Hawala System Essay

1730 Words 7 Pages
In this research paper I will portray and focus on the hawala system. The general outline of this paper is as follows: a description of the hawala system; why certain terrorist groups use the system; which terrorist organizations use the system how it can be advantageous for terrorist groups to use; the relevance of the system; what the counterterrorism implications are for the United States in regards to the hawala system.
What is the hawala system? The hawala system is a way for individuals to channel money. Unfortunately, terrorists will often use this system to move money around. Terrorist organizations that are financially destitute are unlikely to perform well. They are unlikely to thrive. They are unlikely to be able to coordinate
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This is an important question to ask, because there are many very dangerous terrorist groups that use the underground financial channeling system. For instance, Al Qaeda, the most notorious terrorist group to date, uses the hawala system. Maurice Greenberg et al. states “al Qaeda’s financial network is characterized by layers and redundancies. It raises money from a variety of sources and moves money in a variety of manners” (Greenberg et al., 2002, p. 7). Furthermore, the authors state “al Qaeda moves its funds through the global financial system, the Islamic banking system, and the underground hawala system, among other money transfer mechanisms” and al Qaeda “makes good use of the ancient hawala (or hundi) underground banking system, which allows money transfer without actual money involvement, or any wire transfer” (Greenberg et al., 2002, p. 7/15). Al Qaeda used the hawala system prior to the terrorist attacks against the United States. Faisal Shahzad, the Pakistani American arrested in May, 2010 for attempting to blow up his car in Time Square; and other men arrested that were connected to Shahzad, were thought to have used the hawala system. Bob Oakes, from the WBUR website states “the case has brought a lot of attention to hawala, an informal system of money transfer that doesn’t involve a bank. The authorities say the men in custody might have used the system to transfer money to the bomb suspect. Unfortunately, …show more content…
The sheer amount of money that is transferred through the hawala system is, to say the least, impressive. For example, Greenberg et al. state that in Pakistan, “government officials estimate that $7 billion enters the country each year through the hawala system; the true number is likely to be significantly higher. Although the exact amount is unknown, the system has channeled a considerably high amount of funds to many individuals. And some of these funds have been used by terrorist organizations to fuel deadly attacks against innocent civilians. Third, the hawala system is relevant because, as already mentioned, it has been used to help fund terrorist attacks. And some of these attacks have occurred on United States’ soil. For instance, Meenakshi Ganguly, a writer for the Time website, asserts that the hawala system helped to provide funds for the 9/11 terrorists. He states (2001) the system: allows money to show up in the bank accounts or pockets of men like hijacker Mohammed Atta, without leaving any paper trail. There are no contracts, bank statements or transaction records, and yet those who use the hawala networks can move thousands of dollars around the world in a matter of hours. In addition, the hawala system is not technically illegal. And I would wager that the vast majority of the people that use the system are not doing it to channel money to

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