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10 years after 9/11, Treasury looks at hawala

June 17, 2011

The failed Times Square bombing has prompted FinCEN to consider tightening the screws on hawala.  The shocking thing about this article from MoneyLaundering.com on June 14 is that it has taken so long for FinCEN to become concerned about hawala.  The 9/11 Commission found that hawala played a significant role in Al Qaeda’s financing, particular after the East Africa embassy bombings, but also including 9/11 itself.  We also already knew that Italian hawaladars played a role in financing the 26/11 terror attacks against Mumbai.

The sad thing is that, even though FinCEN has become more worried, the only apparent “solution” offered in this article is closer cooperation with law enforcement.  Here’s a suggestion:  outlaw hawala in the U.S., and as soon as any hawala operator is discovered, get a warrant, seize his records, cuff him, jail him, put him on trial, and bulldoze his office after his conviction.

Failed Bombing Prompted Treasury to Scrutinize Unregistered MSBs, Hawala Networks: Sources

By Brian Monroe

Last year’s failed Times Square car bombing has been the chief impetus behind a recent U.S. Treasury Department’s initiative to identify unregistered money services businesses and hawala networks, according to sources.

The department’s Financial Crimes Enforcement Network (FinCEN) began more closely screening the suspicious activity reports (SARs) it receives after it was disclosed that Pakistan-born Faisal Shahzad, who attempted in May 2010 to blow up an explosive-packed Nissan in the heart of Manhattan, had received funding for the operation through hawala brokers, said an individual familiar with the matter.

After the disclosure, the bureau began more closely working with regional law enforcement officials and regulators to determine how to better identify similar brokers, known as hawaladars, said the person, who asked not to be named. In May, FinCEN asked money services businesses (MSBs) to report the names and tax identification numbers of their agents, among other data.

After the attempted bombing, FinCEN officials were “very worried” because, along with the Internal Revenue Service, the bureau is responsible for oversight and enforcement of MSBs, said the person. FinCEN officials wanted to find a way to thwart transfers similar to those received by Shahzad, who accepted $12,000 in funding via a hawaladar from co-conspirators in Pakistan.

Following Shahzad’s arrest, there is a “greater realization in law enforcement that these hawalas can be tied to some pretty serious stuff,” including terrorist financing, said Martin Ficke, a former U.S. Immigration and Customs Enforcement special agent. “These agencies have to do something to close that gap.”

The number of hawala brokers in the country remains a guess at best. While FinCEN lists more than 42,000 registered MSBs on its Web site, the number of unregistered MSBs, including hawala operations, is close to 160,000, according to a 1997 estimate by a third-party consultant commissioned by FinCEN…

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