sunnuntai 5. tammikuuta 2020

Robert Epstein - Google Must Not Choose the Next President

  • A bias the for search engines.
  • Pro-Clinton bias in search results have shifted votes to Mrs. Clinton
  • The researchers found “ evidence of demographic targeting.”
  • Google insiders like Gregory Coppola and Zach Vorhies breaking rank and revealing various political biases in Google search.
  • Google rebel engineer reveals search engine bias
  • Is Google a cult?
  • Google Critic Killed in “Ironic” Car Accident: Struck by Google Street View Vehicle

Prof: Google Must Not Choose the Next President

Robert Epstein, a Clinton supporter in 2016, thinks Big Tech meddling is a risk. And, he says, he isn’t planning on suicide

Denyse O'Leary | August 24, 2019




It’s not every day that we hear a prominent academic announce that he is not suicidal. But human behavior specialist Robert Epstein lives in unusual times and faces two awkward dilemmas.
Okay, this is sort of funny…. It’s been suggested that I remind people that I AM NOT SUICIDAL!!! I love my life, wife, 3 awesome sons, 2 awesome daughters, my research, etc. etc. Everyone got that??? Thanks to @Pumped_4_Trump for the suggestion. pic.twitter.com/TDBztmO3ZN— Dr. Robert Epstein (@DrREpstein) August 21, 2019

Bear with us; this is academia at its messiest. 


A strong supporter of Hillary Clinton for U.S. President in 2016, Epstein came into possession of information that led him to conclude that Google had been manipulating search results in her favor. 

In a public-access 2017 paper, Epstein and Ronald E. Robertson detailed some interesting findings on Google’s alleged manipulation of search engines to affect political outcomes:

3) Was the bias the same for all search engines? No. The level of pro-Clinton bias we found on Google (0.19) was more than twice as high as the level of pro-Clinton bias we found on Yahoo (0.09). The difference between these values was highly statistically significant (p < 0.001).  

9) Issue: Could the pro-Clinton bias in search results have shifted votes to Mrs. Clinton? A comprehensive study published in 2015 in the Proceedings of the National Academy of Sciences found that biased search rankings can easily shift the voting preferences of undecided voters by 20% or more – up to 80% in some demographic groups. Extrapolating from the mathematics introduced in this report, in articles published in February 2016 and thereafter, the lead author of the PNAS study predicted that a pro-Clinton bias in Google’s search results would, over time, shift at least 2.6 million votes to Clinton. She won the popular vote in the November election by 2,864,974 votes. Without the pro-Clinton bias in Google’s search results, her win margin in the popular vote might have been negligible.

The researchers also found “evidence of demographic targeting.” For example, search results seen by men were twice as likely to be pro-Clinton as those seen by women.
Their paper has attracted attention recently, probably due to Google insiders like Gregory Coppola and Zach Vorhies breaking rank and revealing various political biases in Google search.
Google claims it ain’t so but in any event, US President Donald Trump got hold of and responded to the expert and insider claims that Google would try to tamper with his reelection bid in 2020:
Wow, Report Just Out! Google manipulated from 2.6 million to 16 million votes for Hillary Clinton in 2016 Election! This was put out by a Clinton supporter, not a Trump Supporter! Google should be sued. My victory was even bigger than thought! @JudicialWatch— Donald J. Trump (@realDonaldTrump) August 19, 2019

Mr. Trump’s numbers are off but his news sense is on target. And Hillary Clinton hit back:

The debunked study you’re referring to was based on 21 undecided voters. For context that’s about half the number of people associated with your campaign who have been indicted. https://t.co/0zHnWvGjSv— Hillary Clinton (@HillaryClinton) August 19, 2019

Dr. Epstein was, of course, put out when he heard that his study had been “debunked” and he responded,

@HillaryClinton, whom I have strongly supported for many years, told blatant lies about me today. As a result, I have been subjected to widespread condemnation by mainstream media. I’m going to fight this. Stay tuned tomorrow for my first-ever twitter storm. pic.twitter.com/CrPHMycVBu— Dr. Robert Epstein (@DrREpstein) August 20, 2019


Debunked is a problematic word, when used of an academic paper. It certainly doesn’t mean anything like “retracted.”

In a political context, it most often means that ideological opponents have found a way to blunt the force of the findings, chiefly among their own supporters and perhaps for many “undecideds.”

Robert Epstein has made clear recently that his concern is whether Silicon Valley should use its near-monopoly power over search engines and social media to ensure Donald Trump’s defeat in 2020 (or any other political outcome) by manipulating the information available to the lone voter in the booth:
“This is not a problem for conservatives. This is a problem for humanity,” the psychologist told PJ Media. “Who gave a handful of executives in Silicon Valley the right to decide what billions of people around the world can see and cannot see? Who gave them that power?”
Tyler O’Neil, “‘I AM NOT SUICIDAL,’ Says Man Who Exposed Hillary’s Ties to Google” at PJ Media (August 22, 2019)

Epstein’s “suicide” theme stems, as readers may well have guessed, from the coincidence that he has the same surname as accused child sex trafficker Jeffrey Epstein, whose recent death while in federal custody has been ruled a suicide.
Robert Epstein has no plans for joining him and plans to press on, trying to draw attention to the power of Big Tech and what it might mean for politics in democracies.


Along those lines, an article Epstein wrote last year at Hacker Noon is worth a read, to understand how Big Tech could affect an election and what he thinks could be done to prevent it:
What if, early in the morning on Election Day in 2016, Mark Zuckerberg had used Facebook to broadcast “go-out-and-vote” reminders just to supporters of Hillary Clinton? Extrapolating from Facebook’s own published data, that might have given Mrs. Clinton a boost of 450,000 votes or more, with no one but Mr. Zuckerberg and a few cronies knowing about the manipulation.
Because, like most Democrats, Mr. Zuckerberg was overconfident that day, I don’t believe he sent that message, but there is no way to know for sure, and there is certainly nothing to stop him from broadcasting election-tilting messages like that in the future — and not just in the U.S. but in countries around the world.
Do we have to wait for whistleblowers or warrants to learn, belatedly, about shenanigans of this sort, or is there a way to detect them as they occur? What kind of monitoring system would it take? Is there a way to look over the shoulders of internet users to see what overzealous tech companies are showing them on their screens? 

This is the story of how my colleagues and I, working in the shadows of the internet, developed such a system and used it to monitor what Google, Bing and Yahoo were showing users in the months leading up to the 2016 election — a working prototype for a large-scale monitoring system that we hope will soon be protecting all of us 24 hours a day from the unfettered power of Big Tech.
Robert Epstein, “Taming Big Tech: The Case for Monitoring” at Hacker Noon (May 13, 2018)

One interesting facet of the controversy is that, at one time, the claims about Google’s political preferences were not even especially controversial:
An under-the-radar startup funded by billionaire Eric Schmidt has become a major technology vendor for Hillary Clinton’s presidential campaign, underscoring the bonds between Silicon Valley and Democratic politics.
The Groundwork, according to Democratic campaign operatives and technologists, is part of efforts by Schmidt—the executive chairman of Google parent-company Alphabet—to ensure that Clinton has the engineering talent needed to win the election. And it is one of a series of quiet investments by Schmidt that recognize how modern political campaigns are run, with data analytics and digital outreach as vital ingredients that allow candidates to find, court, and turn out critical voter blocs.
But campaigns—lacking stock options and long-term job security—find it hard to attract the elite engineering talent that Facebook, Google, and countless startups rely on. That’s also part of the problem that Schmidt and the Groundwork are helping Clinton’s team to solve. 

Adam Pasick & Tim Fernholz, “The stealthy, Eric Schmidt-backed startup that’s working to put Hillary Clinton in the White House” at Quartz (October 9, 2015)

Pasick and Fernholz go on to speak about the “shrinking distance between Google and the Democratic Party” and the “technology that helped re-elect Obama.”
Ah, a story lies in that last bit! As Gary Smith explained in a recent podcast at Mind Matters News, “When Bernie Sanders and Donald Trump gave speeches, tens of thousands of people showed up and yelled and screamed and were excited. And when Hillary Clinton gave a speech, a couple of hundred people would show up and sit politely. And you couldn’t put that in a computer.” Barack Obama had, of course, been a charismatic candidate too—but one suspects that the computer hadn’t even noticed that element in the two-time winner’s success.
The results of the US 2016 election were a surprise to many pundits because technologies they had deemed very reliable, including trademark polling techniques, failed to predict the results.
As another election looms, we can be sure of charges and counter-charges of Big Tech manipulation, some of which may prove well-founded.


Note: Prof. Epstein kindly noted our Mind Matters News article and tweeted:
Fabulous article by @itsdesign: “Prof [that’s me]: #Google Must Not Choose the Next President.” 1 problem: I never claimed that Google “manipulated” the 2016 election. I’ve simply reported the significant level of pro-Clinton bias in their search results. https://t.co/dnfKoHSOLq— Dr. Robert Epstein (@DrREpstein) August 25, 2019

We apologize for any misunderstanding as to how to characterize search engine policies. It is a new area.



Further reading on search engine manipulation: 
Whistleblower says Google called police to do a “wellness check” on him. He can be seen doing a perp walk on the sidewalk in front of his house on the video (some portions transcribed here). In the documents Vorhies unearthed, Google seemed to be “intending to scope the information landscape so that they could create their own version of what was objectively true.”

What others are saying about the new Google insider’s revelations. The documents’ authenticity is not in dispute. What to do about them is another matter (Zach Vorhies)
Is Google a cult? Or does it just act that way?

Project Veritas announces that a new rebel Googler has sent nearly 1000 documents on algorithm bias to the DOJ.
While we prepare a news story on Zach Vorhies’ revelations, it may be worth asking why one of the world’s largest companies has developed what appears to be the atmosphere of a political cult.

and Google engineer reveals search engine bias. 
He found Google pretty neutral in 2014; the bias started with the US 2016 election (Gregory Coppola)See also: The US 2016 election: 
Why Big Data failed . In the aftermath, a Democratic pollster considered it “malpractice” to rely more on the machine than on Electoral College numbers. Bill Clinton reportedly threw his phone out a window in frustration over this tendency.
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 https://twitter.com/itsdesign


SOURCE:
https://mindmatters.ai/2019/08/prof-google-must-not-choose-the-next-president/

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Dr. Robert Epstein: How Big Tech’s Algorithms Can Impact
Opinions and Votes—and the 2020 Election

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Dr. Robert Epstein: How Google Manipulates Elections

Dr. Robert Epstein on Google's ability to affect the outcome of elections
Sep. 09, 2019 - 11:46
- Senior research psychologist at the American Institute
for Behavioral Research and Technology
Dr. Robert Epstein joins Mark Levin to discuss bias in Google's search results.



