They Are Called Hawalas


Hawala. Look it up. Remember how important hawalas were in the aftermath of 9/11? Just another one of those tough, tedious, very difficult efforts in the war on terror largely forgotten by this Administration, except when it suits their short-term partisan agenda.

Indeed, this story in the New York Times that Bush, Cheney and Tony Snow are going on about is a joke. Here's what I wrote to a friend:

More after the jump.

I argued this on the radio Friday night. Fat lot of good it did me. This whole NYTimes Banking story/Cheney grudgematch is so not news. Everybody in the asset management/financial business knows about SWIFT and how easy it is (and how it was partly designed) to be monitored. It's a joke they are fighting about it. The Admin is just trying to chill free speech is what this is about.

The non-story is that the US is using SWIFT. Any terrorist with a brain knows wiring money through European, American and many East-Asian banks is traceable.

As Bill Keller rightly notes, the Administration has already, by and large, telescoped its plans to watch international money flows:

A secondary argument against publishing the banking story was that publication would lead terrorists to change tactics. But that argument was made in a half-hearted way. It has been widely reported — indeed, trumpeted by the Treasury Department — that the U.S. makes every effort to track international financing of terror. Terror financiers know this, which is why they have already moved as much as they can to cruder methods. But they also continue to use the international banking system, because it is immeasurably more efficient than toting suitcases of cash.

What is really happening is the same thing that happened in the aftermath of NSA story (a story, I would note, that the Administration was extremely unhappy with). The Bush-Cheney-Snow pushback is another attempt to chill freedom of the press in this country. Because, like Bill Keller writes, press freedom is the antidote for a wide range of abuses and a fundamental right:

the people who invented this country saw an aggressive, independent press as a protective measure against the abuse of power in a democracy, and an essential ingredient for self-government. They rejected the idea that it is wise, or patriotic, to always take the President at his word, or to surrender to the government important decisions about what to publish.

Sadly, this President is a cowardly-bully, much like the lion in the Wizard of Oz, who, when pushed back against scurries off like the 'fraidy cat' he is.


Sean Paul Kelley June 26, 2006 - 3:32pm

...hawalas, I don't think that one can discount the importance of monitoring conventional financial transactions. They have used them in the past. From the Executive Summary of the 9/11 Commission Monograph on Terrorist Financing [pdf]:

The September 11 hijackers used U.S. and foreign financial institutions to hold, move, and retrieve their money. The hijackers deposited money into U.S. accounts, primarily by wire transfers and deposits of cash or travelers checks brought from overseas. Additionally, several of them kept funds in foreign accounts, which they accessed in the United States through ATM and credit card transactions. The hijackers received funds from facilitators in Germany and the United Arab Emirates or directly from Khalid Sheikh Mohamed (KSM) as they transited Pakistan before coming to the United States. The plot cost al Qaeda somewhere in the range of $400,000–500,000, of which approximately $300,000 passed through the hijackers’ bank accounts in the United States. The hijackers returned approximately $26,000 to a facilitator in the UAE in the days prior to the attack. While in the United States, the hijackers spent money primarily for flight training, travel, and living expenses (such as housing, food, cars, and auto insurance). Extensive investigation has revealed no substantial source of domestic financial support."

Does terrorist money move around the hawala network? Yes, yes, it does - a lot of it, I suspect. Does it end up in there without ever touching the international banking system? I sure don't think so, not the amounts that we're talking about. Money on this scale leaves useful footprints somewhere - it may prove difficult to track directly in the hands of the operational people, but combined with other tools and used properly it could be damned effective at cutting the balls off the guys that are the ultimate sources of the money that these guys are dependent on. The more time the players have to spend on fundraising because their funders can't move big chunks of cash easily, the less time they have to plan ops.

"We declared war on terror, it's not even a noun, so, good luck. After we defeat it, I'm sure we'll take on that bastard ennui." - Jon Stewart.

JustPlainDave June 26, 2006 - 4:49pm

this 'pretending' by the administration that this story has wrecked, wrecked I tell you, our effort to track down the evil-doers is a joke, not to mention patently false. I'll be posting shortly, I hope, a relevant portion from Ron Suskind's new book about just this.

Bite Your Head Off

Sean Paul Kelley June 26, 2006 - 5:06pm

...has as a whole potentially hampered efforts to chase these mutts down, and has particularly told these guys that the efforts towards tracking them extend well beyond what most people would have thought prior to the revelations.

