| Hawala on the streets of London |
|
|
Money transfer to war-torn and desperately
poor parts of Africa and Asia is booming on the streets of
London. Local immigrants from poor countries use a myriad of
tiny shops, restaurants, internet cafes and grocery stores
to send back money to their home countries in a form of self-help
aid effort. This is an independent supplement to the Government's
aid for Africa. But could these shops also be vehicles for
money laundering and moving criminal money over to warlords
and terrorists?
In the wake of September 11 and Western governments woke
up to the risk that money transfer agents funded terrorism.
They started a clampdown, inspecting more premises and systems.
But their efforts are impeded by the scale of the sector. UK
Customs have responsibility for money transmitters and they
have registered no less than 995 money transmitter businesses
operating out of 18,964 registered premises. This compares
with 10,838 branches of the main High Street banks who are
regulated by the much tougher and better resourced Financial
Services Authority. The FSA has no remit for money transmitters.
Despite the terrrorist threat, sanctions for poor management,
or total abuse by money transmitters are minimal in the UK.
A Customs spokesman said, ''There is no provision for compulsory
deregistration and we have not compulsorily de-registered any
business... . We aim to obtain voluntary compliance [with money
laundering regulations]. Penalties can be imposed for non-compliance.'
One money transmitter that has obtained Customs registration
is The Blue Nile Arts and Crafts shop on the Clapham Road.
Blue Nile does not scream out to you as a money transfer system.
Its fascia on a parade of shops in Stockwell says 'Alterations'
and Arts and Crafts. A few ethnic products from Ethiopia, like
gowns and dresses, local Ethiopian jewelry and incense sticks
gather dust. The wallpaper is flaking off the ceiling. A couple
of Ethiopians sit behind the counter, one smoking the Arab
pipe called the hookah.
|
| If Blue Nile had to rely
on its cultural sales, its commercial prospects would be bleak.
But refugees from Ethiopia's civil war who have come in large
numbers to the UK since the Military regime took over in Addis
Ababa, use Blue Nile to remit funds back home. It is basically
much cheaper than the only bank in the market. It is also much
quicker. A shop attendant at Blue Nile confirmed that his shop
transmitted money to Ethiopia. |
| Yet tens of thousands
of pounds are transferred by Blue Nile to Ethiopia, every month,
according to one Ethiopian. But Blue Nile may not be quite
the agent of charity that some would like to believe. |
| Blue Nile is owned by
two cousins, Abdulkader, an Ethiopian and Almaz, an Eritreian.
Abdulkader comes from the tribe that controls the Ethiopian
Government and Ethiopians in London, most of whom steer clear
of their government, thinking it is murky. One said, 'People
say they are the agents of the government.' Almaz denied this,
saying local Ethiopians were jealous of Blue Nile's success.
'Abdulkader is not supported by any government or government
agent.' |
| Local Ethiopians also
ask how Blue Nile can pay out large quantities of local currency
in Addis, when the country's banking system has been wrecked
by a decade of civil war and poverty is rife. One North London-based
Ethiopian said, 'They must pay out thousands of pounds every
week when they have no established business at the other end.'
Almaz claims the source of the money is her family businesses
in Ethiopia. 'We have clothes shops in Ethiopia. That is where
they go and collect the money. This is a way we recycle the
money we make in the shops. This business has not made any
profit for the last two years although we hope to make some
this year. This is a community service.' Almaz declined to
disclose details of the sterling amounts remitted from the
UK to Ethiopia or the value of Blue Nile's sales of arts and
crafts products. |
| Speculation about the
motives of Blue Nile's owners is rampant in the Ethiopian community.
One member thought it might provide a stash of sterling for
Ethiopian politicians, if they were forced to flee their country.
'If the government gets kicked out, or if some politician wants
to be here, he can take the sterling that has been accumulated.' |
| Ephram, a taxi driver
in North London, uses Blue Nile for perfectly proper purposes.
His wife in Addis is pregnant, there have been complications
with her pregnancy, and she needs to pay the doctors. So Efram
visits Blue Nile each month and deposits £200. 'The money
arrives at my wife's house the same day. I phone her to check
that it has arrived. She has no means of support and this pays
for her food, bills and any medicines she needs.' Blue Nile
does not charge a fee for the transaction, unlike say Western
Union, which ships out money to Africa in a more formal way
and charges a hefty fee. Instead, it marks down the exchange
rate it gives to the recipient and takes that as its cut. |
| Efram said, 'you go there
with the cash. They give you a receipt. They ask for your name
and address and the name and phone number of the intended recipient.
