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Throwing Cash Into The Abyss

For more than 20 years I have been receiving money laundering instructions on matters involving Hawala. Legitimate cash enters the system but is replaced with criminal cash that is seized at the destination. As time goes by there seem to be more cases. Twenty years ago I would receive one or two instructions each year. Last year I saw over a dozen different asset seizure or money laundering cases where Hawala featured.

Cash Is King – Still?

These days, anybody caught with a bag full of cash must explain where it has been obtained. Otherwise they run the risk of it being confiscated by the authorities. There are different classes of people who might be apprehended with cash. These include event organisers or shopkeepers who decide not to use a security service to transport takings to the bank. There are others who might handle large quantities of cash:

  • Criminals who collate their proceeds of crime and those that launder the money for them.
  • Individuals and organisations who are expecting legitimate funds from abroad. They find themselves unwittingly receiving criminal cash to settle the transaction.

Both classes might cite transferring money via Hawala as the reason for having the cash. They might say that they had been on the way to deposit the cash with the local Hawaladar. They might say they were expecting the funds from a relation abroad.

Caught Between Two Extremes!

I find myself caught between two extremes when writing my reports. As a recognised independent Hawala expert I am asked to describe the system of money transfer. I will explain why it is used and how it is regulated in the UK and abroad. I fall between two camps. On one side there is the large number of Prosecution experts working within government bodies. On the other there are academics. They are wheeled out by the defence to present the case for the social and economic necessity of unregulated money transfer.

The Prosecution will say that all Hawala is suspect. Conversely, the academics will say unregulated money transfer systems are serving social and economic needs. There is a vast amount of legitimate money being transferred. This makes Hawala a target for organised money launderers who wish to hijack such transactions. This is made easy when the transactions are flowing through unregulated agents.

Legitimate Transfer or Money Laundering?

Hawala in the UK is regulated in the same way as a bank or building society is. As such, its agents must maintain scrupulous records. The agents must train their staff properly and investigate the legitimacy of the sources of the money they are receiving. They must “know their clients”. Most importantly they must pay proper heed to the UK and International anti money laundering frameworks.

Unregulated Hawaladars often conduct their business wholly in cash and use the unique serial number of a banknote as an anonymous identifier during cash handovers. This means that they are likely, unwittingly or otherwise, to be taking part in money laundering.

Where An Expert On Hawala Can Assist?

My forensic accounting services come in to play as a Hawala and money laundering expert. Money is sent from a location abroad and the system is hijacked by the organised criminals. They are seeking a source of legitimate transfers that they can use to “layer” their criminal cash. I need to trace the transaction and explain the system.

Very often I will agree with the Crown’s expert that the circumstances demonstrate many characteristics of money laundering. However, I will attempt to see the extent of the criminal activity. More specifically I will determine where it ends. I will distinguish between the legitimate transactions and the money laundering.

For example, last year an Iranian National imported her inherited wealth into the UK using Hawala. This was on the advice of her solicitor. Because of the economic sanctions against Iran, Hawala was the only practical method for transferring the money. The NCA failed in its application for forfeiture because I could demonstrate how the wealth could be traced to a legitimate source. My explanation of the Hawala system supported a view accepted by the court. The Iranian National could not have been expected to know that the money arriving in the UK was being settled by criminals.

Hawala Is Accepted Around The World

Hawala is accepted as the preferred money transfer system by many communities around the world. Billions are sent using this method every year. However, users everywhere pay little heed to the requirement in most countries for the agents to be regulated. Consequently, customers in the UK importing money will find that their money is being sent from abroad using unlicenced dealers. The authorities in those countries seemingly turn a blind eye.

Until other countries begin to enforce the existing international anti-money laundering requirements more strenuously (as does the UK) and the vast number of users become more accepting of government imposed regulatory frameworks, Hawala will continue to feature in a large number of the criminal cases where I am asked to assist!