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Hawala used to launder £20 million in England

January 26, 2014

A British trial has revealed that criminal gangs have been laundering drug money by sending it through hawala and conventional banking channels from England to a hawala dealer overseas to send back to the gangsters in the U.K.

Despite the seriousness of the underlying crime, four of the men involved in the scheme have received light sentences ranging from three years in prison to supervised release with no prison time.  The sentencing is reminiscent of that of New York hawala dealer Faisal Shahzad, who funded the failed Times Square bomber and got off with probation.

Meanwhile, law enforcement and financial regulators continue to make marginal or piecemeal recommendations for how to protect financial markets and the public from the inherent risk of hawala transactions.  One simple idea would be to impose tougher penalties and longer sentences for hawala crimes.

From the Liverpool Echo on Jan. 17 (h/t Arun):

Gang who laundered more than £20m using ancient Islamic system jailed

Two Liverpool men part of four man gang

Two Liverpool men who helped launder more than £20m of drugs money through banks were spared prison.

The money is believed to have been laundered using legitimate bank accounts and an ancient  Islamic money lending system.

Kamran Butt and Instar Ahmed, from Greater Manchester and Liverpool men Steven McKenna and Sean Moore were put under surveillance by police in two undercover operations.

But officers found they were linked when Butt and Ahmed were seen depositing money into  the same bank accounts.

The money was transferred to the defendants, who were recruited by operatives in the Middle East, using the ‘Hawala’ system – an informal Islamic way of lending money based on honour agreements and third-party lenders.

A fifth man, named in court as ‘Akhtar’, was also heavily involved – but was deported to  Pakistan in 2012 and has not been traced since.

Watched by undercover police, Akhtar and Ahmed were seen depositing huge sums of money  at banks in Chorlton, Longsight and Manchester city centre.

The two men would travel to branches of Lloyds, HSBC and Halifax together but then pretend  not to know each other once inside.

Ahmed also worked in partnership with others in the gang.

Manchester Crown Court heard how on Monday, August 22, 2011, police intercepted Ahmed and McKenna and seized three rucksacks stuffed with more than £200,000 in cash.

On another occasion, Moore was seen with Butt in his Mercedes car.

Butt was stopped and a bag was seized, which was found to contain about £120,000 in cash.

His Stretford home was then searched and a further £10,000 was seized.Cash receipts in vehicles traced to the four men showed they were paying in anywhere from £500 to £10,000 a time.All the money is believed to have come from criminal gangs, mainly through drug sales.

The criminal cash was given to a Hawala money lender abroad who then transferred the  money to a Hawala lender in the UK and gave them a password.

This password was then passed onto one of the defendants allowing them to collect the cash.

They then paid the money into bank accounts in Manchester which the criminals had access to.

The court heard the four defendants were the bottom of the chain – below controllers and then  co-ordinators, working as collectors to receive the money, deliver it and pay it into various bank accounts in the UK.

After being caught, all four defendants pleaded guilty – Moore to two charges of money  laundering and Butt, McKenna and Ahmed to one charge of money laundering each.

Butt, of Great Stone Road, Stretford, was believed to be behind £12m in laundered cash, and  was sentenced to three years and six months.

Ahmed, of Kelstern Square, Rusholme, who is believed to have laundered £10m also received  a sentence of three years, six months.

Moore, of Kingfisher Grove, Liverpool, and McKenna, of Maley Street, Liverpool, both received  14 month sentences suspended for 12 months and 12 month supervision orders.

Moore was ordered to carry out 108 hours unpaid work and McKenna 150 hours…

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