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'My beautiful wife Misti, a published poet, succumbed last night to injuries sustained  in a car accident. I was supposed to die in your arms some day, but a slippery road has ruined everything. You were not just my love, you were my greatest adventure.' 




R.I.P. - 
Misti Dawn Vaughn 






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Vista woman, 29, seriously injured in I-15 crash in Escondido

It happened around 8:05 a.m. on a rain-slick northbound I-15 near state Route 78

By ALEX RIGGINS | DEC. 23, 2019, 7:46 PM

ESCONDIDO — 

A 29-year-old Vista woman was seriously injured Monday morning when her pickup spun out across a rain-slick Escondido freeway and into the path of an oncoming big rig, authorities said.

It happened around 8:05 a.m. on north Interstate 15 near state Route 78, California Highway Patrol spokesman Officer Mark Latulippe said in a statement.

It was unclear why the woman lost control of her Ford Ranger, but the truck “slid out of control ... and slid across the lanes into the path” of a Freightliner semi hauling two dump trailers, Latulippe said.
The trucker was unable to avoid hitting the Ranger and struck the passenger side of the pickup, Latulippe said. A 19-year-old Santee woman in a Toyota 4Runner was unable to avoid the nearby collision in front of her and struck the Ranger.
Medics treated the Vista woman at the scene before Escondido Fire Department personnel took her to Palomar Medical Center with major injuries, Latulippe said. The 50-year-old Murrieta man driving the big rig and the Santee woman in the 4Runner were both uninjured.
A Sig Alert was issued around 8:50 a.m. shutting down the left two lanes, but the lanes were reopened around 9:45 a.m.

alex.riggins@sduniontribune.com
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https://sandiegouniontribune.com/news/public-safety/story/2019-12-23/vista-woman-29-seriously-injured-in-i-15-crash-in-escondido
 
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Monday, December 23, 2019 - 7:50 AM / 9:08 PM - Rain, again!
A rather heavy band moved through here (San Diego) in the past couple hours/

- 7:30 AM - My gauge was at a very impressive .65". The second main band of this storm is approaching, should easy get an inch total. NWS continues to predict widespread rain Christmas night into Thursday. NWS posted storm totals as of 7AM: SD Airport .50", Encinitas .74", Escondido .33", La Mesa .08". The calendar year for San Diego is already the wettest in eight years!
- 11:10 AM - Edit: lost the data here.
- 12:30 PM - Gauge slightly more, now at 1.02" here in Bankers Hill. NWS updated storm totals as of 12:01 PM: SD Airport .99", Encinitas 1.07", Elfin Forest .88", Escondido. 64", La Mesa .41". Coast areas rather uniform and doing much better than SD inland valleys and mountains.
- 9:00 PM - Recent fairly robust and continuing local showers have brought my Bankers Hill gauge to 1.23" for the day. Impressive. NWS storm totals haven't been updated since 7:16 PM: SD Airport 1:02", Encinitas 1.11", Elfin Forest .92", Escondido .72", La Mesa .42". The latest forecast as of just a few minutes ago at 8:50 PM is calling for a "MAJOR and IMPACTFUL winter storm possible by Christmas night". The capital letters are the NWS's! Precip amounts of 1" or more along the coast, although, ahem, this storm has already done this. The main thrust is that there could be heavy snow the SD county I-8 mountain passes.


https://www.custompuzzlecraft.com/Weather/weathernotes.html



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Google Whistleblower and Hillary Clinton Critic Dr. Robert Epstein Suggests Wife’s Fatal Car Crash Not an Accident, ‘I’m Not Suicidal, Hear That, Hillary?’

Cristina Laila January 20, 2020


Photo of his wife Misti’s Ford Ranger after it was broadsided by a freight liner semi truck towing cement.



Photo of his wife Misti’s Ford Ranger after it was broadsided by a freight liner semi truck towing cement | https://www.thegatewaypundit.com/2020/01/google-whistleblower-and-hillary-clinton-critic-dr-robert-epstein-suggests-wifes-fatal-car-crash-not-an-accident-im-not-suicidal-hear-that-hillary/



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Weather History for Escondido, CA





https://www.almanac.com/weather/history/CA/Escondido/2019-12-23


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Woman Dies From Injuries Suffered in I-15 Crash with
Big Rig in Escondido




A 29-year-old Vista woman who suffered serious injuries Monday when her pickup spun out and was struck by a big rig and SUV on - rain-slick ? - Interstate 15 in Escondido has died, authorities reported Friday.

Misti Dawn Vaughn was driving on the transition ramp from eastbound state Route 78 to northbound I-15 around 8 a.m. Monday when her Ford Ranger spun out and veered to the left across freeway lanes, according to information from the California Highway Patrol and the San Diego County Medical Examiner’s Office.
The pickup was then struck on the passenger side by a big rig and subsequently struck by a Toyota 4Runner, according to the CHP.
Vaughn was taken to Palomar Medical Center in Escondido, where she was admitted to the intensive care unit and was given “poor prognosis for recovery,” the Medical Examiner’s Office reported. She was pronounced dead at the hospital at 10:12 p.m. Thursday.
The big rig driver, a 50-year-old Murrieta man, and the Toyota driver, a 19-year-old Santee woman, both remained at the scene and were unhurt, according to the CHP.
Drugs or alcohol were not believed to have been factors in the crash, the CHP said.–City News Service

debbies@timesofsandiego.com

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Now this is Weird. Meant to be irony only:





Google Critic Killed in “Ironic” Car Accident: Struck by Google Street View Vehicle

  

By Camille Johnson, San Diego Union-Tribune

San Diego, CA. Prominent research psychologist and author Dr. Robert Epstein, age 60, was killed yesterday afternoon by a Google Street View vehicle while crossing Front Street in San Diego, where he has long resided. Although foul play is not suspected, Epstein’s friends are calling the accident “ironic.”


According to Daryn Thompson, a 30-year friend of Epstein’s who also lives in San Diego, “We all know that Google isn’t evil, so there’s no chance this was deliberate, but it’s troubling and ironic that it just happened to be an outspoken critic of Google who was hit. I’m sure it was just a coincidence, though.”
Google Street View vehicles routinely drive up and down streets in countries around the world taking photographs of homes, businesses, and playgrounds.

For several years, they also secretly recorded unencrypted Wi-Fi signals in more than 30 countries, collecting massive amounts of personal data.

 According to the company’s promotional materials, “The Street View vehicles provide an invaluable service to consumers, who really like having their homes, businesses, and playgrounds photographed. If they didn’t want them photographed, they wouldn’t have put them there in the first place.”


Epstein was a Ph.D. of Harvard University, the author of fifteen books, and the former editor-in-chief of Psychology Today magazine. In recent years, he published a series of essays criticizing various aspects of Google’s operations and ethics - Google’s Dance, published by TIME, Google’s Gotcha, published by U.S. News & World Report, Google’s Snoops, published by Dissent, and others.
Most recently, he conducted a series of experiments that prompted media coverage worldwide which appear to show that Google can determine the outcome of close elections by biasing search rankings to favor certain candidates. Based on those experiments, Epstein claimed that to protect voters from undue influence, Google’s ubiquitous search engine would need to be regulated and monitored, with political candidates guaranteed equal time in search rankings, just as they are guaranteed equal time on radio and television.

Earlier this year, stock analyst Susan William Gates - no relation to Bill Gates, founder of Microsoft - estimated that regulating Google’s search engine would reduce the value of Google’s stock by 95 percent. “Basically,” she said while giggling for some reason, “they’d be fucked.”

The driver of the vehicle, Eric Schmidt Jr. - no relation to Google’s outspoken executive chairman, Eric Schmidt - remained on the scene and was not arrested or charged. Said Schmidt - uh, junior, that is - “I’m really, really, really sorry. No kidding.”

The deputy sheriff on the scene, Lawrence Page - no relation to Google CEO Larry Page - said there was no evidence that Schmidt - uh, junior - had broken any laws. “A video kindly provided to us by a passerby wearing Google Glass,” said Page - uh, Lawrence - “shows clearly that Dr. Epstein was looking straight ahead when he crossed the street.
- That was the problem.
If he had looked to his right, he would have seen the Google Street View vehicle coming toward him at high speed, but he never turned his ahead. 


In other words, the real culprit here was Dr. Epstein’s poor peripheral vision. With better peripheral vision, he could easily have avoided being hit simply by running very fast.”


Asked to comment on the tragic accident, a Google spokesperson said, “We didn’t do it. We believe the accident occurred because of an impartial algorithm. All bad, illegal, or suspicious things having to do with our company are usually attributable to an impartial algorithm.”

[Comment by Dr. Epstein, not written from a hospital bed, where he is not on life support: “Every time I publish a satire, a few people turn up who take what I wrote literally. That is as it should be. Satire was invented to make fools of people, after all. In any case, for the record, and for the benefit of people who cannot understand satire (or, no doubt, good jokes), I am quite alive. Please hold off on the eulogies, and please do not boycott Google. You do not want to piss them off.”]

https://www.huffpost.com/entry/google-critic-killed-in-i_b_5351458?guccounter=1&guce_referrer=aHR0cHM6Ly90LmNvLw&guce_referrer_sig=AQAAADgm8m_ghGJuGu6_0xfJYrO-N1ZemwNs-RiNGd_-GhxswI49wMnVcXflXAlRHJ-9IjEK4O0y17A83R4SR3oSTy6bO71mM3MKlSBMzG9AcfRPA8IjniWUdXnGS32Sy_gJ0jmys4-RBk-kRVCwpXs8o2CCTJlCxdwtNmMGPIOMub54


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Archived California I-15 Accident Report     From The News   




January 2020 California I-15 Accident Archives
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https://www.navbug.com/accidents_on/california/i-15_archives.htm
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eof




lauantai 4. tammikuuta 2020

The Healing Power Of Ancient Chinese Music

  • Music has the amazing power to change our state of mind, stimulate brain activity, regulate the heart and increase our metabolism.
  • Soulful music can generate a good and positive psychological state, and as a consequence, affect the body as a whole.

LISTEN IT WORKS:

1) Tai Chi Music to Relax the Body and Mind. 

2) The Best Chinese Music Without Words (Beautiful Chinese Music) | Part 1.
3) Beautiful Chinese Music, Bamboo Flute Music vs Rain Sound, Peace, calm, Soft, Meditation



By Lucy Acebes | The BL

Traditional Chinese medicine operates on the principle that the normal circulation of energy through energy channels in the human body is essential for a healthy life.


