Case Shows Rise of Non-Bank Transfers to Fund Terror
Source: WSJ
One illustration of the problem came Tuesday in a criminal complaint filed in Boston against a Pakistani man who is accused of unwittingly helping to move $4,900 from the Pakistani Taliban to the U.S. to fund the failed Times Square bombing.
The admitted bomber, Faisal Shahzad, told investigators that he used hawala money transfers to collect about $12,000, which went toward preparation of his May 1 bombing attempt. In September, authorities filed charges against another unlicensed hawala operator in New York who is alleged to have transferred the other $7,000 to Mr. Shahzad.
At a time of increasing worries about homegrown terrorism plots, federal counter-terrorism officials also point to a flourishing fund-raising network in the U.S. funneling money to al Shabaab, the Somali Islamist insurgency that the U.S. classifies as a terrorist group.
Feb. 22, 2010—Aftab Ali borrows $5,000 cash from manager of Massachusetts gas station where he works.
Feb. 24, 2010—Mr. Ali receives text message from "Haneif" in Islamabad, Pakistan, with instructions to handle the transfer. The message includes serial number on a $1 note Mr. Shahzad would bring with him. The message reads:
Faisal phone +12032090643
Amount 4900$
I121774569B (1 USD)
From: Haneif Islamabd
Feb. 25, 2010—Mr. Ali meets Mr. Shahzad at Mr. Ali's apartment in Watertown, Mass., around 4 p.m. He takes the $1 bill and saves it as proof that Mr. Shahzad received the funds.
Date unclear—"Haneif" pays Mr. Ali's brother Akhtar in Pakistan.
Feb. 26, 2010—Mr. Ali tells gas station manager his brother, Akhtar, in Pakistan had received $4,900, settling the money transfer
Source: Justice Department
Criminal cases in recent months brought by the Justice Department in Minneapolis, San Diego and St. Louis have targeted hawala operators and fund-raisers who transferred money to Somalia allegedly as part of appeals made by al Shabaab. The transfers are often made in sums smaller than $3,000, according to prosecutors, to evade legal requirements aimed at catching money launderers and financial backer of terror.
The recent uptick in such cases "sheds light on how terrorist organizations and their financial supporters are exploiting hawalas and other money remitting businesses in this country to move funds quickly, cheaply, and internationally, " said David Kris, assistant attorney general for national security.
The use of informal money transmitters and small donations shows an evolution in terrorism financing, U.S. officials say. In the aftermath of the Sept. 11 attacks, legislation including the Patriot Act sought to stop terrorist groups from using charities and other methods to raise money.
The 9/11 Commission estimated that the attacks cost al Qaeda between $400,000 and $500,000. The plotters hid in plain sight, using U.S. banks and their own identities.
Steps taken after Sept. 11 included requiring financial institutions to report to the federal government any suspicious activity as well as money transfers over $10,000.
In September, the Treasury Department's Financial Crimes Enforcement Network, known as FinCen, reported that 38,600 money-service businesses, which include hawalas, were legally registered. Authorities believe thousands more are not.
Bruce Hoffman, a Georgetown University professor who studies terrorism, says the move into informal networks and small sums is a sign of success and there may not be much more authorities can do. "It's somewhat like airport security," he said. "You can put layer upon layer of regulations but the terrorists will find a way to work around them."
Mr. Kris, the assistant attorney general, said closing down the financial pipeline "continues to be a challenge, particularly given the small sums of money that are often involved in individual transactions."
Authorities' focus on al Shabaab activity in the U.S. came after Minnesota's large Somali community raised concerns in late 2008 about al Shabaab recruiting young men to travel to their homeland to become fighters.
In August, the Federal Bureau of Investigation arrested two Somali-American women in Rochester, Minn., and charged them with providing material support to al Shabaab terrorists. According to the indictment against the two women, they made a dozen hawala transfers totaling less than $10,000 to al Shabaab.
The women allegedly went door-to-door and arranged conference calls with al Shabaab fund-raisers who sometimes claimed they needed money to help the poor in Somalia. That pretense was dispensed with in other conference calls, authorities said.
In Tuesday's case related to the Times Square bombing, Aftab Ali, a 28-year-old former gas-station employee in Brookline, Mass., was charged in a criminal complaint with visa fraud and making false statements, though prosecutors said he wasn't aware of the bomb plot.
Prosecutors allege that Mr. Ali met with Faisal Shahzad, the admitted Times Square bomber, on Feb. 24 or 25 outside Mr. Ali's apartment. There he provided Mr. Shahzad with $4,900, which had been sent using hawala. Mr. Ali's brother, who operated a hawala in Pakistan, had received $4,900 in cash from a person in Pakistan, prosecutors allege.
Mr. Shahzad told investigators after his arrest that he received the February money transfer and others from members of Tehrik-e-Taliban, the group also known as Pakistani Taliban that directed the Times Square attack.
Prosecutors allege Mr. Shahzad and Mr. Ali communicated using a common method in hawala exchanges between strangers.Mr. Shahzad sent Mr. Ali a text message on his cell phone and provided a serial number of a dollar bill that served as a receipt to verify and complete the money transfer.
