Hawala and Other IVTS
FinCEN identified 19 SARs (or 23.8 %) filed by financial institutions referencing hawala and/or broadly indicating other facets of IVTS. The term ?hawala? simply means transfer in Arabic and is commonly associated with IVTS activities that occur in southwest Asia and the Middle East. Since the tragic events of September 11th, the financial community has acquired a better understanding of hawala and other IVTS(s) located in the United States and throughout the world, as well as observing their nexus with bank accounts.
The following extracts were taken from SARs associated with hawala and similar types of IVTS-related activity:
- A wire transfer company was identified as a hawala by the filing financial institution. The company sent a large volume of wire transfers to an Arabian Gulf nation.
- A financial institution identified a customer who accepted large volumes of money orders and other monetary instruments deposited into his personal account. When questioned about the activity, the customer indicated he provided services, through his brother residing in a south Asian country, to local expatriates wishing to send merchandise to their families in their home country. The customer further indicated he accepted payment from his customers either by money order or cashier?s check. When his customers provided these payments, the suspect customer contacted his brother to release the merchandise to the particular family member abroad.
- A former banking employee was suspected of acting as an unlicensed money transmitter on behalf of his brother located in a West African nation. He would collect cash from local members of the community that would be deposited into his personal account, followed by wire transfers to trading companies in Asia and North America.
- An account held by a clothing and jewelry store was identified with large cash deposits and numerous deposits of checks and other monetary instruments. Once a month, a large wire transfer from the account was sent to a Southeast Asian country. 4
- Street vendors, all expatriates of a south Asian country, deposited cash into accounts, from which the balances were subsequently wire transferred to a businessman residing in the south Asian country. When further questioned, the street vendors indicated they were conducting this operation because only certain individuals could maintain accounts in the receiving country.
- An unregistered and/or unlicensed entity was identified as making several large cash deposits into its account, in addition to negotiating several checks drawn on personal accounts from all over the country. The funds were further transferred to a trading company located in an Arabian Gulf country.
- Two ?students? were identified as the joint holders of a checking account. Several checks issued from a number of Arabian Gulf nations, including cultural offices, were deposited into the account. Checks were also drawn on the account made payable to other subjects, as well as other varied types of debit activity occurring through the account.
- A money exchange entity was identified as structuring over $3 million into an account within a one-month period. The account was set up to allow members of a local ethnic community to send funds to their families in a Southeast Asian country.
- Two SARs, filed on the SAR-MSB form, mentioned ?hawala? in the narrative. The SARs identified a customer who visited multiple branches of the same money transmitter service to send funds to a south Asian country. Each transaction was under $3,000 and was forwarded to the same payee on multiple days.
Excerpted from SAR Activity Review Issue 6, page 19
First published on 11/01/2003