While all internal organs influence circulation, the heart dominates the major functions of internal organs, as it is the source of all movement and energy. The heart is deeply impacted by emotions, so in order to be healthy, a person has to be in excellent spiritual and mental condition.
Music has the amazing power to change our state of mind, stimulate brain activity, regulate the heart and increase our metabolism. In other words, soulful music can generate a good and positive psychological state, and as a consequence, affect the body as a whole. But beyond these general relationships, there are much deeper or connections between music and the human body.

(Public domain/United States public domain tag)
Ancient Chinese scholars asserted that the five musical notes of the Chinese musical scale have a corresponding relationship with the five principal sensory organs – ears, eyes, lips, nose and tongue. As the saying goes: “with the five internal organs and with the five elements.”

The five elements and the organs they correspond to. 

(Adobe Stock/TheBL)



According to the ancient theory of the Five Elements, ‘fire’, ‘earth’, ‘metal’, ‘water’ and ‘wood’ constitute all things and matter in the universe, including the human body. When the human body shows symptoms of a disease, it is because one or all five elements have lost their balance.

While sound exists as in a physical field, it is also composed of the five elements. Different musical melodies are composed of different specific substances. Hence, authentic traditional or classical music can have a healing effect on the respective internal organs according to the predominant musical note.
For example, if one has problems in the spleen, this means that the body has earth element deficiency, and the treatment – or the musical component of a broader medical treatment– would be to listen to beautiful and virtuous music (from the perspective of traditional Chinese wisdom) composed primarily of the “do” note, which corresponds to the earth element.

Traditional Chinese music is based on an ancient five-tone scale (known as the pentatonic system) and its five tones are called gong (note Do), shang (Re), jiao (Mi), zhi (Sol) and yu (La). Each of these five tones can affect the internal organs and act as a regulatory mechanism.
Each person is different, and the internal organs also differ from person to person, so everyone perceives music in different ways. Thus, each of the five basic tones can exert different influences on one’s body. However, there are some general patterns that have been used to treat people whose systems are out of balance.

(Epochtimes Singapore)
For example, gong-based melodies (Note C) are noble, earth-related, and influence the spleen. Listening to this kind of music, as long as it is moderate and harmonious, will encourage kindness and tolerance in the person.
Shang (Re) melodies are heavy and inflexible as their element–metal. This type of music influences the lungs. Hearing it can help the patient feel a sense of recovered strength and tenacity.
Music based on Jiao (Mi) heralds the arrival of spring and the renewal of life. This type of music influences the liver, and listening to it produces states of harmony and a desire to make peace with others
Zhi (Sol) music is extremely emotional, like its basic element, fire. It influences the heart, and listening to it brings out a warm, generous spirit in the person.
Yu-based melodies (La) are melancholy, like water flowing in a quiet stream. They influence the kidneys, and hearing them helps balance us mentally. As the ancient Chinese would often say, their sounds are “sad but not painful” and “happy but not in excess.”

An illustration of ancient Chinese music, including flutes and zithers. (Public domain)
Whatever emotion the music expresses, if taken to an extreme, it can harm the body and the flow of qi energy.
With the rise in popularity of music therapy as a field of study and practice in the West, there has never been a better time to explore the profound insights of Chinese tradition. Seeing music as an integral part of medicine could inform a modern world in search of alternatives to costly and addictive pharmaceuticals.
(The cover photo from Public domain/United States public domain tag)

SOURCE:
https://thebl.com/culture/the-relationship-between-ancient-chinese-music-and-the-human-body.html
___

1) Tai Chi Music to Relax the Body and Mind


2) The Best Chinese Music Without Words
(Beautiful Chinese Music) | Part 1


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3) Beautiful Chinese Music, Bamboo Flute Music vs 
Rain Sound, Peace, calm, Soft, Meditation



torstai 2. tammikuuta 2020

Hawala Funding Terrorism - Interpol, The Hawala Alternative Remittance System

  • Interpol: The hawala alternative remittance system and
    its role in money laundering
  • Why would anyone bother with hawala?
  • How does hawala work?
  • Is hawala legal?
  • How is hawala used to launder money?
  • What are some indicators of hawala?
  • Hawala cases


Hawala Funding Terrorism - Interpol, The Hawala Alternative Remittance System

Hawala, -kuinka terrorismi rahoitetaan


Suuri joukko Suomessakin asuvia ihmisiä on siinä tilanteessa, että heillä on omaisia sellaisessa maassa, jossa ei ole toimivaa pankkijärjestelmää tai kansainväliset rahansiirtosysteemit eivät pidä sitä riittävän vakaana jotta voitaisiin pitää normaaleja kontakteja.



Kun omaisten jättäminen ilman säännöllisiä avustuksia on "haraam" elikkä siis syntinen teko, jolla menettää kasvonsa synnyinyhteisössään ikiajoiksi, on heidän pakko turvautua mihin tahansa tapaan saada rahaa vaikkapa isöäidilleen.

Ratkaisu on keskiaikainen Hawala-järjestelmä, jota Lähi-Idän ja muslimimaiden asukkaat ovat käyttäneet menestyksellä jopa sotien aikana.

Hawala toimii näin:





1. Suomessa asuva syntyperältään vailla vakinaista valtiokoneistoa olevassa maassa juurensa l. taustansa omaava saa kuulla, että hänen isoäitinsä vuohi on varastettu/tapettu. Isoäiti tarvitsee vuohen elääkseen. Pojanpoika on Suomessa sosiaalielättinä, ja koko maailma tietää että kaikki jotka ovat Suomessa ovat rikkaita. Jos rikas ei auta sukulaistaan, hän on hylkiö. hänet kirotaan ja häneen katkaistaan kaikki yhteydet. Muillekin klaaneille kerrotaan, että hylkiö on kelvoton eikä ansaitse kunnioitusta. Tämä voi jopa käydä hengen päälle.

2. Siispä esimerkkihenkilömme hankkii rahat. Nyt on ongelma, miten siirtää ne kotimaahan.

3. Henkilö kuulee, että Helsingissä on eräässä asunnossa kaveri, joka auttaa. Henkilö menee tämän luokse. Hän saa kuulla, Mitkä ovat esim. 1000 euron siirtokulut kotimaahan. Hän antaa välittäjälle 1000+kulut, ja isoäitinsä nimen ja osoitteen. Siinä se.

4. Kun asiakas on ovesta ulkona, välittäjä ottaa kännykkänsä ja soittaa yhden puhelun. Hän kertoo henkilön ja summan, joka hänelle pitää maksaa. Sitten hän ottaa sängyn alta matkalaukun johon laittaa äsken saamansa setelit.

5. Kaukana Suomesta itähelsinkiläisen maahanmuuttajan isoäidin luokse tulee vieras mies, joka ensin selvittää saajan henkilöllisyyden ja sitten jättää rahat. Sitten hän sanoo "Saalam aleikum" ja poistuu.

6. Mitään rahaa EI ole siirtynyt Suomesta vastaanottaja maahan. Ei ole tarpeenkaan. Saudi-Arabiassa on rikas mies, oikeastaan useita. Eri syistä he haluavat antaa rahaa vaikkapa "Al-Skeidalle" tämän Euroopassa oleville terroristisoluille. Mutta suorista rahansiirroista jää jälkiä, ja sitten tulee predator-lennokki ja sitten hyvää yötä...?

7. Ei mitään huolta! On "Hawala": Saudi-liikemiehen antamat dollarin setelit on salakuljetettu meidän maahanmuuttajamme kotimaahan, huolimatta merirosvo-vaarasta.

8. Maahanmuuttajan kotimaassa on siis tämä kaveri, jonka sängyn alla on myös seteleillä täytetty matkalaukku. Hänpä maksaa saudi-rahalla kaikki Suomeen muuttaneiden maamiestensä rahasuoritukset suvuilleen ja klaaneilleen.

9. Mummo sai rahat, Suomessa asuva pelasti kasvonsa ja auttoi sukulaistaan. Kuka pelissä hävisi jos kukaan?

10. Kuka pelissä voitti? Al-Skeida tms.. Suurinpiirtein saudi-miljardöörin antamia rahoja vastaava summa on saatu EU:n rajojen sisälle ilman mitään jälkiä missään tiedostoissa. Ne setelit, jotka itä-helsinkiläisemme antoi välittäjälle, hakee kerran vuodessa tai useamminkin vaikkapa Birminghamista Suomeen "rukouksia johtamaan" lentävä sporttinen ja nuorekkaan sotilaallinen imaami. Tai joku muu.

Suomessa asuvan suvustaan huolehtivan maahanmuuttajan sukulaiselleen lähettämillä seteleillä siis ostetaan aseita, räjähteitä, myrkkyjä, bioaseita, ja vaikkapa lentokoulutus-tunteja Muhammed Attan Hampurin solun jäsenille. Näin se käy.








Hawala-rahoituksen käyttö terrorismiin oli paljastettu USA:n turvallisuuselimille jo ennen 10v sitten tapahtunutta tragediaa: 


Ex-vakoojan järkyttävä kertomus: Olisiko 9/11-iskut voitu estää?/ Sunnuntai 11.9.2011 klo 20.02


Hawala-rahansiirtojärjestelmät riskit tunnetaan hyvin:

Über-pehmo wiki-artikkeli
Engl. wiki
The Hawala System
Interpol Hawalasta
US officials believe Shahzad used “Hawala” system to finance Times Square plo

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Hawala on epävirallinen pankkien kaltainen rahansiirtojärjestelmä Lähi-idässä, Pohjois- ja Koillis-Afrikassa sekä Etelä-Aasiassa. Hawala-järjestelmällä on taustansa islamilaisessa perinteessä ja oikeudessa.
Hawala-järjestelmässä rahaa siirretään maasta toiseen kun käytettävissä ei ole virallista ja toimivaa pankkijärjestelmää.
Järjestelmässä asiakas antaa maassa A käteisrahaa hawala-"pankkiiri" X:lle ja saa vastineeksi velkatunnisteen. Asiakas matkustaa maahan B, johon haluaa varansa siirtää (tai lähettää velkatunnisteen maassa B olevalle perheelleen) ja esittää velkatunnisteen paikalliselle hawala-"pankkiirille" Y, joka antaa asiakkaalle varat kyseessä olevan maan valuutassa vähennettynä kuluilla. X ja Y hoitavat saamis-velkasuhteensa muun liiketoimintansa yhteydessä, esimerkiksi X maksaa Y:lle olemattomasta tavaratoimituksesta asiakkaan käteissuorituksen määrän vähennettynä kuluilla.[1]  https://fi.wikipedia.org/wiki/Hawala

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The Hawala System




Mohammed El-Qorchi
Senior Economist, Monetary and Exchange Affairs Department, IMF.

How does this informal funds transfer system work, and should it be regulated?




