HAWALA THE SILENT KILLER

Transcription

1 ORGANIZED CRIME - CHANGING THE FACE OF THE WORLD, THE AMERICA S AND THE INDIAN SUBCONTINENT COURTESY NARCO TERRORISM, TERRORIST FINANCING AND MONEY LAUNDERING - A DANGEROUS MIX Chiranjeeb Das Since 9/11, investigations into the al Qaeda financial network have led to several notable successes in the United States and Europe. Much of this achievement in the United States has resulted from strengthening the financial investigatory powers of domestic law enforcement agencies and coordinating them through the Treasury Department's new Foreign Terrorist Asset Tracking Center(FTAT). In other countries, the FATF, for example, is helping to coordinate the tracking of terrorist funds through the global banking system and cracking down on countries that fail to improve transparency and regulation. These efforts are already proving useful in uncovering large-scale drug-trafficking and money-laundering operations. They have also helped reveal important information on terrorist groups, particularly those operating in the West. HAWALA THE SILENT KILLER Focusing more on the 9/11 attacks, financial investigators tracking Al Qaeda assets rely heavily on data and paper trails from commercial banks and financial regulators in pursuing and investigating leads. Such data have included the tracing of wire transfers between suspected hijacker Mohammed Atta and Sheikh Saiid of Dubai, believed to be one of Osama bin Laden's key financial operatives. Unfortunately, these efforts have achieved little success to date in reaching the core of the Al Qaeda financial network. The problem is that much of the organization's funding mechanisms, like its cells, are small and inconspicuous, often using the hawala. The arrest of Aftab Ansari alias Farhan Malik, prime accused in the American Centre attack, led to further disclosures regarding the international linkages between the Pakistan-based Jaish-e-Mohammed (JeM), Lashkar-e-Toiba (LeT) and the HuJI based in Pakistan and Bangladesh. Aftab Ansari played a key role in the July 25, 2001 abduction of Kolkata-based businessman Partha Pratim Roy Barman, who was subsequently released on July 30, 2001, after reportedly paying a ransom amount of INR 37.5 million in Dubai through the Hawala network. It was out of this money that Omar Sheikh convicted by a Pakistan court in the Daniel Pearl murder case is said to have wired $100,000 to Mohammed Atta, the alleged ringleader of the hijackers in the 9/11 multiple terrorist attacks. India s position is also similarly situated. It has been facing terrorism from a long time. Money through hawala for financing terrorism began showing signs. The

2 arrest of Jammu and Kashmir Liberation Front (JKLF) prominent front leader Md. Yasin Malik has re-focussed attention on the foreign funding of terrorism in Jammu and Kashmir. Police arrested half-a-dozen Srinagar and Baramulla businessmen on illegal money transfer charges in November 2001 and some Rs 1.25 crore has been recovered. Pakistan and Saudi Arabia are believed to be the primary sources of the funds. In 1995, the Centre issued notices to 82 individuals and groups in the state, seeking details of funds received from abroad but the response was poor. The Income-Tax Department in 1996 wrote to banks in the state, seeking details of accounts held by 16 top Hurriyat leaders. The next year, police stumbled upon the bank account of a vegetable vendor from where transactions worth over a crore had taken place. The vendor revealed the money belonged to very well known Hurriyat leader, and police said it had reached the account through hawala and for the first time US dollars have been seized and sources in Srinagar said the money was supposed to be a part of the Hurriyat's election funds. India has always been an advocate of global anti terrorism and New Delhi continued to support the global coalition against terrorism in 2002 while engaging its own efforts to address internal and external threats. The Government of India(GOI) has enacted the Prevention of Terrorism Act (POTA) to provide the Central and State Governments additional law enforcement tools in the war against terrorism. An Anti Money Laundering Bill was passed by the Parliament which was signed into a law -- Prevention of Money Laundering Act 2003 in January In force now, it will establish a financial intelligence unit to monitor suspected terrorist transactions. Since September 11, combating money laundering has assumed a new sense of urgency, egged on both the Patriot Act in the United States of America and the Prevention of Money Laundering in India. The PMLA makes it illegal to enter into a transaction related to funds derived from criminal activities as also to posses and transfer such funds. Financial institutions and intermediaries are required to furnish with the Income Tax authorities, details of all transactions that exceeds Rs. 2.5 million a month. All information related to the clients to these transactions are also to be furnished. Co-operative banks, NBFC s, chit funds and housing financial institutions also come under the Act s ambit. The Act also makes it mandatory of banking companies to maintain a record of all transactions of a prescribed value and to provide all information whenever sought. UNITED STATES- INDIA PROTOCOL The United States Government of India has an understanding and the cooperation increased significantly as the GOI and the USG moved forward to combat drug trafficking and transnational crime. The Ministry of Finance, Govt. of India continues to be the United States focal point for cooperative counter narcotics efforts.

