No paper trail, no identity required, no records kept and huge amounts of money can be sent from and to India without the government knowing.
A CNN-IBN-DIG investigation conducted in New York, London and New Delhi has found Western Union agents who transfer money through hawala channel and breach the stringent money transfer security protocols of the global financial services company.
When former director, Intelligence Bureau, A K Doval was asked if what was shown in the expose is an isolated incident, he said, “It’s not. There are thousands everyday. Hawala money is being moved through an international networking in a massive scale.”
Five years ago terrorist activity would have meant large movement of funds in the international financial system. If we look at the events of the past couple of days, we could talk about five friends getting together and raising ₤ 5000 and stage an attack. Is this why this investigation is so important because this is a possible loophole that can be used with the unit cost of funding terror almost crashing.
“Planning a terrorist attack doesn’t involve a lot of money. Where the money actually goes in large amounts is where you have to build the infrastructure. And sources of the money come from more institutional mechanisms from the states, which are sponsoring terrorism, organisations or charitable and religious institutions,” said Yoval.
But is it possible to force agencies like Western Union or money transferring companies, to make them legally comply that any suspicious activity related to money transfer needs to be reported?
“We will have to tighten various regulatory systems. Western Union is not an exclusive hawala transaction platform. There are many non-institutional, unregistered groups which are functional,” said Yoval.
Estimates suggest that the 9/11 attacks may have cost $500,000 to stage. By contrast the Madrid bombings of 2002 are believed to have cost about $15,000. Last year’s London attacks cost just $2,000 to stage - four bombs, four rucksacks some train tickets and of course great planning.
A ₤1,000 may seem like a relatively small amount when you talk about a terrorist operation. But today terrorists don’t need to plan another 9/11. Even the smallest of events, like the failed London terror plot, can create hysteria.
“The ₤1000 is just the tips of the iceberg. There’s so much of organisation that goes into that there must be lakhs going into it. The quantum of transaction is so immense, and the hawala operator who is dealing with it, is also dealing with funds for politicians, bureaucrats and terror fundings, that the investigating agencies are hesitant to go and see how this big nexus of money is going on because that becomes politically sensitive,” said former Additional Commissioner of Police, Y P Singh.
So where are those who actually track terror financing going wrong in the entire picture?
“They aren’t going wrong. They are doing their work. Hawala is just one of the ways. They have been bale to develop other sophisticated methods of transferring money,” said Yoval.
That’s the concern that the National Security Advisor M K Narayanan. at one point of time, had also hinted that we are increasingly finding terrorist money getting into legitimate business. But that mean that agencies are only looking at the big money when it comes to terrorist tracking where as a lot of terror attacks are today being planned are extremely cheap.
“It is the big money that is required to be investigated. But the agencies are so politcally motivated that they will not look into these transactions. We have a corporate entity that is known to have got funding from Dawood Ibrahim. The corporate czar said he is an NRI and he is not going to give a statement before the Enforcement Directorate. Where as it is a fact that for terror funding, no such inhibition is there. But the investigating agencies are just dumb,” said Singh.
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But Yoval disagreed and said it was a mixing up of two issues.
“Terrorism funding does not come in very large amounts because for terrorist operation, you don’t require a huge amount and secondly, even if it is required, it comes in small installments. So wherever there have been catches, they have been in the amounts ranging from Rs 10 lakh to Rs 20 lakh. The biggest one Rs 7.5 crore spread over a period of five years,” said Yoval.
There are number of key recommendations made by intelligence agencies like the FIU. One of them involved posting Revenue Intelligence Officials to embassies or High Commissions of sensitive countries. Do you think that a doable thing?
“I don’t think that will do anything. We will have to strengthen the laws, increase punishments and build in some more regulatory mechanisms,” said Yoval.
“I think it’s not possible. There can be no willingness to unearth the racket because the same hawala agent is handling funds for terrorists, bureaucrats and politicians,” said Singh.
Naxals take hawala route
Hawala is an informal money transfer system, which operates below the financial systems radar. But it's not a terrorist activity only that the hawala route funds, but also the Naxal activities.
There is now speculation that a number of NGOs in Bihar are funding the training of Maoist guerrillas. Twenty-two NGOs in Gaya district have been issued a show-cause notice for their Maoist links.
CNN-IBN's Special Investigation Team tracked down one unique source of funding of the Maoists in Bihar.
Anil Sinha IG Headquarters, Spokesperson said, “We are engaging with the same problem and have been led to a catch-22 sitaution.”
Not all but some NGOs are routing this money to naxal activity.
“The evidences that we have had so far do point in the direction that some of the frontal organisations are being run with this kind of money,” said Sinha.
How does the police track funds because a lot of donations that are made to NGOs are made in cash?
“It is a very well coordinated effort between different state agencies,” said Sinha.
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