Since the September 11, 2001, terrorist attacks on the United States, public interest in informal systems of transferring money around the world, particularly the hawala system, has increased.
The reason is the hawala system's alleged role in financing illegal and terrorist activities, along with its traditional role of transferring money between individuals and families, often in different countries. Against this background, governments and international bodies have tried to develop a better understanding of these systems, assess their economic and regulatory implications, and design the most appropriate approach for dealing with them.

Informal funds transfer (IFT) systems are in use in many regions for transferring funds, both domestically and internationally. 

The hawala system is one of the IFT systems that exist under different names in various regions of the world. It is important, however, to distinguish the hawala system from the term hawala, which means "transfer" or "wire" in Arabic banking jargon. The hawala system refers to an informal channel for transferring funds from one location to another through service providers—known as hawaladars—regardless of the nature of the transaction and the countries involved. While hawala transactions are mostly initiated by emigrant workers living in a developed country, the hawala system can also be used to send funds from a developing country, even though the purpose of the funds transfer is usually different (see box).



How does the system work?
An initial transaction can be a remittance from a customer (CA) from country A, or a payment arising from some prior obligation, to another customer (CB) in country B. A hawaladar from country A (HA) receives funds in one currency from CA and, in return, gives CA a code for authentication purposes. He then instructs his country B correspondent (HB) to deliver an equivalent amount in the local currency to a designated beneficiary (CB), who needs to disclose the code to receive the funds. HA can be remunerated by charging a fee or through an exchange rate spread. After the remittance, HA has a liability to HB, and the settlement of their positions is made by various means, either financial or goods and services. Their positions can also be transferred to other intermediaries, who can assume and consolidate the initial positions and settle at wholesale or multilateral levels.
The settlement of the liability position of HA vis-・vis HB that was created by the initial transaction can be done through imports of goods or "reverse hawala." A reverse hawala transaction is often used for investment purposes or to cover travel, medical, or education expenses from a developing country. In a country subject to foreign exchange and capital controls, a customer (XB) interested in transferring funds abroad for, in this case, university tuition fees, provides local currency to HB and requests that the equivalent amount be made available to the customer's son (XA) in another country (A). Customers are not aware if the transaction they initiate is a hawala or a reverse hawala transaction. HB may use HA directly if funds are needed by XB in country A or indirectly by asking him to use another correspondent in another country, where funds are expected to be delivered. A reverse hawala transaction does not necessarily imply that the settlement transaction has to involve the same hawaladars; it could involve other hawaladars and be tied to a different transaction. Therefore, it can be simple or complex. Furthermore, the settlement can also take place through import transactions. For instance, HA would settle his debt by financing exports to country B, where HB could be the importer or an intermediary.


Hawala Chart


Why hawala developed


In earlier times, IFT systems were used for trade financing. They were created because of the dangers of traveling with gold and other forms of payment on routes beset with bandits. Local systems were widely used in China and other parts of East Asia and continue to be in use there. They go under various names—Fei-Ch'ien (China), Padala (Philippines), Hundi (India), Hui Kuan (Hong Kong), and Phei Kwan (Thailand). The hawala (or hundi) system now enjoys widespread use but is historically associated with South Asia and the Middle East. At present, its primary users are members of expatriate communities who migrated to Europe, the Persian Gulf region, and North America and send remittances to their relatives on the Indian subcontinent, East Asia, Africa, Eastern Europe, and elsewhere.
These emigrant workers have reinvigorated the system's role and importance. While hawala is used for the legitimate transfer of funds, its anonymity and minimal documentation have also made it vulnerable to abuse by individuals and groups transferring funds to finance illegal activities.

Economic and cultural factors explain the attractiveness of the hawala system. It is less expensive, swifter, more reliable, more convenient, and less bureaucratic than the formal financial sector. Hawaldars charge fees or sometimes use the exchange rate spread to generate income. The fees charged by hawaladars on the transfer of funds are lower than those charged by banks and other remitting companies, thanks mainly to minimal overhead expenses and the absence of regulatory costs to the hawaladars, who often operate other small businesses. To encourage foreign exchange transfers through their system, hawaladars sometimes exempt expatriates from paying fees. In contrast, they reportedly charge higher fees to those who use the system to avoid exchange, capital, or administrative controls. These higher fees often cover all the expenses of the hawaladars.

The system is swifter than formal financial transfer systems partly because of the lack of bureaucracy and the simplicity of its operating mechanism; instructions are given to correspondents by phone, facsimile, or e-mail; and funds are often delivered door to door within 24 hours by a correspondent who has quick access to villages even in remote areas. The minimal documentation and accounting requirements, the simple management, and the lack of bureaucratic procedures help reduce the time needed for transfer operations.

In addition to economic factors, kinship, ethnic ties, and personal relations between hawaladars and expatriate workers make this system convenient and easy to use. The flexible hours and proximity of hawaladars are appreciated by expatriate communities. To accommodate their clients, hawaladars may instruct their counterparts to deliver funds to beneficiaries before expatriate workers make payments. Moreover, cultural considerations encourage expatriate workers to remit funds through the hawala system, and such considerations also apply to family members in the home country.
Many expatriate communities are exclusively male, because wives and other family members remain in the home country, where family traditions prevail. These traditions may require family members, especially women, to maintain minimal contacts with the outside world. A trusted hawaladar, known in the village and aware of the social codes, would be an acceptable intermediary, protecting women from having direct dealings with banks and other agents. Thus, a system based on national, ethnic, and village solidarity depends more on absolute trust between the participants than on legal documents.

On the receiving side, repressive financial policies and inefficient banking institutions, which have often lacked interest in the remittance business, have contributed to the development of IFT systems. In addition to overly restrictive economic policies, unstable political situations have offered fertile ground for the development of the hawala and other informal systems. Most IFT systems have prospered in areas characterized by unsophisticated official systems and during times of instability. They continue to develop in regions where financial development has been slow or repressed. Overall, financial development tends to check the spread of informal fund transfer systems, even though they exist in financially mature countries as well.
Economic implications
Despite its informality, the hawala system has direct and indirect macroeconomic implications—for financial activity as well as for fiscal performance. One aspect is its potential impact on the monetary accounts of countries on either end of the hawala transaction. Because these transactions are not reflected in official statistics, the remittance of funds from one country to another is not recorded as an increase in the recipient country's foreign assets or in the remitting country's liabilities, unlike funds transferred through the formal sector. As a consequence, value changes hands, but broad money is unaltered. However, hawala transactions may affect the composition of broad money in a recipient country. In the remittance business, such transactions are conducted mainly in cash, even though hawaladars may use the banking system for other purposes. Individuals from developing countries who transfer funds abroad through the hawala system for investment or other purposes are usually members of wealthy groups. They supply local hawaladars with cash by making withdrawals from their bank accounts. As a consequence, hawala-type transactions tend to increase the amount of cash in circulation. Furthermore, IFT systems have fiscal implications for both remitting and receiving countries because no direct or indirect tax is paid on hawala transactions. The negative impact on government revenue applies equally to both legitimate and illegitimate activities that involve the hawala system.


Hawala transactions cannot be reliably quantified because records are virtually inaccessible, especially for statistical or balance of payments purposes. This holds true for both the remitting and, especially, the receiving sides of the transactions. Hawala transactions from developing countries are sometimes driven by capital flight motivations; they may also be driven by a desire to circumvent exchange control regulations and the like, leaving no traceable records. Nevertheless, the authorities of some countries have sporadically made estimates of hawala activity based on their expatriate populations and balance of payments data. In any case, all crude estimates should take into account both hawala and reverse hawala transactions (see box) as well as transactions driven by illicit activities. Although it would be impossible to provide a precise figure, the amounts involved in hawala transactions are likely to entail billions of dollars.
Difficulties for regulators
There is also a consensus that, in the wake of heightened international efforts to combat money laundering and terrorist financing, more should be done to keep an eye on IFT systems to avoid their misuse by illicit groups. Policymakers believe that the potential anonymity afforded by these systems presents risks of money laundering and terrorist financing that need to be addressed. Yet selecting the appropriate regulatory and supervisory response requires a realistic and practical assessment and an understanding of the specific country environment in which the IFT dealers operate.


Regulation of IFT systems in various jurisdictions will be a complex endeavor. The variety of legal systems and economic circumstances across countries make a uniform approach technically and legally impractical. In a number of countries, the hawala system is prohibited. Any attempt to regulate this system in these countries would, therefore, be at odds with existing laws and regulations and would be seen as legitimizing parallel foreign exchange operations and capital flight.

Where IFT regulations are conceivable, there is agreement that overregulation and coercive measures will not be effective because they might push IFT businesses, including legitimate ones, further underground. The purpose of any approach is not to eliminate these systems but to avoid their misuse. Against this background, policymakers tend to favor two options, which are already in force in some countries: registration or licensing of IFT systems.

While these measures could deter illegal activities, they will not, in isolation, succeed in reducing the attractiveness of the hawala system. As a matter of fact, as long as there are reasons for people to prefer such systems, they will continue to exist and even expand. If the formal banking sector intends to compete with the informal remittance business, it should focus on improving the quality of its service and reducing the fees charged. Therefore, a longer-term and sustained effort should be aimed at modernizing and liberalizing the formal financial sector, with a view to addressing its inefficiencies and weaknesses.

Source: Finance and Development, December 2002, Volume 39, Number 4
 Return to the Documents Section

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The hawala alternative remittance system and its role in money laundering


Interpol General Secretariat, Lyon, January 2000


Executive summary
What is hawala?
How does hawala work?
Why would anyone bother with hawala
Why does hawala work?
Is hawala legal?
How is hawala used to launder money?
What are some indicators of hawala?
Appendix A: Origins of hawala, hundi and other related
word
Appendix B: The history of hawala
Appendix C: Another hawala pricing scheme
Appendix D: Hawala bookkeeping
Appendix E: Hawala case
Appendix F: Glossary
Appendix G: Bibliography
End note


Executive summary

This paper presents a description of the hawala (also referred to as hundi) alternative remittance system. Hawala is an ancient system originating in South Asia; today it is used around the world to conduct legitimate remittances. Like any other remittance system, hawala can, and does, play a role in money laundering. In addition to serving as a 'tutorial' on hawala transaction, this paper will also discuss the way in which hawala is used to facilitate money laundering.



What is hawala?

Hawala (1) is an alternative or parallel remittance system. It exists and operates outside of, or parallel to 'traditional' banking or financial channels. It was developed in India, before the introduction of western banking practices, and is currently a major remittance system used around the world. It is but one of  several such systems; another well known example is the 'chop', 'chit' or 'flying money' system indigenous to China, and also, used around the world. These systems are often referred to as 'underground banking'; this term is not always correct, as they often operate in the open with complete legitimacy, and these services are often heavily and effectively advertised.

