President Bush was swift to react angrily against the New York Times for exposing U.S. monitoring of SWIFT (Society for Worldwide Interbank Financial Telecommunications) as a suspected conduit for the transfer of terrorist funds. Former Attorney General Edwin Meese accused the newspaper of giving “aid and comfort to the enemy,” which is tantamount to treason. Belgian and European authorities also reacted angrily against the Bush administration for tapping SWIFT’s Belgian-based supercomputers without the green light of a Belgian judge. The hullabaloo generated much heat and little light.

President Bush’s denunciation of the New York Times seemed a tad hyperbolic. Transnational terrorists have studiously avoided getting tangled in the ones and zeros of electronic interception in favor of a time-honored, time-tested, interception-proof system known as Hawala (Arabic for “transfer” or “wire”). It’s an informal funds transfer (IFT) mechanism, swifter than SWIFT that leaves no paper or digital trail.

I first used Hawala fifty years ago. It’s always been fast and secure.

It is based entirely on trust between two individuals separated by thousands of miles. Hawala is much faster than a normal bank transfer. Originally devised as protection against the dangers of traveling with gold and precious stones and other forms of payment on roads prowled by bandits, today’s system is transnational.

How would an al-Qaida operative transfer funds from, say, Quetta in Baluchistan, to Queens in New York? He/she would hand a specific amount to a “hawaladar” who then calls a trusted friend at the other end of the transaction to hand over the equivalent amount to the person (man, woman or child) who gives him the coded word or phrase already mentioned, either by e-mail, fax or phone, or VOIA (voice over internet protocol).

Two hawaladars who work together — with two-way traffic — settle up their accounts at the end of a fiscal year. If one owes the other more than he/she transferred, the balance is frequently settled by putting something of value in a bank’s safe deposit box, or in goods and services. Hawaladars charge lower than bank fees and use the exchange rate spread between countries to generate more income. The system is also used for settling debts through import-export transactions.

The saddest comment is that if we could place half as much trust in our politicians, we’d be ahead of the game.



  1. Anonymous says:

    The US and most official banking chanels put too much restrictions on money transfers. I used to make all my wires at my bank, thinking that that would actually leave an electronic trace so that in case of official enquiries I’ll be able to say: “look, I’ve done everything in the clear, I have nothing to hide…” instead, my bank said no, we don’t want any wire, from an individual, not a business, who makes so many transfers…forcing me to use some unoffical solutions, though cheaper, secure and hassle free, does not allow me to keep an offical paper trail as a bank would.

  2. AB CD says:

    If they avoid such things, then how has the program led to capture of terrorists? There’s at least four instances that they’re telling us about. Another problem with the exposure is that other coutnries won’t share intel because they’re worried about leaks. If the Germans had shared everything they knew about WMDs, the US might have known the case was overstated, but Germany wouldn’t say who their sources were. The CIA would have known those sources couldn’t be trusted.

  3. Don says:

    Darn those Germans for getting us into Iraq!

  4. Mike Voice says:

    I first used Hawala fifty years ago

    Yet another reason you are being watched… [grin]

    I love the rationale that: if we don’t mention we are doing something, the terrorists won’t think we are doing it…

    The world’s governments started making noises about tracking “terrorist financing” way before 9/11…

    http://www.ccc.nps.navy.mil/si/2005/Jan/clunanJan05.asp

    e.g.: “In 1995 the financial intelligence units (FIUs) of a twenty states began an informal transgovernmental network for sharing information concerning money laundering. This group, dubbed the Egmont Group, grew rapidly to 58 by June 2001. It has served as useful informal means to improve information sharing, analysis, and training to combat money laundering.”

    And reporting on the tracking of funds through halawas is not unknown…
    http://tinyurl.com/z364y

    [I especially love the “correction” at the beginning of the article, where the paper’s excuse for the error is: “The report was based on congressional testimony by a former director of the CIA.”]

    That the US Government – and this group of neo-cons in particular – is still actively involved in this process would only be a suprise to imbeciles like the “Bonehead 7″…

  5. AB CD says:

    People knowing about watching finances isn’t the same as knowing the means. Lots of people in the banking industries at very high levels didn’t know about SWIFT’s involvement in money transfers.

  6. Mr. H. Fusion says:

    Lots of people in the banking industries at very high levels didn’t know about SWIFT’s involvement in money transfers

    Sure, like all the janitors, security guards, and sign painters. If a bank employee doesn’t know anything about money transfers, then they must fit into one of those three jobs.

  7. AB CD says:

    From Jake Tapper:

    Kean said that when he was briefed by the Treasury Department on the program, “I was told very few people knew about this facility,” which provides transaction processing services for over 7,000 financial organizations located in 194 countries worldwide.

    “I was told that very few financial houses in this country knew about it; it was not well known even by people in banking,” Kean said. “The terrorists didn’t know the financial transactions went through this one group. Treasury told me, this was a method of financial tracking that people didn’t understand, that nobody knew this was how things were done. Top-notch people in the US didn’t even know.”

    All gone because the NYT won’t support the war on terror unless there’s a Democrat President.

