An informal money-exchange network known as “hawala’’ — a centuries-old system that operates outside conventional banking networks — is at the center of the investigation into three Pakistanis arrested Thursday in Massachusetts and Maine with alleged ties to the suspect in the failed Times Square bomb plot, law enforcement officials said yesterday.
The men, who were detained on immigration charges after several raids across the Northeast, were described by government officials as having funneled money to Pakistani-born Faisal Shahzad, who is in federal custody for trying to set off a car bomb earlier this month. The three men are being investigated for possibly using the hawala system to provide money that Shahzad used to finance the plot, the officials said yesterday.
Detecting the use of a "Hawala"-based system is not going to be easy with high technology tools, systems and software that are in place with financial institutions. Even those legal citizens in country have found ways to move money back to relatives still in their native homeland before they took the citizenship exam and pledged their allegiance to their new country.
Operational Risks in your environment include the behaviors by employees, suppliers and 3rd parties that touch this anonymous and prolific network for moving money for potential use by criminal or terrorist non-state actors. Do you run the operations for a large charitable organization or non-governmental organization (NGO)? How many entities now are operating alone on the Internet acting as 501(c)3 organizations in the United States involved with Haiti Relief, Aide to Congo Refugees or even now environmentalists who claim to be advocates for cleaning up the Gulf of Mexico oil disaster?
The financial safeguards for even the most legitimate organizations who operate in the movement of funds for use in religious, community food banks and other non-profit charities must be continuously monitored. The controls for detecting the possible illegal transfer of money from an individual or business to another individual or transnational entity is a risk management priority. Utilizing capabilities from firms like World-Check in combination with even the most simple system for cross-checking transactions can be an initial step for those legitimate businesses who are still Operational Risk neophytes.
Anti-Money Laundering compliance has been part of the banking systems regulatory framework for decades. According to World-Check:
According to the KPMG Global Anti Money Laundering Survey published in 2007, a staggering US$ 1 trillion per year is being laundered by financial criminals, drugs dealers and arms traffickers worldwide. With this much laundered money in the wrong hands, criminal syndicates are able to expand their operations, resulting in more violence, higher levels of addiction and a range of related socio-economic problems throughout the world.
Laundered money is also known to finance highly coordinated international terrorist activities; a phenomenon that poses a clear and present danger to worldwide political and economic stability.
As such, Anti Money Laundering and the Combating of Terrorist Financing (CTF) can only be treated as pressing objectives of global concern. A sharp worldwide increase in the amount of wealth in private hands, combined with the multinational expansion of leading financial institutions, further necessitated the expansion of supranational legislation and law enforcement structures to combat money laundering and related financial crimes.
Entities such as the Financial Action Task Force (FATF), Wolfsberg Group and Basel Committee are key drivers of the regulatory policy-making process, and are closely involved in the standardization and enforcement of related compliance mandates.
So where do you begin as a consumer or a small and legitimate charitable organization? One place is with the "Top Ten Best Practices of Savvy Donors" at Charity Navigator. As a consumer this will give you a better idea on what to look for when you are providing money to a particular cause or to aid your favorite religious organization. As a charitable organization, it will give you an understanding of what you should be putting in place to become compliant and to attract the kind of donors you are looking for online. Here are "Six Questions to Ask Before Donating":
At Charity Navigator, we advocate that all potential donors take the time to ask charities questions about their programs, mission, and goals before they decide to support them. For those people who don't have the time or resources for this, we provide our services as a guide, so you can give with confidence. In addition, we have developed a list of questions that you as a donor should ask before you begin the act of supporting a charity.
Be alert and be vigilant. If the entity that you are engaging with doesn't pass the sniff test on these 16 questions then observe, document and report what you have experienced with the proper authorities within your organization or by contacting your local law enforcement. Follow the money.