3 The GOI says it is increasingly concerned over the nexus between drug trafficking and terrorism. The GOI has recognized the need for stronger drug control efforts nationally, particularly in the North East states of India. The United States will continue to explore opportunities to work with the GOI in addressing drug trafficking and production and other transnational crimes of common concern and interest. The recent declaration of Dawood Ibrahim as global terrorist by the United States is a significant action in 2003 and further went to the extent of saying that Dawood has links with the al Qaeda and is financing activities of Lashkar-e-Toiba and other Islamic groups to destabilize the Indian Government, which was acclaimed all over India. This makes obligatory of Pakistan to take action against him since he is living in Karachi. He was all along laundering money and it was already suspected that most of his illicit money was integrated in the licit mainstream and most Indian companies under scanner of the Government. Further, most of his assets in the US were frozen by the US Government. The declaration of Dawood as global terrorist is seen in all probability as an outcome of the US GOI Protocol. Stephen B. Cohen of the Brookings Institution an internationally respected scholar on South Asia and a top advisor to the US Government on foreign policy matters, in a lecture in the Omeo Kumar Das Institute of Social Change and Development in Guwahati (India) in October 2003 states that Prior to the September 11 attacks, global terrorism had not been a priority for the Bush Administration. Their number one strategic concern had been the rise of China as a potential threat to US interests. There had also been some thought of India as a counter balance to this growing Chinese presence. However, the September 11 attacks changed all that. He also adds After the attacks, Americans became more interested in countries such as India, which have been facing terrorist activities for quite some time. I believe now we have greater sympathy and understanding for the problems in other countries. This is indeed a silver lining in South East Policy of the US whose proactive role manifested in the naming of Dawood as a global terrorist and recognizing his support for Islamic fundamentalist organizations by way of financial support but stopped short to pressurize Pakistan to hand over India s most wanted 20 persons believed to be in Pakistan. It is also not too long that the world community comes to understand India s stand against terrorism and the stand against Pakistan of breeding terrorism in Jammu & Kashmir and elsewhere in India. It has also come to the fore that hawala played an important role. The hawala route is used by Pakistani intelligence agency ISI and several other fundamentalist outfits based in countries grouped under the Organisation of Islamic Countries (OIC) to send money to terrorist groups in J&K. Funding to militants through hawala is done through a network of dealers which

4 extends all the way to Delhi, Mumbai and other places in India. Pakistan and Dubai are the epicenters of hawala operators for funding to militants in J&K, Singapore and Bangkok service insurgents in the North-East. Many of these hawala dealers have begun genuine wholesale and retail businesses as fronts to divert money to the militant groups. It has been reported that Kashmiri carpet dealers throughout the country under-invoice their exports to Islamic countries and the balance of the under-invoiced value is diverted to the terrorist groups. INDIA S NORTH EAST A ZONE IN THE RECKONING From another angle, Pakistani activity is highlighted in India when Bangladesh continues to remain a haven for various terrorist groups operating in India s North East region. The Bangladeshi Directorate General of Forces Intelligence (DGFI) in collaboration with the ISI and transnational Islamist groups, coordinate the activities of several Indian groups such as the United Liberation Front of Asom (ULFA), National Liberation Front of Tripura (NLFT), All Tripura Tiger Force (ATTF) and the National Democratic Front of Bodoland (NDFB). It has also been reported on several occasions that a link exists between northeast terrorist groups and Bangladeshi Islamist outfits. It is also suspected that the ULFA has relocated some of their camps from Bhutan to Bangladesh before Operation All Clear took effect by the Bhutanese Army. The Indian Government has, on a number of occasions, stated that the ISI makes direct use of Bangladeshi territory to infiltrate its agents and saboteurs across the border into India, and that it is assisted in this task by the DGFI and other state agencies of Bangladesh. Speaking in the Lok Sabha (Lower House of Parliament), on November 27, 2002, India's External Affairs Minister, explicitly stated that the Pakistani High Commission in Dhaka had become the "nerve center" of ISI activities in promoting terrorism and insurgency in India. He also asserted that "Some Al Qaeda elements have taken shelter in Bangladesh the foreign media has reported several such instances, our own sources have also confirmed many of these reports.". Bangladesh continued to be a transit route for arms and narcotics trafficking and the country s Home Minister, Altaf Hossain Chowdhury, validated this while he was speaking at a national workshop on drug control in Mirpur in February Chittagong district, especially its port area, remained a major route for arms smuggling. The 17 th Conference of Director-General and Inspector General of Police of North Eastern states and West Bengal held in Shillong(India) in September 2003 stressed on the corridors of North Eastern states and its use by the Inter Services Intelligence (ISI) in the smuggling of arms, drugs and fake currencies into and out of Bangladesh which says has added new dimensions to cross border terrorism. Most of the members were of the view that there has indeed been a rise of cross border terrorism and the flourishing nexus between narcotics mafia, terrorists and insurgent groups posing new threat to the region. The meeting unanimously concluded with

