty verdicts.

What is certain is that there is still a general misunderstanding regarding the legitimacy and importance of Hawala. For example the large aid agencies all use Hawala to transfer many £100 millions to places like the Horn of Africa and Syria to fund their humanitarian operations and pay local aid workers. They simply can’t use Barclays to transfer funds to places like Aleppo! Another example is that merchants in Ethiopia have no other way of paying for imported goods.

My feeling is that there is much wrong with alternative money transfer systems that allows them to be abused by criminals the way it is. There is something wrong in the regulatory system that apparently allows unregulated Hawaladars to operate seemingly freely, advertising their business in the high street, in Afghanistan, Ethiopia and India. The individuals using the system need to know the dangers – anybody depositing cash in Pakistan may be facilitating criminals to offload street cash in the UK – the recipient is therefore put at risk of arrest.

The problem is not going away anytime soon, and those indicted with money laundering in the UK have the strongest chance of acquittal if a balanced and independent explanation of the transfer systems is presented to the court along with as full an explanation as possible of the legitimate source of the funds initially being transferred. As mentioned, every case is different, but enabling the courts to understand the cultural preference for the system and the willingness to deal in cash, will provide the greatest chance of acquittal.