The components of hawala that distinguish it from other remittance systems are trust and the extensive use of connections such as family relationships or regional affiliations. Unlike traditional banking or even the 'chop' system, hawala makes minimal (often no) use of any sort of negotiable instrument. Transfers of money take place based on communications between members of a network of hawaladars, or hawala dealers (2).



How does hawala work?

Hawala works by transferring money without actually moving it. In fact 'money transfer without money movement' is a definition of hawala that was used, successfully, in a hawala money laundering case.
An effective way to understand hawala is by examining a single hawala transfer. In this scenario, which will be used throughout this paper, Abdul is a Pakistani living in New York and driving a taxi. He entered the country on a tourist visa, which has long since expired. From his job as a taxi driver, he has saved $5,000 that he wants to send to his brother, Mohammad, who is living in Karachi (3).

Even though Abdul is familiar with the hawala system, his first stop is a 
major bank. At the bank, he learns several things: The bank would prefer that he open an account before doing business with them; The bank will sell him Pakistani rupees (Rs) at the official rate (4) of 31 to the
dollar; and The bank will charge $25 to issue a bank draft.


This will allow Abdul to send Mohammad Rs 154,225. Delivery would be extra; an overnight courier service (surface mail is not always that reliable, especially if it contains something valuable) can cost as much as $40 to Pakistan and take as much as a week to arrive. Abdul believes he can get a better deal through hawala, and talks to Iqbal, a fellow taxi driver who is also a part-time hawaladar.


Iqbal offers Abdul the following terms:
A 5% 'commission' for handling the transaction;
35, instead of 31, rupees for a dollar; and
Delivery is included.

This arrangement will allow Abdul to send Mohammad Rs 166,250. As we will see, the delivery associated with a hawala transaction is faster and more reliable than in bank transactions. He is about to make arrangements to do business with Iqbal when he sees the following advertisement (5) in a local 'Indo-Pak' newspaper (such advertisments are very common):



MUSIC BAZAAR AND TRAVEL SERVICES AGENCY
  • Cheap tickets to India, Pakistan, Bangladesh, Sri Lanka, Dubai
  • Great rupee deals (service to India and Pakistan)
  • Large movie rental selection
  • Video conversions
  • Latest Bollywood hits on CD and cassette
  • Prepaid international calling cards
  • Pager and cellular activations (trade-ins welcome)
  • Conveniently located in Jackson Heights

(718) 555-1111 ask for Nizam or Yasmeen
(718) 555-2222 [fax]
(718) 555-2121 [pager]



Abdul calls the number, and speaks with Yasmeen. She offers him the following deal:
A fee of 1 rupee for each dollar transferred;
37 rupees for a dollar; and
Delivery is included.
Under these terms (6), Abdul can send Mohammad Rs 180,000. He decides to do business
with Yasmeen.
The hawala transaction proceeds as follows:
Abdul gives the $5,000 to Yasmeen;
Yasmeen contacts Ghulam in Karachi, and gives him the details;
Ghulam arranges to have Rs 180,000 delivered to Mohammad.


This diagram summarizes the transaction:




Even though this is a simple example, it contains the elements of a hawala transaction.
First, there is trust between Abdul and Yasmeen. Yasmeen did not give him a receipt, and her recordkeeping, such as it may be, is designed to keep track of how much money she owes Ghulam, instead of recording individual remittances she has made.

There are several possible relationships she can have with Ghulam (these will be discussed later); in any case she trusts him to make the payment to Mohammad. This delivery almost always takes place within a day of the initial payment (a consideration here is time differences), arid the payment is almost always made in person. Finally, in some scenarios, he trusts her to repay him the equivalent of either $5,000 or Rs 180,000.

Connections are of equal importance. Yasmeen has to be connected to Ghulam in Karachi to arrange this payment. As her advertisement indicates, she also offers service to India, so she either knows, or has access to, someone who can arrange payment there. Hawala networks tend to be fairly loose, communication usually takes place by phone or fax (but email is becoming more and more common).

To complete this discussion, there are two related issues to be addressed. The first is the relationship between Yasmeen and Ghulam, and the second is how Ghulam 'recovers' the money that he paid to Mohammad on Abdul's behalf.

As was stated above, hawala works through connections. These connections allow for the establishment of a network for conducting the hawala transactions. In this transaction, Yasmeen and Ghulam are part of the same network. There are several possible ways in which this network could have been constructed.

The first possibility is that Yasmeen and Ghulam are business partners (or that they just do business together on a regular basis). For them, transferring money is not only another business in which they are engaged but a part of their normal business dealings with one another. Another possibility is that, for whatever reason, Ghulam owes Yasmeen money. Since many countries make it difficult to move money out of the country,

Ghulam is repaying his debt to Yasmeen by paying her hawala customers; even though this is a very 'informal' relationship, it is quite typical for hawala. A third (and by no means the final) possibility is that Yasmeen has a 'rupee surplus' and Ghulam is assisting her in disposing of it.

In the last two cases, Ghulam does not need to recover any money; he is either repaying an existing debt to Yasmeen, or he is handling money that Yasmeen has entrusted to him, but is unable to move out of the country. In the first case, where Yasmeen and Ghulam are partners, a more formal means of balancing accounts is needed.

One very likely business partner scenario is an import/export business. Yasmeen might import CDs and cassettes of Indian and Pakistani music and 22 carat gold (7) jewelry from Ghulam, and export telecommunications devices to Ghulam. In the context of such a business, invoices can be manipulated to 'conceal' the movement of money.

If Yasmeen needs to pay Ghulam the Rs 180,000 that he has given to Mohammad, she can do it by 'under invoicing' a shipment to him. She could, for example, send him $20,000 worth of telecommunications devices, but only invoice him for $15,000. Ghulam pays Yasmeen $15,000 against this invoice. The 'extra' value of goods, in this case $5,000 (the equivalent of Rs 180,000) is the money that she owes him.

In order to move money the other way (in this case, from Pakistan to New York)',over invoicing' can be used. For this example, it is assumed that Ghulam owes Yasmeen $5,000. She could buy $10,000 of telecommunications devices, and send it to Ghulam with an invoice for $15,000. Ghulam would pay her $15,000; this covers the $10,000 for the telecommunications devices as well as the other $5,000.

Since many hawala transactions (legitimate and illegitimate) are conducted in the context of import/export businesses, the manipulation of invoices, as discussed above, is a very common means of settling accounts after the transactions have been made.


Why would anyone bother with hawala?

When compared to a 'traditional' means of remitting money, such as obtaining a check or ordering a wire transfer, hawala seems cumbersome and risky. In this section, we will examine the motivations for using the hawala system.
The primary reason is cost effectiveness. As was shown in this example, Abdul was able to obtain nearly Rs 30,000 more (averaging exchange rates, this is about US$ 880), a significant savings by using the hawala system. Some of the reasons for this cost effectiveness, namely low overhead, exchange rate speculation and integration with existing business activities, will be discussed in the next section of this paper.

The second reason is efficiency.
A hawala remittance takes place in, at most, one or two days. This can be contrasted with the week or so required for an international wire transfer involving at least one correspondent bank (as well as delays due to holidays, weekends and time differences) or about the same amount of time required to send a bank draft from North America to South Asia via a courier service (surface mail is not a reliable option where the contents are valuable, and it can also take several weeks to arrive).

The third reason is reliability.
Complex international transactions, which might involve the client's local bank, its correspondent bank, the main office of a foreign bank and a branch office of the recipient's foreign bank, have the potential to be problematic. In at least once instance reported to the authors, money for a large commercial transaction (money being sent from the United States to South Asia) was lost 'in transit' for several weeks while trying to conduct such a transaction. When the bank located the money, it was returned to the customer. He enlisted the services of a local hawaladar, who was able to complete the transaction in less than a day.

The fourth reason is the lack of bureaucracy.
Abdul is living and working in the United States on an expired student visa; he does not have a social security number (and since he deals almost exclusively in cash, he really does not need one).
It would be difficult, if not impossible for him to open a bank account as he does not have adequate identification. In addition, he does not completely trust banks and would prefer not to use them if at all possible. Iqbal and Yasmeen do not operate in a 'bureaucratic' framework, making them a preferable alternative to the bank.

The fifth reason is the lack of a paper trail.
Even though Abdul earned the money that he sent to Mohammad legally, he would prefer to remain anonymous (this is a much more important consideration in illicit hawala transactions). Since it is rare for hawaladars to keep records of individual transactions, it is unlikely that Abdul's remittance will ever be identified as part of the business dealings between Yasmeen, Ghulam and their associates.

The sixth reason is tax evasion.
In South Asia, the 'black' or parallel economy is 30%-50% of the 'white' or documented economy. Money remitted through official channels might invite scrutiny from tax authorities - hawala provides a scrutiny-free remittance channel.


Why does hawala work?

In brief, hawala 'works' - or competes effectively with other remittance mechanisms -
because of its cost effectiveness. A secondary consideration is that hawala is often related
or even integral to existing business dealings.

One reason for hawala's cost effectiveness is low overhead. A business like Yasmeen's 'Music Bazaar and Travel Services Agency' operates out of a rented storefront as opposed to a bank building (which has expensive vaults and alarm systems), and may even share space with another business (e.g. a sari or gold shop), further reducing rental expenses. Yasmeen's employees are paid less than bank officers, and they probably do not have insurance or access to a retirement plan. Some hawaladars operate with even less, using a table in a tea shop as an office and having little more than a cellular phone and notebook as overhead expenses.

The second reason is exchange rate speculation. In India, for example, the Foreign Exchange Regulation Act (FERA), 8(2) (8) states that '(e)xcept with the previous general or special percussion of the Reserve Bank, no person, whether an authorised dealer or a moneychanger or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for time being authorised by the Reserve Bank'. Since hawala dealers do not, in many if not most cases comply with such regulations, their transactions may be illegal (a more detailed discussion of the legality of hawala follows).

Depending on one's perspective (and possibly jurisdiction), hawaladars are either engaging in foreign exchange speculation or black market currency dealing. In any case, they exploit naturally occurring fluctuations in the demand for different currencies. This enables them to turn a profit from hawala transactions (which, in addition to being remittances, almost always have a foreign exchange component), and they are also able to offer their customers rates that are better than those offered by banks (most banks will only transact at authorized rates of exchange).

The rates cited in this paper (35 Rs/$ for Iqbal, 37 Rs/$ for Yasmeen and the official rate of31 Rs/$ as cited by the bank) reflect a difference of 12-19% over the official rate. These may actually be a little high. A U.S. hawaladar (9) involved in the laundering of drug proceeds as well as legitimate remittances told one of the authors of this paper that he could still make a profit on an exchange rate margin as small as 2%, making him much more competitive than a bank.