Write to Evan Perez at evan.perez@wsj.com
By EVAN PEREZ
A decadelong effort to close off the U.S. financial system to terrorism funding is falling short of stopping people who send small sums at a time, often using informal money transmitters known as hawala, authorities say.One illustration of the problem came Tuesday in a criminal complaint filed in Boston against a Pakistani man who is accused of unwittingly helping to move $4,900 from the Pakistani Taliban to the U.S. to fund the failed Times Square bombing.
The admitted bomber, Faisal Shahzad, told investigators that he used hawala money transfers to collect about $12,000, which went toward preparation of his May 1 bombing attempt. In September, authorities filed charges against another unlicensed hawala operator in New York who is alleged to have transferred the other $7,000 to Mr. Shahzad.
At a time of increasing worries about homegrown terrorism plots, federal counter-terrorism officials also point to a flourishing fund-raising network in the U.S. funneling money to al Shabaab, the Somali Islamist insurgency that the U.S. classifies as a terrorist group.
Money Trail
Times Square bomber Faisal Shahzad used hawala to receive money from the Pakistani Taliban to fund the failed May 1 attack. Here's how the money was transferred, according to a criminal complaint:Feb. 22, 2010—Aftab Ali borrows $5,000 cash from manager of Massachusetts gas station where he works.
Feb. 24, 2010—Mr. Ali receives text message from "Haneif" in Islamabad, Pakistan, with instructions to handle the transfer. The message includes serial number on a $1 note Mr. Shahzad would bring with him. The message reads:
Faisal phone +12032090643
Amount 4900$
I121774569B (1 USD)
From: Haneif Islamabd
Feb. 25, 2010—Mr. Ali meets Mr. Shahzad at Mr. Ali's apartment in Watertown, Mass., around 4 p.m. He takes the $1 bill and saves it as proof that Mr. Shahzad received the funds.
Date unclear—"Haneif" pays Mr. Ali's brother Akhtar in Pakistan.
Feb. 26, 2010—Mr. Ali tells gas station manager his brother, Akhtar, in Pakistan had received $4,900, settling the money transfer
Source: Justice Department
The recent uptick in such cases "sheds light on how terrorist organizations and their financial supporters are exploiting hawalas and other money remitting businesses in this country to move funds quickly, cheaply, and internationally, " said David Kris, assistant attorney general for national security.
The use of informal money transmitters and small donations shows an evolution in terrorism financing, U.S. officials say. In the aftermath of the Sept. 11 attacks, legislation including the Patriot Act sought to stop terrorist groups from using charities and other methods to raise money.
The 9/11 Commission estimated that the attacks cost al Qaeda between $400,000 and $500,000. The plotters hid in plain sight, using U.S. banks and their own identities.
Steps taken after Sept. 11 included requiring financial institutions to report to the federal government any suspicious activity as well as money transfers over $10,000.
In September, the Treasury Department's Financial Crimes Enforcement Network, known as FinCen, reported that 38,600 money-service businesses, which include hawalas, were legally registered. Authorities believe thousands more are not.
Bruce Hoffman, a Georgetown University professor who studies terrorism, says the move into informal networks and small sums is a sign of success and there may not be much more authorities can do. "It's somewhat like airport security," he said. "You can put layer upon layer of regulations but the terrorists will find a way to work around them."
Mr. Kris, the assistant attorney general, said closing down the financial pipeline "continues to be a challenge, particularly given the small sums of money that are often involved in individual transactions."
Authorities' focus on al Shabaab activity in the U.S. came after Minnesota's large Somali community raised concerns in late 2008 about al Shabaab recruiting young men to travel to their homeland to become fighters.
In August, the Federal Bureau of Investigation arrested two Somali-American women in Rochester, Minn., and charged them with providing material support to al Shabaab terrorists. According to the indictment against the two women, they made a dozen hawala transfers totaling less than $10,000 to al Shabaab.
The women allegedly went door-to-door and arranged conference calls with al Shabaab fund-raisers who sometimes claimed they needed money to help the poor in Somalia. That pretense was dispensed with in other conference calls, authorities said.
In Tuesday's case related to the Times Square bombing, Aftab Ali, a 28-year-old former gas-station employee in Brookline, Mass., was charged in a criminal complaint with visa fraud and making false statements, though prosecutors said he wasn't aware of the bomb plot.
Prosecutors allege that Mr. Ali met with Faisal Shahzad, the admitted Times Square bomber, on Feb. 24 or 25 outside Mr. Ali's apartment. There he provided Mr. Shahzad with $4,900, which had been sent using hawala. Mr. Ali's brother, who operated a hawala in Pakistan, had received $4,900 in cash from a person in Pakistan, prosecutors allege.
Mr. Shahzad told investigators after his arrest that he received the February money transfer and others from members of Tehrik-e-Taliban, the group also known as Pakistani Taliban that directed the Times Square attack.
Prosecutors allege Mr. Shahzad and Mr. Ali communicated using a common method in hawala exchanges between strangers.Mr. Shahzad sent Mr. Ali a text message on his cell phone and provided a serial number of a dollar bill that served as a receipt to verify and complete the money transfer.
Write to Evan Perez at evan.perez@wsj.com
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