Hawalas. Hawalas are informal arrangements for transferring or lending money. While it’s illegal in the United States to have an unregistered remittance business, the motivation isn’t always nefarious among those who use hawalas, who are often immigrants. But after 9-11, hawalas were thrust into the spotlight because al-Qaeda moved money through them.
Since hawalas tend to be run in “mom and pop” stores in communities, it’s not easy for law enforcement to discover them. And since hawalas aren’t always a nexus of large-scale criminal activity, they don’t always get priority treatment.
“One of the realities of all white collar crime is it has to look like a bigger priority than the other things that are in front of that law enforcement agency that day, and hawalas fall in the general category that white color crime does sometimes of being victimless. In other words, there’s no bloody victim standing in front of you,” explains Jonathan Turner, who is the managing director at Wilson & Turner Incorporated and author of Money Laundering Prevention.
“Really, the only thing that we’ve done about [hawalas] is force them to register as [money service businesses]. But what happens is you close them down, and they open up again the next day in a different location. They’re very difficult,” says Kevin Sullivan, who is a retired investigator for the New York State Police and director of the Anti-Money Laundering Training Academy.
Business exploits. Using front businesses and small businesses as money laundering vehicles are also still popular tactics. Some businesses are in on the scam, and some are just taken advantage of. “[Someone] might own a small jewelry store. And suddenly [a new customer] starts coming into the store on a frequent basis to buy jewelry, and he keeps buying jewelry at $9,000, $9,500, all under that $10,000 mark,” says Sullivan. A $10,000 cash deposit would have to be reported to the government. “And the business owner has to eventually start to wonder whether these transactions might be suspicious.
Sullivan notes that it is difficult for business owners to turn away that business, but they need “to go out and contact somebody to get some advice” about whether the transactions warrant a report to the authorities.