In addition, since many hawaladars are also involved in businesses where money transfers are necessary, providing remittance services fits well into these businesses' existing activities. Monies from remittances and business transfers are processed through the same bank accounts, and few, if any, additional operational costs are incurred by a business that offers hawala remittance services.

Finally, an important component of hawala is trust.
Hawala dealers are almost always honest in their dealings with customers and fellow hawaladars. Breaches of trust are extremely rare. It is worth noting that one of the meanings attached to the word hawala is 'trust'!


Is hawala legal?
Top

Since hawala is a remittance system, this question really addresses regulations governing remittance services (10) and the circumstances of the remittance. The assumption here, of course, is that these remittances are like Abdul's, and 'legitimate'; the illicit use of hawala in money laundering is discussed in the next section of this paper.
Even though hawala is illegal from a regulatory standpoint in some U.S. jurisdictions, hawaladars advertise their services widely in a variety of media (ethnic newspapers have been the traditional place to find them, now some are using the Internet). Enforcement of these regulations is difficult with respect to hawala. The advertisements are often printed in foreign languages, and wording like 'sweet rupee deals' does not necessarily suggest remittance services. Moreover, businesses like Yasmeen's do not conduct remittances as their primary activity.
In South Asia, the situation is more complicated. Many South Asian nations (such as India and Pakistan) have laws that prohibit speculation in the local currency, prohibit foreign exchange transactions at anything other than the official rate of exchange, and impose strict licensing requirements on money remitters and foreign exchange dealers. In addition, there are regulations governing inbound and outbound remittances.
A detailed discussion of these regulations is beyond the scope and intent of this paper. It is, however, possible to state 'hawala is illegal in India and Pakistan' with nearly complete accuracy.
The important point for our purposes is that the existence of these regulations is another reason hawala is still used. Many people in these countries have money that they would like to move to another country due to concerns about stability, to pay for education or medical treatment. Hawala provides a ready means of doing this, and its use as a facilitator of 'capital flight' on both large and small scales is very common. The existence of these laws also explains, in part, the prevalence of invoice manipulation as part of hawala schemes.
Another aspect of these regulations is the use of the United Arab Emirates, specifically Dubai, for hawala transactions. There are two main reasons for this. The first is the large population of expatriate workers from India and Pakistan; they use hawala to send money home. The second is Dubai's large gold market, which is the source of much of the gold sent (licitly and illicitly) to India and Pakistan. Dubai, unlike many other South Asian nations, allows essentially unregulated financial dealings. Because of this, many South Asian businessmen maintain offices in Dubai, and money is often wired there to circumvent regulations elsewhere. In addition, Dubai offers a neutral meeting place for Indian and Pakistani businessmen, as tension between these countries makes travel between them difficult if not impossible.
This paper should not, however, be considered a condemnation of the economic policies of India or Pakistan, both of which have taken concrete steps to combat money laundering. The efficiency and cost effectiveness of hawala make it an attractive means of remitting money under almost any regulatory regime.

How is hawala used to launder money?
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Up to this point, no distinction has been made between hawala transactions where the source of the money is legitimate (e.g. Abdul's remittance to his brother) and where the source, and intent, of the transactions is illegitimate. Following Indian and Pakistani usage, the term 'white hawala' is used to refer to legitimate transactions, such as Abdul's. The term 'black hawala' refers to illegitimate transactions, specifically hawala money laundering (11).
This distinction is valuable for money laundering enforcement. Many 'white' hawala transactions are essentially remittances, and, while illegal under Indian and Pakistani law, are not illegal in other jurisdictions. `Black' hawala transactions, however, are almost always associated with some serious offense (e.g. narcotics trafficking, fraud), that is illegal in most jurisdictions.
Money laundering consists of three phases: placement, layering and integration. Since hawala is a remittance system, it can be used at any phase.
In placement, money derived from criminal activities is introduced into the financial system. In many money laundering schemes, the biggest 'problem' here is handling cash. Some jurisdictions, such as the United States, require reporting by financial institutions of cash transactions over a certain amount (in the U.S. it is US$ 10,000) (12), and attempting to circumvent such reporting requirements by making smaller transactions is an offense.
Hawala can provide an effective means of placement. In the example, Abdul gave Yasmeen US$ 5,000 in cash. Since she also operates a business (and also performs remittance services for others), she will make periodic bank deposits consisting of cash and checks. She will justify these deposits to bank officials as the proceeds of her legitimate business. Even though she might prefer it if reports were not filed, she will not object to this as it would arouse suspicion at the bank (and her business provides more than adequate justification). She may also use some of the cash received to meet business expenses, reducing her need to deposit that cash into her bank account.
In the layering stage, the money launderer manipulates the illicit funds to make them appear as though they were derived from a legitimate source. A component of many layering schemes has been seen to be the transfer of money from one account to another. Even though this is done as carefully as possible, when it is done through the 'traditional' banking system it presents two problems to the money launderer. First, there is the possibility that a transaction could be considered to be suspicious and reported as such. Related to this is the paper trail created by these transactions. If any portion of the laundering network is examined, the related paper trails could lead a diligent investigator directly to the source of the criminal proceeds and unravel the money laundering network.
Hawala transfers leave a sparse or confusing paper trail if any. Even when invoice manipulation is used, the mixture of legal goods and illegal money, confusion about `valid' prices and a possibly complex international shipping network create a trail much more complicated than a simple wire transfer.
Both of the authors of this paper have investigated hawala money laundering, and have found that even 'basic' hawala transfers can be difficult to trace and tie to the original, criminal source of money. There is no reason, however, why hawala transfers could not be 'layered' to make following the money even more difficult. This could be done by using hawala brokers in several countries, and by distributing the transfers over time.
In the final stage of money laundering, integration, the launderer invests in other assets, uses the funds to enjoy his ill-gotten gains or to continue to invest in additional illegal activities. The same characteristics of hawala that make it a potential tool for the layering of money also make it ideal for the integration of money. This is when money seems to become legitimate, and, as we have seen, hawala techniques are capable of transforming money into almost any form, offering many possibilities for establishing an appearance of legitimacy.
Given hawala's close ties to business activities, there is no reason why money cannot be 'reinvested' in a legitimate (or legitimate appearing) business. Yasmeen could very easily arrange for the transfer of money from the United States to Pakistan, and then back to the United States, apparently as part of an investment in a business there.

What are some indicators of hawala?
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As has been shown in this paper, hawala is actually quite simple; much of the complexity associated with and ascribed to hawala money laundering comes from the nearly infinite number of variations that are encountered in hawala transactions.
This complexity of variation makes it nearly impossible to lay out a straightforward guide to recognizing hawala money laundering as part of a criminal undertaking. It is, however, possible to provide a few indicators that may be useful.
One of the most consistent and valid indicators of hawala activity in investigations conducted in the United States is seen in bank accounts. A 'hawala' bank account almost always shows significant deposit activity, usually in the forms of cash and checks, which are often from one or more ethnic communities (e.g. Afghan, Bangladeshi, Indian, Pakistani, Somali) associated with the hawaladar. These checks may be made out to the primary account holder, or some secondary entity (often outside the United States) somehow associated with the account. These checks may also have some sort of notation, consisting of a name (presumably of the person to whom the money is remitted to) or something supposedly indicating what was 'bought' with the money. In one case, many checks were seen with the word 'bangle' written on them; this was done apparently in order to make it appear as though the checks, which were almost all for even dollar amounts, had been written to purchase jewelry.

These accounts will also almost always show outgoing transfers (usually by wire) to a major financial center known to be involved in hawala. Three of the most common locations are Great Britain, Switzerland, and, as discussed previously, Dubai. Given the flexible and casual nature of the hawala business, hawala accounts will not always be seen to balance.

The following diagram summarizes 'hawala account' behavior:


As has been discussed, certain businesses are also more likely than others to be involved in hawala. Once again, it is not possible to give an exhaustive list, but the following is a starting point:
Import/Export
Travel and Related Services
Jewelry (gold, precious stones)
Foreign Exchange
Rugs/Carpets
Used Cars
Car Rentals (usually non-chain or franchise)
Telephones/Pagers
Laws in India, Pakistan and other countries make it difficult to convert foreign currency (or foreign currency instruments, such as travelers' checks). Criminal activities in these countries may often involve foreign currency (especially dollars), which pose something of a problem. A 'solution' that has been seen to this problem is the shipment of these negotiable instruments from South Asia to the United States. Even though such shipments may violate both courier policies and U.S. law, the money launderers accept these risks rather than try to attempting to place these instruments into their local economies.

Appendix A: Origins of hawalahundi and other related words
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This section provides linguistic background on some Arabic, Hindi, Urdu, Gujarati and Farsi (Persian) words associated with hawala.

The words hawala and hundi are both used, correctly and interchangeably, to describe the alternative remittance system discussed in this paper. Since there is only one system, the usage 'the hawala and hundi systems' is incorrect. Either name can be used, or one can say 'the hawala or hundi system'.

The word hawala comes from the Arabic root h-w-l , which has the basic meanings 'change' and 'transform'. The word 'hawala'  is defined as a bill of exchange or a promissory note. It is also used in the expression hawala safar , traveler's check.

When the word came into Hindi (13) and Urdu (14 it retained these meanings, but it also gained the additional meanings 'trust' and 'reference' which reflect the manner in which the system operates. Furthermore, in popular usage',hawala' is often used to refer to any sort of financial crime, particularly money laundering or fraud.
A hawala operator is a hawaladar 

The word hundi  comes from the Sanskrit root meaning 'collect'. In India, one of its most common meanings is for the collection box found in a Hindu temple. In addition to this, it also has the same meanings as hawala: bill of exchange, promissory note, trust, reference and the alternative remittance system.

A hundi operator is a hundiwala , which also means banker or foreign exchange dealer.
Both terms are used; there appears to be some slight geographic preference for the term hundi in northern Pakistan, particularly around Lahore. Hawala, on the other hand, seems to be used almost exclusively in Indian journalism. In Iran, the term havala (also spelled  as in Urdu) is used, this is the same as the word 'hawala' due to a difference in pronunciation of the letter  (w in Urdu, v in Farsi).

A Hindi word which is of interest for historical reasons (see Appendix B) is potedar , which means 'treasurer' or 'paymaster' and comes from the word pot , which means 'assessment'.
The Arabic root s-r-f  has, among other meanings',pay' and 'disburse'. The Arabic word for bank, masrif , comes from this root. It is also the basis for the Farsi words saraf , which means a 'money changer' or 'money remitter (hawala dealer)' and sarafi , which is the name for the business.