But they don't have to know you and they don't ask for a passport.
You could make up all the details.' Ethiopians find Blue Nile
through a network of restaurants, agents and shops scattered
round North London. The manager of an internet cafe on Blackstock
Road in Finsbury Park, called HostNet, says he passes customers
and money onto Blue Nile although, he would not use Blue Nile
himself. He is an Eritreian and is politically opposed to the
Ethiopian government and all its activities. Four Ethiopian
restaurants, on a half a mile stretch of the Caledonian Road
also accept funds on behalf of Blue Nile. |
| Ethiopians are some of
the newest migrants to the UK and their cash transfer facilities
are among the more rudimentary. Somalis have been here much
longer and have more formal networks serving this 200,000 strong
community. No Western bank transmits money to war-torn Somalia,
so money remitters virtually have the field to themselves. |
| The main money transfer
system to Somalia, called El Barakhat, was closed down by the
American government in the wake of September 11 2001 on the
grounds that it carried terrorist money. The families of many
Somalis living in Britain were badly hit as the money was frozen
enroute London Mogadishu. Allegations about terrorist involvement
have been retracted by the US but the money remains untouched
in bank accounts in Dubai. Threats of revenge against El Barakhat's
owner forced him into exile and he is unable to restore the
money to its rightful owners. |
| Many Somali operators
stepped into the breach left by El Barakhat and today 12 separate
firms operate out of a host of internet cafes, grocery stores
and shop fronts in North London. The largest is Dahabshiil,
the owner of the Somali telephone system. Dhabshiil's office
in Whitechapel has some of the trappings of a conventional
bank with a glass screen protecting the cashier and a fascia
advertising itself as a 'hawala', Arabic for money transfer
agent. |
| UK Somalis remit $6m a
year back home, and about a third of it passes through Dahabshiil's
70 UK agents who are based in a network of internet cafes and
grocery shops around north London. The firm has 200 agents
worldwide. No-frills systems compete strongly with the more
formalised Western Union which is the only alternative money
transfer agency to Somalia. Dahabshiil charges just £4
to send £100 compared with Western Union's £18.
The fee charged by Dahabshiil drops to 2% of amounts above £500.
Yet Dr Saad Ali Shire, its manager, says the system is 'very
formal'. Dahabshiil is registered with the UK Customs and it
emphasises strong anti-money laundering practices. |
| Dr Shire says checking
the identity and honesty of depositors is not a problem, '
Somalia has a very strong tribal system, and Somalis trust
members of their own tribe to handle their money. A tribe's
agent knows every member of a tribe. An agent in the UK is
likely to know the person who brings in the money and the agent
in Somalia knows the person who is supposed to receive the
money.' |
| Customers can be tracked
down a refugee camp using the tribal connections, even if the
local agent does not have an address. Dr Shire: 'The paying
agents know the members of his tribe. You have a biological
identifications system. It's like having finger prints.' |
| Money put through Somali
agents cannot be tracked beyond a certain point. It might be
funding the warlords commanding parts of Somali and the Horn
of Africa, admits Dr. Shire. Their private armies and military
vehicles need to be funded.. 'It is possible that family members
in the UK help out warlords, but I don't think there's an organised
system for sending them money. I wouldn't know if someone was
sending a warlord money. If you are a tribal leader you might
call a relative and say, 'can you help?' |
| Darsan, another Somali
remittance company, says it has blacklisted those Somalis connected
with warlords. When a payments tops few hundred pounds, the
UK agent gets suspicious, and Somalis are prohibited from sending
more than £2000. Agents in Africa are also advised against
sending the same person more than one payment a month. |
| Bank of Asia (UK) a money
transfer agent based on Bethnal Green Road, which sends money
to Bangladesh says there is no limit to amounts it will accept
in cash although a passport is required for those sending more
than £1,000. Depositors sign a form which says, 'We hereby
declare that money paid to you by me/us was or is not derived
obtained by any illegal means... including but not limited
to any unlawful drug dealings.' |
| People who are dependent
on money sent through these money transfer systems complain
that they are exploited by unscrupulous agents. Recipient who
may be so destitute that they cannot resist being pressurised
into taking part of the money they receive from the agent in
the form of food which they have to buy from the agent's own
shop. He may allow them to take the rest in cash. |
| Aid, government or private,
comes with strings attached. Money transmission is no exception. |
