Based on a March 2003 FinCEN Advisory, informal banking systems, (a.k.a. informal value transfer or alternative remittance systems), have been around since 5800 BC.  Such systems are abused by terrorists to transfer their funds, as more fully described by a presentation from the Organization for Security and Co-operation In Europe.  According to said presentation, the following are some informal banking systems from jurisdictions all over the world:

  1. hawala;
  2. hundi;
  3. hui kuan / fei-chien (a.k.a. “fei chi ien”);
  4. poey kuan (a.k.a. “phoe kuan”);
  5. hui.

While the above and other informal banking systems like the Mexican or Columbian Black Market Peso Exchange are most active in offshore geographical locations, they still of course continue to operate in the U.S.  In the U.S. for example, ordinary people sometimes send funds back home to their families through informal banking systems. Informal banking systems can however, additionally be used by an adversary to dissipate funds the subject of a divorce, bankruptcy, or other court proceeding.

Such an adversary might for example, use an informal banking system to conceal any marital, bankruptcy estate, or other kinds of assets.  An adversary may make his / her financial transfers via an informal banking system especially because the same could easily go undetected in the pre-trial phase of a trial or the computer-based research described at “A Low-Cost Asset Search“.

Transferring funds through an informal banking system might however, lead to the kind of criminal prosecution which occurred in “Operation Cash-Out”.  As a press release explained, Operation Cash-Out involved 46 defendants in multiple jurisdictions including the U.S., Spain, Canada and Belgium.  One of those defendants was Mr. Mohammad Ahsan, who was recently prosecuted in U.S.A. v. Ahsan, et. al.  As mentioned by the Department of Justice, Mr. Ahsan was sentenced on September 22, 2008, to three years in prison because he had conspired to launder money through a hawala.

Copyright 2008-2011 Fred L. Abrams