Appendix B: The history of hawala
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Hawala predates 'traditional' or 'western' banking (the first 'western bank' in India was the Bank of Hindustan, established in Calcutta around 1770) (15). Prior to this, the operations of sarafs and potedars (see appendix A), who were primarily moneychangers (and essentially the predecessors of the hawaladars discussed in this paper) were a fundamental component of the commercial and financial infrastructures.
Contrary to some accounts, hawala did not begin during the Vietnam War. It was, however, during the Vietnam War that many Americans were exposed to hawala through the operations of Indian merchants in Saigon. Americans often took advantage of their hawala service to remit money.
Today, hawala and 'traditional' banking exist as parallel, but intertwined, economic systems in India and Pakistan.

Appendix C: Another hawala pricing scheme
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In this scenario, Abdul wants to send 100,000 rupees to his brother Mohammad. This differs from the previous scenario in that he wants to send a fixed amount in rupees, rather than dollars.
The Bank
The bank gives the official exchange rate for rupees (for the purposes of this paper, that is assumed to be 31 Rs/$) and charges $25 for the exchange. The cost of the 100,000 rupees would be $3,125; adding the $25 fee brings the total cost of this transaction to $3,150.
The Hawaladars (Iqbal and Yasmeen)
Iqbal offers his usual rates: 35 rupees for a dollar and five percent commission. The rupees will cost Abdul $2,857, Iqbal's fee is $142, for a total of $2,999.
Yasmeen also offers her typical terms: 37 rupees for a dollar and a fee of one rupee for each dollar remitted. The rupees will cost Abdul $2,702 and Yasmeen's fee is $73. At $2,775, Yasmeen still has the best deal in town!

Appendix D: Hawala bookkeeping
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'Hawala bookkeeping' emphasizes keeping track of how much money is owed to whom. The following sample chart is based on records analyzed by one of the authors of this paper during a recent investigation (16), and is representative of the records that might be encountered during a hawala investigation (note that these charts are usually handwritten, and it is not uncommon for English and another language to be used):


16/6/98Vinod10000037.62659.57F-1202
16/6/98Ashish25000039.256369.42F-1203
16/6/98Nitin Bhai35000042.38274.23B-8146
17/6/98DK5000038.751290.32F-1204
17/6/98Suresh Kumar30000039.257643.31B-8147
17/6/98Anil20000040.14987.53S-5428
17/6/98Vinod15000039.753773.58F-1205
18/6/98Manoj30000041.257272.72B-8148
18/6/98Vinod Bhai35000042.28293.83L-2160
18/6/98Ganesh Trading200000385263.15
19/6/98Suresh Kumar17500039.54430.37B-8149

The first column indicates the date of the transaction. The second column is the name of the hawala broker to whom the debt is owed; it is very common to use partial names (e.g. 'Vinod') or codes (e.g. 'DK' ). The third column is the amount of the debt. This chart reflects a tendency to do business in multiples of 100,000; so it would not be uncommon to see things like '1.5' for 150,000. The third column indicates the dollar/rupee exchange rate in effect for the transaction. The fourth column is the value of the transaction in dollars. The fifth column reflects the way in which the payment was made. Notations such as 'F-1202' usually represent a bank ('F' might be 'First Bank'; 'B' and 'L' would represent other banks) and the check number. The notation  for Ganesh Trading is '52 t' in Hindi. This represents 52 tolas (17) of gold, possibly paid to a local goldsmith or jeweler instead of remitting the money via a bank.

Appendix E: Hawala cases
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This section provides brief descriptions of cases where hawala or hawala-like techniques were used to launder proceeds derived from various predicate offenses. If the case has been adjudicated, identifying information is provided. In others, the investigation was ongoing at the time of writing, so particulars are not provided and certain details of the case may be designated as hypothetical.

Narcotics Trafficking (1)

In mid-1997, several people were convicted of conspiracy to launder as well as laundering the proceeds of the sale of Pakistani heroin and opium (18). This case involved a legitimate foreign exchange business, Frankfurt-based MGM Marwex Geldwechsel, its U.S. branch, MGM Marwex International and a hawala network spanning several countries.

Narcotics Trafficking (2)

Several Pakistani and Afghan nationals allegedly importing heroin into a major U.S. metropolitan area are suspected of collaborating with a bank officer to launder the proceeds of the sale of the heroin. This bank officer is believed to open accounts without following appropriate 'know your customer' procedures and also assists the traffickers with the management of these accounts, which are used for hawala-like transfers. Large numbers of checks have been processed through these accounts, and money has then been wired to Dubai and other places. It is also believed that other traffickers have availed themselves of this money laundering scheme. In addition, this bank officer may be handling the receipt of shipments of negotiable instruments from a south Asian country on behalf of suspected criminals in that country. These shipments may represent part of a money laundering scheme as well as potential violations of U.S. laws regarding the import of currency and the source country's laws regarding the export and possession of currency.

Narcotics Trafficking (3)

In 1985, British courts convicted a Mr. Choraria (19) of 'being knowingly concerned in the fraudulent evasion of the prohibition of importation of a Class A controlled drug, namely heroin'. Choraria was described as the 'banker who knowingly enabled payment for heroin imported into this country illegally to be transferred to India from whence the heroin had been sent'.
Choraria operated two legitimate businesses, an import/export financing firm (confirming house) and a remittance business (it is possible that at least part of this remittance business was hawala-based). In this case, Mr. Choraria brokered the transfer of funds between parties in Karachi and Mumbai as part of heroin smuggling.
This case has two somewhat humorous aspects: hawala had to be explained at length during the trial by Mr. Choraria's nephew, as the system was not known to Choraria's bankers. In addition, some of the British criminals involved in the case did not seem to understand how the money was being transferred.
Narcotics Trafficking (4)

The investigation of a Delhi-based hashish trafficking organization revealed that the traffickers had established several false corporate identities. Under the cover of these identities, machinery was shipped to Germany, the United Kingdom, the Netherlands and Australia. Hashish was concealed in this machinery. Hawala was used to repatriate the proceeds of the hashish sales back to the Indian traffickers.
Terrorism (1)

The investigation into the assassination of an important Indian politician revealed that the assassins were, in fact, terrorists. These terrorists used hawala to transfer the proceeds of the sale of narcotics to arms dealers for the purchase of military hardware.
Terrorism (2)

The series of bomb blasts in a major Indian city in 1993 was financed through hawala. The investigation revealed that the funds supporting these bombings (specifically funds used to buy explosives and to pay the bombers) were handled by hawala operators in the United Kingdom, Dubai and India.
Alien Smuggling

A worldwide alien smuggling network is suspected of using hawala banking techniques to move money between North America and South Asia to pay the alien smuggling 'fee' and additional payments (e.g. for lawyers) are also made.
Welfare Fraud

Certain immigrants from a particular country are accused of committing large scale welfare fraud in two major U.S. cities. An employee of a car rental agency deposits large numbers of checks into a personal checking account, and then wires money to a variety of locations, including Dubai (this is documented by Suspicious Activity Reports filed by the bank where the account is held). Since it is known that there are many immigrants from this country working in Dubai, it is suspected that hawala is then being used to remit money (which probably includes proceeds derived from welfare fraud) from Dubai back to this country, which has a poorly developed banking system, via couriers. This is the sanitized text from one of the Suspicious Activity Reports associated with this case:
SUSPECT ONE MAKES FREQUENT LARGE CASH DEPOSITS INTO HIS CHECKING ACCOUNT AND IN A FEW DAYS HE WIRES IT OUT OF THE COUNTRY. HE HAS BEEN SEEN WITH SUSPECT TWO. THIS ACTIVITY SEEMS UNUSUAL FOR HIS OCCUPATION.
Insider Trading

A citizen of a South Asian country, who was an investment banker in a major U.S. financial center is accused of giving 'tips' to various friends and relatives. After some illegal trades took place, the banker resigned and apparently fled the United States for his homeland. At the same time, several of his associates also traveled to this same country as well as several European financial centers. An analysis of seized bank records indicates that money was wired to persons apparently of the same nationality in at least one of these financial centers. It is possible that these wire transfers were the first part of hawala-like transfers of the proceeds from the illicit trades to the investment banker's home country.
Customs and Tax Violations (1)

A Pakistani living in the Washington, D.C. metropolitan area was doing hawala transfers for other expatriates. Large cash transactions at the bank used by some of the defendants were brought to the attention of customs and tax authorities. Their subsequent investigation uncovered a scheme in which surgical instruments manufactured in Pakistan were being imported at inflated prices (over-invoicing) to facilitate the transfer of money from the United States to Pakistan, in apparent violation of Pakistani law. Convictions were obtained for customs violations, making false statements and tax fraud (20).
Customs and Tax Violations (2)

An individual representing himself as being in the gold business in a large U.S. city, specifically as a 'gold broker', is suspected of various customs and tax violations as well as money laundering. This individual has made very large cash deposits at several banks, and at least one bank has closed this individual's account because of these deposits. This individual's bank account was examined in conjunction with a tax investigation. This individual claims to supply various gold shops with gold bullion, and also that he sells gold coins and jewellery to individuals. Interviews with owners of these businesses and alleged clients indicate that this is not the case. It is believed that this individual is acting as a bank for various individuals and businesses, assisting them in evading the payment of taxes.
Gambling

Hawala has been used not only as an alternative remittance system but as an alternative banking system in a South Asian gambling operation. Currency control laws made it nearly impossible for citizens of one country to take money to gamble in another, and there are similar problems with bringing gambling winnings back into the country. The gambling operators have engaged hawaladars to accept money 'on deposit' from gamblers, and pay winnings through them as well. This is something of a testimony to the reliability of hawala. During a conversation with one of the authors of this paper, one of the principals in this gambling operation reported that this had been going on for nearly twenty years without any significant difficulties.

