The Obstacles to Regulating the Hawala: A Cultural Norm Or a Terrorist Hotbed
![handle is hein.journals/frdint27 and id is 2027 raw text is: THE OBSTACLES TO REGULATING THE
HAWALA: A CULTURAL NORM OR A
TERRORIST HOTBED?*
Rachana Pathak**
INTRODUCTION
In its efforts to stymie the flow of funds for terrorists, the
U.S. government has, since September 11th, put a halt to many
hawala operations.1 As the Al Barakaat, Alshafei, and Albanna
cases show, however, these actions have needlessly sideswiped
many civilians with no terrorist involvement, resulting in finan-
cial damages and civil rights violations.2 The U.S. government
* Author's Note: There is little reliable information on hawala networks as few
comprehensive studies have been conducted. Due to the lack of academic material and
case law, this Note relies heavily on the following sources: 1) U.S. Congressional
hearings and Interpol reports for law enforcement perspectives; 2) International
Monetary Fund and World Bank reports for economic perspectives; and 3) news articles
based on anecdotal perspectives.
** J.D. Candidate, 2004, Fordham University School of Law; M.A., School of Ori-
ental and African Studies, University of London; B.A., Cornell University. My deepest
gratitude to the ILJ editors - especially Michele Totah - for their editorial assistance,
to Parag Pathak for his instructive comments, to Carl Stoll for his encouragement, and
to Alexander Boldizar and Kate Johnson for their feedback.
1. See Hearing on the Financial War on Terrorism and the Administration 's Implementation
of the Anti-Money Laundering Provisions of the USA PATRIOT Act Before the U.S. Sen. Comm.
on Banking, Housing, and Urban Affairs, 107th Cong. 15-20 (Jan. 29, 2002) (statement of
Kenneth W. Dam, Deputy Secretary, Treas. Dep't) [hereinafter Dam] (describing U.S.
efforts to stop terrorist financing); Hearing on Hawala and Underground Terrorist Financ-
ing Mechanisms Before the Subcomm. on Int'l Trade and Finance, U.S. Sen. Comm. on Banking,
Housing, and Urban Affairs, 107th Cong. 28-35 (Nov. 14, 2001) (statement of PatrickJost,
SRA International) [hereinafter Jost Statement] (testifying about links between hawala
networks and terrorists). Jost notes that Osama bin Laden is a Saudi national with
connections to Afghanistan and Somalia, countries where hawala is the preferred
means of remitting money. Id. See also Financial Action Task Force on Money Launder-
ing, Combating the Abuse of Alternative Remittance Systems, Int'l Best Practices, June 20,
2003 (agreeing to extend anti-money laundering requirements to alternative remit-
tance systems in October 2001).
2. See General Accounting Office, Terrorist Financing: U.S. Agencies Should Systemati-
cally Assess Terrorists' Use ofAlternative Financing Mechanisms, Nov., 2003, at 3 [hereinafter
Terrorist Financing] (stating that extent to which terrorists use hawala networks is un-
known); Jean-Charles Brisard, Terrorism Financing: Roots and Trends of Saudi Terrorism
Financing, Report prepared for U.N. Security Council, Dec. 19, 2002, 26-28 (describing
practice of zakat as more important source of terrorism funding rather than alternative
remittance systems).
2007](ViewImageLocal?handle=hein.journals/frdint27&div=62&collection=&method=preview&ext=.png&size=3)
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The Obstacles to Regulating the Hawala: A Cultural Norm Or a Terrorist Hotbed
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