HAWALA AND TERRORISM
Recent anti-terrorist legislation in the US and the UK allows government agencies to regularly supervise and inspect businesses that are suspected of being a front for the ''Hawala'' banking system,thus making it a crime to smuggle more than $10,000 in cash across USA borders.
There is a belief that the al-Qaida network of Osama bin Laden uses the Hawala system to raise and move funds across national borders.
A Hawaladar in Pakistan (Dihab Shill) was identified as the financier in the attacks on the American embassies in Kenya and Tanzania in 1998.
But USA is not the only country to face terrorism, financed by Hawala networks.
Sometime ago, the Delhi police, the Enforcement Directorate (ED), and the Military Intelligence (MI) arrested six Jammu Kashmir Islamic Front (JKIF) terrorists. The arrests led to the exposure of an enormous web of Hawala institutions in Delhi, aided, some say, by the ISI (Inter Services Intelligence, Pakistan's security services). The Hawala network was used to funnel money to terrorist groups in the Kashmir Valley.
Luckily, the common view that Hawala financing is paperless is wrong. The transfer of information regarding the funds often leaves digital trails. Written, physical, letters are still the favourite mode of communication among small and medium Hawaladars, who also resort to extremely detailed single entry bookkeeping.
Such flows of funds affect the local money markets in Asia and are instantaneously reflected in interest rates charged to frequent borrowers, such as wholesalers.
Most countries have only one system, the storehouse of data regarding all banking (and most non-banking) transactions in the country. Yet, even this is a partial solution. Most national systems maintain records for 6-12 months only.
Yet, the root of the problem is not the Hawala or the Hawaladars, but the corrupt and useless governments of Asia are to blame for not making flexible their banking systems, for over-regulating everything else, for not developing competition, for throwing public money at bad debts and at worse borrowers, for over-taxing, for robbing people of their life savings through capital controls, for tearing the weak fabric of trust between customer and bank.Perhaps if Asia had reasonably means, reasonably priced, reasonably regulated, user-friendly banks - Osama bin Laden would have found it impossible to finance his mischief so invisibly.
Recent anti-terrorist legislation in the US and the UK allows government agencies to regularly supervise and inspect businesses that are suspected of being a front for the ''Hawala'' banking system,thus making it a crime to smuggle more than $10,000 in cash across USA borders.
There is a belief that the al-Qaida network of Osama bin Laden uses the Hawala system to raise and move funds across national borders.
A Hawaladar in Pakistan (Dihab Shill) was identified as the financier in the attacks on the American embassies in Kenya and Tanzania in 1998.
But USA is not the only country to face terrorism, financed by Hawala networks.
Sometime ago, the Delhi police, the Enforcement Directorate (ED), and the Military Intelligence (MI) arrested six Jammu Kashmir Islamic Front (JKIF) terrorists. The arrests led to the exposure of an enormous web of Hawala institutions in Delhi, aided, some say, by the ISI (Inter Services Intelligence, Pakistan's security services). The Hawala network was used to funnel money to terrorist groups in the Kashmir Valley.
Luckily, the common view that Hawala financing is paperless is wrong. The transfer of information regarding the funds often leaves digital trails. Written, physical, letters are still the favourite mode of communication among small and medium Hawaladars, who also resort to extremely detailed single entry bookkeeping.
Such flows of funds affect the local money markets in Asia and are instantaneously reflected in interest rates charged to frequent borrowers, such as wholesalers.
Most countries have only one system, the storehouse of data regarding all banking (and most non-banking) transactions in the country. Yet, even this is a partial solution. Most national systems maintain records for 6-12 months only.
Yet, the root of the problem is not the Hawala or the Hawaladars, but the corrupt and useless governments of Asia are to blame for not making flexible their banking systems, for over-regulating everything else, for not developing competition, for throwing public money at bad debts and at worse borrowers, for over-taxing, for robbing people of their life savings through capital controls, for tearing the weak fabric of trust between customer and bank.Perhaps if Asia had reasonably means, reasonably priced, reasonably regulated, user-friendly banks - Osama bin Laden would have found it impossible to finance his mischief so invisibly.