Although not given a lot of attention in the mainstream media, the recent mistrial in the Holy Land Foundation (HLF) case, due to a deadlocked jury, could have a significant and far-reaching impact on terrorism prosecution cases in the future. As the former head of Homeland Security’s New York investigative field office at ICE, one of my roles was to manage the El Dorado Financial Crimes Task Force. And one of the primary missions of the Task Force was to follow the money trail of terrorism-related cases.
Money laundering case associated with terrorism operations are already incredibly difficult to prosecute for a multitude of reasons. Now they may be that much tougher.
At a Muslim-American town hall meeting in Jackson Heights, NY, last year, a member of the community asked a representative from the Office of Foreign Assets Control (OFAC) how one was to control what a “charity” did with its contributions. This individual stated that when one makes a contribution to the American Red Cross, he or she has little or no control over how the Red Cross spends the funds. Similarly, he said, if one makes a good faith contribution to a charity sending funds to the Mid-East, Iraq, Jordan, Saudi Arabia, Libya, etc., how does he guarantee that a portion of those funds will not be “siphoned off” to finance a terrorist organization?
In addition, federal financial investigators face additional unique challenges in the post-9/11 era as traditional methods utilized to investigate money laundering prove ineffective in tracing funds in the “hawala” alternative remittance system.
The “hawala” is an informal money transfer system based on the performance, honor and tradition of a network of money brokers primarily located in the Middle East, Africa and Asia. This system of money remittance dates back to the 8th century. Money is transferred via a network of brokers (hawaladars) who accept money in one location and, through their network, make it available in another.
The hawala transaction is virtually paperless, based on an honor system, and operates outside normal banking channels. No records of individual transactions are maintained — only a running tally of the amount owed one broker by another. The informal and unregulated nature of these transactions make this system very attractive to criminal and terrorist organizations. It also makes it very difficult for investigators to gather evidence of a criminal act.
Even with the passage of the Patriot Act — and its amendments to require extra due diligence for correspondent accounts, private banking accounts and foreign shell banks — it is extremely difficult, if not impossible, to trace funds through banks located in the Middle East, Africa and Asia. Often times that is where the “trail runs dead,” and at best it can only be determined that the funds were disbursed to an area where the United States has significant national security concerns.
Terrorism financial investigations are among the most important, as well as challenging, modes of investigation facing the law enforcement and homeland security community today. The complexity of such investigations don’t make for good media because they are so difficult to follow. Therefore, these critical investigations don’t always receive the amount of attention among congressional leaders and policymakers that they deserve.
We need to apply more resources and attention to this area of terrorism investigations, though, and cases like the HLF must be pursued despite all the obstacles.
