Paris trial may link terrorist funding to ancient money transfer system
A Lebanese businessman sanctioned by the US for having ties to Hezbollah yesterday went on trial in Paris, accused of being part of a money-laundering ring using an ancient banking practice to fund the group’s arms in Syria.
Hawala, the anonymous banking system, is a common method of payment for foreign workers who send remittances across the world.
But criminals are using the system as a way to move money around outside institutional banking networks.
Dating to the spice trade, hawala and the shopkeepers who offer the service, known as hawaladars, act as a value transfer service that predates modern transactions. It is mainly used in North Africa, the Middle East, the Horn of Africa and South Asia.
The system is based on trust in brokers who immediately receive and release money at another destination. Its speed, reliability and opaqueness to security services have made it attractive to terrorist groups.
While it started between Arab traders on the Silk Road, today its use is not confined to Muslims but people of all creeds.
Identification is rarely if ever needed, financial crime experts say, and passcodes are used to complete transactions rather than personal information.
The use of this system by Hezbollah for its battle in Syria backing the forces of President Bashar Al Assad is unsurprising, given its use by extremists.
In 2010, the Times Square bomber Faisal Shahzad received $7,000 through the hawala system from the Pakistani Taliban. Indian bomb blasts in 1993 were funded through hawala and the Taliban used the system often before 9/11.
Most recently, European investigators discovered a hawala network in 2015 sending money to fighters aligned with ISIS and the Al Qaeda-linked Nusra Front in northern Syria.
Billions of dollars are believed to be traded through the system every year and, although intelligence services across the world pay close attention, they cannot trace every transaction.
Financial crimes experts warn that until hawala has an overhaul, aligning it more closely to the modern banking system, groups who seek to fund their roles in conflicts across the world will be able to move funds around unnoticed.
But on this occasion, investigators in seven countries including the US, France, Italy, Germany and Belgium, stopped Hezbollah in its tracks.