Informal Money-Movement System in UAE Is Likely Uncontrollable

In the interests of the public, I am re-publishing a piece here that shows that there was at least a veiled confirmation, by the Wall Street Journal, that Mohamed Atta and Marwan Al-Shehhi received $110K through wire transfers. But boy, they sure don't explain WHERE that $110K came from, do they. Was this the Mahmud Ahmad/ISI transfer? What Asia Times called 9/11’s “Smoking Gun?” Sounds like it was. See below, especially the bold text. —Sander Hicks

By Paul Beckett, The Wall Street Journal, 933 words

Nov 12, 2001

Document Text

DUBAI, United Arab Emirates -- When Hassam Khan Afridi, a Pakistani immigrant here, wants to send money to his family back home, he calls the owners of a textiles store in the nearby city of Sharjah. They send a fax to a contact among Mr. Afridi's Hassam Khel tribe near Peshawar, Pakistan. A few days later, Mr. Afridi's father walks to a local shop or to the guest room of a neighbor's home and picks up the cash.

This system, known as hawala, operates semilegitimately here out of the backrooms of restaurants and shops. Few, if any, records are kept and cash may not even change hands for individual transactions. That informality, U.S. officials say, makes it an important channel for the movement of terrorist funds and for the sponsorship of terrorist groups, including Osama bin Laden's al Qaeda network.

Yet, while tightening controls on mainstream financial institutions as part of the international crackdown on terrorist finances in recent weeks, the UAE is reluctant to take any concrete action against hawala. That is despite the fact that this small Gulf nation has emerged as an important transit point for much of the money traced in connection with the Sept. 11 attacks on New York and Washington.

Why the reluctance? Hawala is the cheapest, most convenient and most-popular way for the UAE's two million foreign laborers to send money back to their families in India, Pakistan, Bangladesh and a host of other nations in Southeast Asia and Africa. That creates such a huge demand that any clampdown on existing hawala dealers would simply cause others to spring up in their place, UAE government officials say.

"It would be very difficult to find them," concedes Sultan bin Nasser Al Suweidi, governor of the UAE central bank. "And if there is a great incentive in using it and people believe they are not doing any illegal activity, they will go ahead and use it. We will not be able to control it."

Indeed, often these blue-collar workers, who perform the workaday jobs that support the wealthy population of about one million UAE citizens, have no viable alternative for sending money home. "You could say the banks are not really keen to have in their halls these dirty laborers whose shoes are full of dust," Mr. Al Suweidi says. And the nation's 105 licensed wire-transfer houses typically offer a much worse exchange rate than the hawala dealers do. So, Mr. Al Suweidi says, "These people use hawala to maximize the benefits to their families and to improve themselves."

The government's inaction over hawala stands in marked contrast to its tightening of controls in other parts of its financial sector in the wake of the UAE's emergence as an unwitting financial hub for the terrorists involved in the attacks on Washington and New York.

Last year, a total of more than $110,000 was transferred from a UAE exchange house via Citibank in New York to a SunTrust Banks Inc. account in Florida jointly held by two of the suspected hijackers, Mohamed Atta and Marwan Al-Shehhi. And in the days before the attacks, three of the suspected hijackers sent a total of about $15,000 back to the UAE, where a suspected lieutenant of Mr. bin Laden's collected it and then fled the country. Two of the transfers -- one for $5,000 and one for $5,400 -- were sent from Western Union outlets in Boston. They were collected at a branch of the Al Ansari Exchange in Sharjah, according to Mohammed Al Ansari, the company's managing director.

Since then, the UAE has criminalized money laundering. The central bank now requires exchange houses to get government-issued identification from customers for any transaction over about $550. It also has shut down one exchange house for poor record-keeping. It has imposed stricter record-keeping rules on banks, too.

Moreover, the government has complied with several U.S. requests to freeze bank accounts and has won plaudits for its cooperation with the U.S. The latest example: The central bank last week froze 12 accounts allegedly related to the Al Barakaat network, identified by U.S. authorities as a channel for funding terrorist groups including al Qaeda. Much of the money sent from the Al Barakaat network in the U.S. was sent to Dubai before being forwarded to other places, U.S. authorities say. Al Barakaat officials have denied the company has any links to Mr. bin Laden or al Qaeda.

But when it comes to hawala, Mr. Al Suweidi, the central-bank governor, says there is little the UAE can do on its own. He says the best way to clean it up is for other countries in the region to abolish controls that restrict the flow of currency and make such an underground transfer network necessary. Only then, he says, will legitimate wire-transfer and banking services become an attractive alternative. He adds that the central bank stands ready to participate in any regionwide discussion on the issue.

Yet, even if those currency controls were abolished, hawala won't be likely to disappear. Mr. Alfridi, a driver who moved to the UAE six years ago, says he uses hawala because it is much more convenient than standing in line at a wire-transfer house. Moreover, he says, there are no banks near where his family lives. He estimates that 95% of the people he knows in the UAE use hawala. "People who send money [this way] are middle class and poor people," Mr. Alfridi says. "People who are rich use the banking system."

Glenn R. Simpson in Washington contributed to this article.

Credit: Staff Reporter of The Wall Street Journal

Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.