Hawala

It has vexed our most sophisticated national security analysts and Web trackers. It is a puzzle that constantly changes, is individualized and reconfigured constantly, and is the fuel of global Jihadists seeking funding for weapons, personnel and travel. “An integral component of U.S. counterterrorism strategy has centered on disrupting terrorist finances. Terrorist groups have exploited resources and industries in various countries – poppy cultivation in Afghanistan, charcoal mining in Somalia, and oil extraction in Iraq to name a few – to sell on the black market and subsequently use proceeds to arm and pay militants.

“Perhaps one of the most mystifying aspects of terrorist financing is the ability for terrorist organizations to direct capital from one location to another without the use of institutionalized banking systems. To accomplish this objective, terrorist groups turn to hawala networks as a means of moving funds undetected.” The Cipher Brief, March 16^th. So for those trying to stop that flow of money, it becomes critical to find it in the first place. Sounds simple until you understand how money is moved from place to place. The system is called “hawala.” And it’s how terrorist groups, from al Qaeda to ISIS, finance their deadly operations.

“Hawala, which means ‘transfer’ in Arabic, is an informal transaction system based largely on mutual trust. The way the system works is as follows: An individual in country A gives money to a hawala broker, known as a hawalader, in country A. That hawalader then contacts a hawalader operating in country B and informs the person to give a certain amount of money to a specific individual in country B. Codes are provided by all parties to ensure that the money is delivered to the proper recipient. The hawaladers themselves do not send physical money; instead, they maintain records of payments and settle debts at a later point, often through the exchange of valuable goods or even through wire transfers. During the transaction, hawaladers charge a fee for their service.

“A major reason why hawala networks are so appealing to terrorist groups is because they do not leave paper trails. Record keeping amongst hawaladers is not uniform and can be grueling to interpret. This reality presents difficulties for law enforcement agencies aiming to uncover and crack down on individuals or organizations that facilitate illicit hawala operations.” The Cipher Brief. Simply, it is based on paperless transactions fueled by “trust and honor.” While U.S. efforts have mounted in recent years, they clearly represent “too little, often too late” to have accomplished their ultimate goal of cutting off the tap, the flood of money that flows into these malignant coffers. And it is a lot money!!!

“As part of the effort to clamp down on illicit hawala networks, the U.S. Treasury Department has sanctioned several hawala organizations with links to terrorist groups. In 2012, the Treasury Department sanctioned three hawala networks, the Haji Khairullah Haji Sattar Money Exchange (HKHS), the Roshan Money Exchange (RMX), and Rahat Ltd, all of which principally operate in Afghanistan and Pakistan, for sending funds to the Taliban. Two years later, the Treasury Department sanctioned Haji Basir and Zarjmil Co., another hawala group operating in Pakistan, for its connection to the Taliban. Beyond these organizations, several individuals have been added to the U.S. sanctions list for providing material support to the Taliban as well as to al Qaeda and ISIS.

“Despite these efforts, much work remains to be done to diminish the impact of hawala networks on terrorist financing. The Treasury Department, quoting Pakistani officials, estimates that more than $7 billion flows into Pakistan through hawala channels each year. Ensuring that portions of this sum evades terrorist hands is a daunting task.

“Last October, the House Committee on Homeland Security issued a report on U.S. efforts to combat financial tactics employed by ISIS and other terrorist groups. The report stated that ‘gaping weaknesses in reporting and oversight standards for hawala transactions hamper efforts to identify ISIS financiers and hold financial institutions accountable.’

“To combat this, the report recommended that the Treasury Department work alongside states that are members of the Financial Action Task Force (FATF) – an inter-governmental body charged with developing measures to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system – ‘to improve financial regulatory reporting and oversight standards for processing hawala payments.’

“While these recommendations are a step in the right direction, the challenges presented by hawala networks remain vast… ‘In short, there is no regulatory solution for hawala networks and our adversaries understand this,’ explains John Cassara, Cipher Brief expert and former Special Agent at the U.S. Treasury Department.” The Cipher Brief.

As Donald Trump evidences a profound failure understanding of the legal system he has sworn to support, the hawala networks prosper. Focusing on a statute that he seems to believe gives him blanket authority to close borders to virtually anyone he subjectively fees is a threat, but ignoring the Constitution that clearly supersedes any statute to the extent of conflict, Trump seems to be going out of his way to make it even more difficult to intercept hawala funding.  

The President’s rather obvious Muslim travel bans discourage Muslims “out there” from cooperating with U.S. operatives chasing down the financial trail. If you read the Middle Eastern and foreign press, his policies are interpreted fairly uniformly as anti-Islamic; so exactly why should Muslims work with a government that they now perceive is an enemy to their faith? Further, his merciless attacks against our own national security agencies and appointment of unqualified supervisors over such agencies has only served to create chaos and forced too many great government operatives to retire or resign, leaving those who remain deeply demoralized. His withdrawal from international treaties, peace-keeping agencies and foreign aid have further reduced incentives for the outside world to cooperate in the crushing of our obvious enemies.

I’m Peter Dekom, and we are living in a world that is becoming increasing dangerous in the deployment of ill-conceived policies falsely presented to us as making us safer.