Hawala transactions are used by migrant workers for legitimate purposes due to its cheaper cost.

Hawala is an underground payment system that lets users make undocumented transactions.
It has been linked to terrorist financing but is also used for legitimate purposes.
Experts say oligarchs using Hawala would have to make hundreds of small transactions. 

Russian oligarchs may be using informal trust-based payment systems known as Hawala to evade Western financial sanctions in a move that is not illegal but reflects their desperation, experts say. 

Hawala lets funds be transferred from one entity to another without actually moving any money. There are no records as no documentation is required.

While it is often used for legitimate purposes such as migrant workers sending money home to family members, for example, Hawala transactions have also been linked to terrorist financing. 

Following the 9/11 attacks, the US government sought to find how Al Qaeda had fund its attacks. Senator Paul Sarbanes said in a Senate hearing on November 14, 2001: “Since little is known about Hawalas, this informal system poses difficulties for law enforcement officials seeking to track the funds utilized for these various purposes.” 

Insider spoke to two experts on the similarities between oligarchs who may be using Hawala and terrorist financing, and how the underground payment systems’ lack of regulation appeals to sanctioned individuals.

David Claridge, chief executive of security intelligence firm Dragonfly, told Insider that if oligarchs are using Hawalas or any informal payment system to move money around, they must have run out of other options.

Doing so would involve hundreds of thousands of smaller transactions rather than one large one, he added. 

Shane Riedel, a financial crime expert and chief executive of Elucidate, which analyses patterns in money movement, said that sanctioned individuals trying to move funds out of their accounts could be …read more

Source:: Business Insider


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