  8. Eideard says:

    AB CD — I’m not certain which of your favorite liars or gullible fools you’re referencing — a link might be useful. There is no one — NO ONE — in banking IT management who doesn’t know about SWIFT.

    If your bank never does an ACH abroad, it might be possible. But, even in East Podunk you’re bound to have a local business or tourist who needs money sent abroad. And you have to know about SWIFT.

    Otherwise you’re not obeying the rules, dude.

  9. Tyrant says:

    WSJ.com – Fit and Unfit to Print

    WSJ says it wouldn’t have published the information.

  10. Constantine says:

    I work for a European bank. When I was hired in 1991, my training, the very first day, was (a) what an account is, (b) what SWIFT is.

    SWIFT is crucial to the workings of a bank if it does anything that involves foreign currency and/or money transfers. No SWIFT arrangements means no correspondent banking which means that you are dealing only in the currency of your country, only within your borders and that you cannot receive or send funds from abroad.

    Also, SWIFT can securely transfer files between banks. For example, I used to work with an application, where the account statements of multinational corporations in multiple banks in different countries can be transmitted though SWIFT to their head office accounting department for consolidation so that they can better handle their liquidity.

    As for the Hawala stuff; there is a large number of (mostly) legal foreign workers in my country from countries such as Pakistan, Sri Lanka, Philippines and India. Hawala exists and it is used by them (mainly because of higher banking charges) but it is not (from what I heard) so fool-proof and secure as the article makes it out to be. Many people (especially the illegal migrants who do not have access to a Bank) are being swindled by the Hawala middlemen. But the think is, that yes, it (usually) works and leaves no paper trail for the tax (or other *cough*CIA/NSA*cough*) authorities.

    Just my 2c. [it was more like 72c before editing]

  11. Mr. H. Fusion says:

    #9, Around the same time, Treasury contacted Journal reporter Glenn Simpson to offer him the same declassified information. Mr. Simpson has been working the terror finance beat for some time, including asking questions about the operations of Swift, and it is a common practice in Washington for government officials to disclose a story that is going to become public anyway to more than one reporter. Our guess is that Treasury also felt Mr. Simpson would write a straighter story than the Times, which was pushing a violation-of-privacy angle; on our reading of the two June 23 stories, he did.

    …However, at no point did Treasury officials tell us not to publish the information. And while Journal editors knew the Times was about to publish the story, Treasury officials did not tell our editors they had urged the Times not to publish. What Journal editors did know is that they had senior government officials providing news they didn’t mind seeing in print. If this was a “leak,” it was entirely authorized.

    So the Wall Street Journal is really taking the high road on this one. Anything their major rival does is wrong while whatever they do is justified. One reporter researched and dug up the information while the Shrub Administration REVEALED the same information to another reporter in an effort to slant the news. So leaking the information is not as serious as researching the information.

    How on earth can the Times be faulted by the Republicans when the Administration GAVE the same information to a rival?

  12. Mike Voice says:

    7. “I was told very few people knew about this facility,” which provides transaction processing services for over 7,000 financial organizations located in 194 countries worldwide.

    One would hope that at least 7000 people in 194 countries know all about it…

    “I was told…” must mean its true!

    I was told Saddam had WMDs!

    I was told we found them!

    Fair & Balanced ™: I was told he didn’t have sex with that woman… Miss Lewinsky. [grin]

  13. AB CD says:

    >I’m not certain which of your favorite liars or gullible fools you’re >referencing

    Didn’t you read the post? It says from Jake Tapper(I think he runs the Bushisms column for Slate), and he is quoting Tom Kean, one of the 9/11 Commission chairmen.

  14. AB CD says:

    >So leaking the information is not as serious as researching the >information.

    That’s not what it said. Once they found out the Times was running it, they leaked some of the details to get their side out. The WSJ is claiming they wouldn’t have run it if the Times hadn’t, whcih is obviously true since they wouldn’t have even known about it. The LA Times hadn’t made up its mind yet and was still talking to the government.

  15. GregAllen says:

    The Bush adminisration claimed that tracking SWIFT transaction was a critical part in preventing terrorist attacks and they had even caught some guys.

    I have a very hard time believing this…. well, uh.. .. I guess I think they are lying again.

    Of course, they could use SWIFT to track the specific records of a known suspect. But they can do that with a warrant… they don’t need secret data trolling.

    But to catch a terrorist before an attack? I don’t believe it.

    I’m just one guy and I use SWIFT a couple times a month… and I don’t even do much international banking because I usually use credit cards. So think of how much data that is! And they claim they can idenitify future terrorists through data trolling?

    I think they are lying again.

  16. Mr. H. Fusion says:

    #14, the Government LEAKED the information to the Wall Street Journal. Without knowing exactly when or if the NY Times was going to run the story. So how can it be OK to leak the same information, hoping to get a favorable story written? If the information is so secret, then why GIVE it to a newspaper?

    So leaking the information is not as serious as researching the information.

    That’s not what it said.

    No, that is what I said. You posted something suggesting this was very secret. Yet, the Government decided to leak it to the Wall Street Journal. Didn’t you read that part?

    I got my quote from #9’s post. Here, I’ll give it again.
    http://tinyurl.com/ggxoh

    Now where is the link for your posts? Or did you just make them up again?


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