5 a common concern over jehadi and narco terrorism in the region. Interestingly, the United States has tagged all ultra outfits operating in the North East of India as terrorists.this was conveyed by Mr. Rex Moser, Director in the American Consulate in Kolkata(India). He also said that the United States of America has expressed concern over the growth of drug trafficking into the North East and from the region to the rest of the country and said the issue calls for an international restrospection, while talking to journalists in Shillong(India) in June MYANMAR BANKS- CENTERES OF PRIMARY MONEY LAUNDERING CONCERNS Further mentioning of Myanmar another significant problem apart from drug trafficking now is the money laundering problem that has come of late and taking centre stage, which is going to change the entire scenario in South Asia and most likely to affect the North Eastern states of India. Only very recently, the U.S. Treasury Department said it was taking action to cut Myanmar off from the U.S. financial system by designating it as a center for money laundering. For the first time, the Treasury has targeted two foreign banks using its authority to impose special measures on foreign jurisdictions under Section 311 of the USA Patriot Act. The action marks the third time the Treasury has used what it calls one of its most powerful tools under the anti-terror Patriot Act enacted in the wake of the Sept. 11 attacks on the United States. Myanmar Mayflower Bank and Asia Wealth Bank of Myanmar were designated by Treasury on November to be centers of primary money laundering concern". Treasury said the designation of Myanmar was the result of (1) inadequate anti-money laundering controls; and (2) lack of cooperation with U.S. law enforcement agencies in criminal matters". This observation of the US towards Myanmar and designating it as a center of money laundering bears credence in the sense that banks in Myanmar which are accused of money laundering may be used by the insurgent groups of North Eastern states of India to fund terrorism and used for the procurement of arms, though there has not been any evidence as yet. The North Eastern states will be more vulnerable in the movement of bulk cash, to and from Myanmar if not the movement of money by illegal means, wire transfer and other electronic methods. INDIA S PROACTIVE ROLE IN SOUTH ASIA Most significantly, the recent 12 th South Asian Association for Regional Cooperation (SAARC) in Pakistan January 2004, all SAARC countries under a comprehensive protocol on terrorism agreed by them which include extradition of terrorists, measures to choke financing of terrorism and money laundering which are among the major obligations the member countries will need to fulfill. SAARC Consensus on Terror Protocol call for mutual legal assistance in dealing with

6 terrorism, cooperation amongst law enforcement authorities, domestic measures against terrorism, as well as denial of refugee status to terrorists and which also included the matters of drug trafficking, money laundering among other matters. The Prime Minister of India, Sri Atal Behari Vajpayee specifically stressed on the mutual rivalries and inadequate coordination, smuggling, drug trafficking, money laundering and gun running flourished across the borders and also talked about the need to jointly tackle these problems while speaking at the summit. The need to have the terror protocol and the consensus is the outcome of the various aspects and the changing environment in South East Asia. In all likelihood and reference from reliable sources, India will soon join as the 34 th member of the Financial Action Task Force (FATF) and a formal announcement is likely to be made at the three-day planery session starting from the 25 th of February 2004 at Paris. SMART MONEY AND TECHNOLOGY Smart Cards and Cyber Money will increase money laundering activities and provide new opportunities for money transfer that are difficult if not impossible for government authorities to monitor and detect. Money Laundering efforts though remain a holistic and comprehensive strategies against drug smugglers and other transnational criminal organizations, therefore, law enforcement should gear up at the best level. As these groups find ways to circumvent new restrictions and display the kind of ingenuinty that is difficult to counter, new technologies for detection and investigation and of research & development should be encouraged by Government and private players and equip the law enforcement, the banking, financial,insurance etc machinery. Not only is the money laundering process integral to the functioning of criminal organizations, but it is also an indicator to their success. Money Laundering and its consequence provides the juncture between what is termed as the upperworld and the underworld. This is one of the major ways in which criminal organizations penetrate the licit economy with the help of reputed members of the society such as bankers and lawyers. To allow money laundering to go unchallenged, therefore, would have a corrosive impact on the integrity of financial institutions. { The author from India and focussing on revenue & enforcement in Assam Excise is also associated with various Law Enforcement Associations worldwide and is an ACAMS member }