Appendix F: Glossary
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This glossary contains certain terms used in this paper as well as others that the reader may encounter while researching hawala and related topics. Where appropriate, Hindi, Gujarati and Urdu spellings are given. 'Hawala', 'hundi ' and other words closely connected to money movement are discussed in detail in Appendix A.

confirming house: in the import/export business, a confirming house acts on behalf of the buyer by dealing directly with the exporter to complete the contract. There is no overseas credit risk or financial burden for the exporter because the confirming house provides short term credit to the overseas buyer, who pays a commission for this service.
crore : 10,000,000 [ten million]; part of the South Asian numbering system, frequently used when discussing money. A crore is 100 lakhs. A billion is often referred to as 100 crore. The South Asian numbering system is based on three units: thousands, lakhs (100,000) and crores. For this reason, 'two crore' will be heard instead of 'twenty million'. The placement of commas reflects the number of crores; 2,00,00,000 would be written instead of 20,000,000 (the first is 'two crores' the second is 'twenty million').
integration: the third and final stage of money laundering In this stage, the launderer invests in other assets, uses the funds to enjoy a luxurious lifestyle or reinvests his profits into criminal activities.
khokha  (also spelled koka; khokhu in Gujarati): The literal meaning of this word is 'something hollow', 'bag' or 'paid bill'; it is used colloquially to refer to 10,000,000 [ten million] rupees. When speaking of money, this word is often used interchangeably with crore.
lakh  (also spelled lack or lac): 100,000 [one hundred thousand]; part of the

South Asian numbering system, frequently used when discussing money. The term 'hundred thousand' is rarely used; instead; 'five lakhs' will be heard instead of 'five hundred thousand'. The placement of commas reflects the number of lakhs; 5,00,000 would be written instead of 500,000 (the first is 'five lakhs' the second is 'five hundred thousand').
layering: the second stage of money laundering. In this stage, the money launderer manipulates the illicit funds to make them appear as though they were derived from a legitimate source.
man  (also maund): approximately 40 kg.
money laundering: the process of converting the proceeds of a criminal activity into funds with an apparently legal source. Money laundering may be further divided into three subprocesses or stages: placement, layering and integrationnumerals: for reference, here are the forms of the numerals as written in Hindi, Gujarati, Punjabi, Bengali, Urdu, Arabic and Persian (Farsi/Dari) (21):
peti : The literal meaning of this word is 'box', 'suitcase' or 'belt'; it is used colloquially to refer to 100,000 rupees. When speaking of money, this word is often used interchangeably with lakh.
placement: the first stage of money laundering. In this stage, the money launderer disposes of the proceeds of a criminal activity (which are often in the form of cash).
ser  (also seer): approximately 1 kg, 1/40th of a man.
tola  (tolo in Gujarati): approximately 11.7 grams (the weight of a silver rupee); this is a common unit used in the precious metals and jewellery businesses in India, Pakistan and Persian Gulf. One twelfth of a tola is a masha 

Appendix G: Bibliography
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Cajori, Florian (1993 reprint of the 1928/9 original) A History of Mathematical Notations, Mineola, New York: Dover.
Chohan, Ali Hassan (1995) Practical Dictionary, English to English & Urdu; Urdu to Urdu & English, Lahore: Oriental Book Society.
Cowan, J. M. [editor] (1976) Arabic-English Dictionary, The Hans Wehr Dictionary of Modem Written Arabic, Ithaca, New York: Spoken Language Services.
Gala, L.R., Shah, B. L, and Gokani, L. B. (1998) Gala's Desk Dictionary: English-English-Gujarati & Gujarati-Gujarati-English, Ahmadabad and Bombay: Gala/Navneet Publications (I) Limited.
Gonzalez, Patricia (1997) 'Ex-Corona Man Guilty of Laundering Drug Money; 68-year-old Aided International `Kingpin'' The Press-Enterprise (Riverside, California), July 4, 1997.
Gupta, Suraj B. (1992) Black Income in India. New Delhi: Sage Publications.
Jost, Patrick (1997) 'Black Hawala, Financial Crimes and the World Drug Trade' in Jayasuriya, D.C., Nayak R. K. and Wells, A. (editors) Global Drugs Law: Selected Papers Presented at the Indian Law Institute/UNDCP International Conference on Global Drugs Law, New Delhi, 28 February-3 March 1997. New Delhi: Har-Anand Publications. This paper is also available from the U.S. Department of the Treasury, Financial Crimes Enforcement Network (FinCEN), Office of Communications, 2070 Chain Bridge Road, Suite 200, Vienna, VA 22182 USA.
Kapoor, Sanjay (1996) Bad Money, Bad Politics: The Untold Hawala Story. New Delhi: Har-Anand Publications (Alka Paperbacks).
Maharaja, Jagadguru Swami Sri Bharati Krsna Tirthaji (1997) Vedic Mathematics. Delhi: Motilal Banarsidass.
Malhotra, Angelina (1995) 'India's Underground Bankers' Asia, Inc. Online/Asia, Inc. August 1995.
McGregor, RS. (1993) The Oxford Hindi-English Dictionary, Delhi: Oxford University Press.
Menninger, Karl (1992 reprint of the original 1969 translation by Paul Broneer) Number Words and Number Symbols: A Cultural History of Numbers [Zahlwort and Ziffer: Eine Kulturgeschichte der Zahlen] Mineola, New York: Dover Publications.
Pathak, R. C. [compiler] (1995) Bhargava's Standard Illustrated Dictionary HindiEnglish. Varanasi: Bhargava Book Depot.
Puliani, Ravi and Puliani, Mahesh (1997) Bharat's Foreign Exchange Regulation Act, 1973 with Rules, Including the Foreign Trade (Development & Regulation) Act, 1992 with 1993 Rules & Other Allied Acts and Rules. Delhi: Bharat Law House.
Quereshi, Bashir Ahman [compiler] (1992) Standard Twentieth Century Dictionary Urdu into English. Delhi: Educational Publishing House.
Sandhu, Harjit Singh (1998) 'Hawala-A Good Old Vehicle for the Movement of Bad Money' Laundering News (Sydney, Australia) 2:1998.
Tannan, M. L. (1996) Tannan's Banking Law and Practice in India. New Delhi: India Law House.
Thakur, Sushila (1990) Two Decades of Indian Banking: The Service Sector Scenario. Delhi: Chanakya Publications.
Tharoor, Shashi (1997) India: From Midnight to the Millennium. New York: Harper Perennial.
Tripathi, Dwijendra and Misra, Prithi (1985) Towards a New Frontier: History of the Bank of Baroda. New Delhi: Manohar.
U.S. Department of Justice, Drug Enforcement Administration [DEA] (1993) Money
Laundering in Southwest Asia. Washington, DC: Department of Justice, DEA Publication DEA-930001.
U.S. Library of Congress (1996) India: A Country Study. Washington, DC: Government Printing Office.
U.S. Library of Congress (1995a) Pakistan: A Country Study. Washington, DC: Government Printing Office.
U.S. Library of Congress (1995b) Persian Gulf States: Country Studies. Washington, DC: Government Printing Office.
Zdanowicz, John S., Welch, William W., and Pak, Simon J. (1995) 'Capital Flight From India to the United States Through Abnormal Pricing in International Trade' Finance India, Vol. X, No. 3, September 1995.

_

END NOTES

(1)
The terms hawala and hundi refer to the same system and may be used interchangably. Refer to Appendix A for background on the origins and meanings of these words.
(2)
The term 'hawala operator' is also very popular; see Tharoor (1997).
(3)
This scenario would be just as valid if the money were being sent to India, or from one of several South Asian nations to the United States; note that hawala is also frequently used to move money out of South Asia. Appendix C has another scenario, showing another aspect of hawala pricing schemes.
(4)
The rates of exchange for various South Asian currencies fluctuate widely; a consistent, but possibly not current, rate of exchange is used throughout this paper.
(5)
This is a fictitious advertisement; it does, however, combine the elements of 'hawala ads' seen by the authors.
(6)
This pricing scheme was encountered in the case U.S. v. Ismail, which is discussed in Appendix D of this paper.
(7)
The gold trade is very much a part of hawala; hawaladars may also be involved in the buying, selling and delivery of gold.
(8)
Puhani et. al. (1971:20); the FERA is one piece of current Indian legislation used to address money laundering; it will eventually be replaced by comprehensive anti-money laundering legislation and a revised foreign exchange act called the FEMA (Foreign Exchange Management Act).
(9)
His 'legitimate' business consists primarily of exchanges between the U.S. and Iran [dollars and rials]. Hawala is also very common in Iran, where it is referred to as 'havala'. The difference in profit margins may, in part, be accounted for by the difference in markets for Iranian rials and Indian and Pakistani rupees.
(10)
Under Section 1960 of Title 18 of the U.S. Criminal Code',whoever conducts, controls, manages, supervises, directs, or owns all or part of a business, knowing the business is an illegal money transmitting business shall be fined in accordance with this title or imprisoned not more than 5 years or both'; this reinforces individual states' efforts to license money remittance businesses, but there is no overall mechanism for regulating these businesses. Under proposed regulations requiring registration of money transmitters, it would be a criminal offense to engage in hawala without being registered with the U.S. Department of the Treasury.
(11)
See Jost (1997) for a detailed discussion of 'black hawala'.
(12)
In other jurisdictions, large cash transactions are often considered at least cause to alert a bank or other financial institution to the possibility that the transaction should be reported as 'suspicious' under applicable regulations.
(13)
In Gujarati, it is , hawalo; Gujarati information is included in this paper as the language has figured prominently in several significant hawala cases.
(14)
Hindi is one of the national languages of India; Urdu the national language of Pakistan. They are Indo-European languages; their origins are Sanskrit, the liturgical language of Hinduism and the Persian of the Mughals, the Islamic rulers of India. In addition, there are many Arabic words in these languages, reflecting the influence of Mughal culture. Today, the spoken languages are nearly identical, leading some to claim that they are dialects of the same language. Hindi is written in the Devanagari script, borrowed from Sanskrit, and tends to favor Sanskrit for the creation of new words. Urdu follows Mughal tradition; it is written in a slightly modified version of the Arabic script, and favors Arabic and Persian as sources of new words.
(15)
Tripati and Misra (1985:6).
(16)
The names and transactions in this example are fictitious.
(17)
The amount owed is $5263.15; assume a price for 22K gold of US$ 8.64/g and 11.7 grams/tola (see Appendix F for more information on South Asian weights, measures and numerals).
(18)
Gonzalez (1997)
(19)
R v. Choraria Court of Appeal (Criminal Division) 27 March 1985.
(20)
UNITED STATES OF AMERICA, Plaintiff-Appellee, v. ISMAEL, Defendant-Appellant.
UNITED STATES OF AMERICA, Plaintiff-Appellee, v. SHAKEEL AHMAD, a/k/a Javed Iqbal, Defendant-Appellant. UNITED STATES OF AMERICA Plaintiff Appellee, v. MIAN TAUQIR AHMED, a/k/a Tauqir Ahmed, Defendant-Appellant.
UNITED STATES OF AMERICA, Plaintiff-Appellee, v. MOB BASHER, Defendant-Appellant. No. 95-5299, No. 95-5324, No. 95-5325, No. 95-5326. 97 F.3d 50; 1996
U.S. App. LEXIS 25229; 96-2 U.S. Tax Cas.

(21)
'Western' numerals (1, 2, 3, etc.) can be referred to as 'Hindu-Arabic' numerals. These numerals, including the important sign for zero, apparently originated in South Asia (Cajori 1993: 45-70; Menninger 393-445; Maharaja 1977:xlii) and were adopted by the Arabs, and ultimately made their way to Europe. Note that the 'Hindi' numerals are actually the original Devanagari (Sanskrit) numerals, and are also used for Nepali.
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eof