I've read about the IC for years, so it really wasn't a surprise to me that the US was collecting on many of the categories of SIGINT targets it has been, but certain elements of that story are things that I sure wouldn't have thought of (such as how many foreign to foreign calls are routed through US based switches, among other things), and I don't think most of the oppo would have picked up on it either. Similarly, I sure figured the US would be studying its own financial transactions pretty carefully, but the notion that they would be plugged into the whole international net on that scale, that's a new one that many wouldn't have posited.

The oppo's known since day one that they could be hunted effectively if the US got onto them - what I'm pretty sure they didn't know is how low the detection threshold could potentially be (i.e., that the US could end up "onto them" without much very specific information at all) and I'm real sure that they didn't know how vast the scale this whole effort could be. The real threat here, to my mind, is that these guys now know how multi-modal everything is - how it hops across various modes of communications, integrates with commercially available data, and into transaction records. Before, in their minds switching cellphones and talking about "apples" and "celebrations" and using draft e-mail folders was enough - now I think they know it potentially isn't. Now we may well find it harder to play the game with the rules rigged to our historical strengths.

"We declared war on terror, it's not even a noun, so, good luck. After we defeat it, I'm sure we'll take on that bastard ennui." - Jon Stewart.

JustPlainDave June 26, 2006 - 5:37pm

in the world of global commerce and finance would know how easily it is to track money when it is moving between large, even medium sized global institutions. It's not a secret, nor was it ever. That's the business I was in. I had clients all over the world. People knew this stuff. I listen very closely when you make suggestions and arguments about intel matters and often back down from a position I had previously based on the evidence you provided. That's what I am asking you to do here: think about what I am saying, based upon my personal knowledge and experience. This kind of tracing was not and never really was a secret, before 9/11 or after.

Bite Your Head Off

Sean Paul Kelley June 26, 2006 - 5:44pm

...and I'll defer to your expertise. The one possible wrinkle that I would add would be that if they were paying attention to what was happening in the courts (which were their best window into American operational practice), I suspect that their bias would be towards thinking that they could easily be hunted post facto rather than in real time. Much that they've experienced could well lead them to believe that the American law enforcement colossus, while immensely powerful, is just too slow to keep up with them so long as they keep the tempo up.

'course, one could cogently argue that the int colossus, even with these powers, is also too slow to keep up with them...

"We declared war on terror, it's not even a noun, so, good luck. After we defeat it, I'm sure we'll take on that bastard ennui." - Jon Stewart.

JustPlainDave June 26, 2006 - 10:09pm

Bite Your Head Off

Sean Paul Kelley June 26, 2006 - 10:33pm

disclosures: you may be right. It may have hurt our efforts. But the necessity of publishing that story to me was never about harming our fight against al Qaeda. It was about holding our leaders accountable. They were quite possibly doing something illegal. Democracy is about a balance. In Canada, I believe similar measure have been used, but are legal. And, as I have stated, if the same measures had already been legal here in the US, I would have no problem with them. Had they been requested int eh aftermath of 9/11 and added into the original Patriot Act, I probably would have not had a problem with them. However, knowing this administration's penchant for lying and secrecy. Well, I think the balance shifts in the favor of needing to know, in order to hold accountable at some point.

Life requires hard choices and this is one of them. Were the choice mine, as it was Bill Keller's, I would have made the same one. Under different circumstances? Well,who knows.

Bite Your Head Off

Sean Paul Kelley June 26, 2006 - 5:49pm

If I am not mistaken President Clinton tried to have a law passed that would require banking institutions that do business in the U.S. to keep records of hawala style money transfers. This was shot down by the Republicans as an undue burden on the banking industry.

Karl der Grosse June 26, 2006 - 5:29pm

Bite Your Head Off

Sean Paul Kelley June 26, 2006 - 5:45pm

is it none of the government's goddamn business what private citizens do?

And yeah, I worked for years in the US financial industry. Everything can be tracked, man, and if you think any financial institution will ignore a legal subpeona you have another thing coming. But I'm sick of fishing expeditions. Get yourself some probable cause, swear an oath or affirmation and get a bloody subpoena or set your constitution on fire and admit you don't bother obeying it anymore.

Ian Welsh June 27, 2006 - 1:02am

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.