*Already last year, MENA Research Center reported how money laundering is carried out by Islamists with the “Hawala” system. Now it has again been observed how terrorists from the Islamist environment make their financial flows untraceable through Spain.***
In principle, the “Hawala” referral system is not criminal. Rather, it is based on a centuries-old tradition of transferring funds and goods in the Islamic world, often for charitable reasons. However, security authorities in Europe have noticed in recent years that this means of payment is increasingly being used by Islamist terrorists and extremists to illegally transfer funds from A to B, or to provide Islamist communities with funds without the banks noticing, who would have to report such transfers to the financial regulator. Hawala means “bill of exchange” or “money order”. It’s an old Muslim money transfer system based solely on trust, sort of like Western Union. However, the flow of money bypasses any state control.
In Spain, investigators were able to capture the following scene on video: Aisha S. enters a small, nondescript store in the Spanish capital, Madrid. At the counter she hands over an envelope with 5,000 euros in cash plus a numerical code. A little later, a man knocks on the door of a shop in the desert of Western Sahara, and the dealer opens it for him. The customer tells him a numerical code and is then handed an envelope containing 700,000 dinars in cash.
An amount deposited in Europe is paid out in West Africa within hours – without the cash having actually moved. Without the origin of the money, the name of the sender or that of the recipient being registered. The customer and the dealer in Madrid simply sent their counterpart in Western Sahara the numerical code, the password for the “transfer”. The transaction is completely anonymous. The intermediaries collect a few percent commission for this.
This is roughly how the business model of A., a North African living in Spain, works. Shopkeepers in Spain and Western Sahara are his employees and A. is the CEO of a financial system in the dark that connects Europe to Africa and the Middle East.
Hawala is Arabic for bill of exchange or money order: an ancient Muslim remittance system based solely on trust. It’s a good way for migrants to quickly send money to their relatives back home, which sometimes lacks a functioning banking system. On the other hand, it’s every financial investigator’s nightmare. The anonymity of this transfer system makes it the preferred instrument for criminals and extremists who use it to launder drug money, secretly finance extremist mosques in Europe or use it to finance attacks.
The European Central Bank estimates that around 200 billion US dollars flow around the world through these shadow banks every year. In Germany, this payment method is punishable since 2018, for the money transfers the Muslim money brokers actually need a license as a payment service provider from the financial regulator Bafin. Police officers across Europe are now being trained in Hawala in order to better understand the networks.
“Europe, with its diverse migrant communities who know Hawala from their homeland, is a linchpin of these networks,” says a former department head of a Western intelligence agency specializing in terrorist financing. In a year and a half of investigative work, he and a research team tracked down A.’s hawala network in Spain.
Those findings trigger an alarm among terrorism experts. Because the region around Western Sahara is interspersed with offshoots from al-Qaeda to the Islamic State. One key player in particular is expanding its influence in West Africa and beyond: Iran, the world’s largest state sponsor of terrorist groups. The central strategy of the Islamic dictatorship is to exert cultural, political and military influence through Shiite communities abroad. Unstable and poor regions are ideally suited to winning over local militias for the supposed fight against the “colonialist West”. There are more than enough of them in Africa. And Iran is expanding its influence in West Africa.
Morocco has accused the Iranian government of supporting militias in Western Sahara that are demanding independence for the region and fighting Moroccan security forces. Polisario members are said to have been supplied with surface-to-air missiles and drones from Tehran. Hezbollah, which is allied with Iran, has set up camps in Algeria where they train Polisario fighters. The Polisario Front has been fighting for Western Sahara’s independence since the mid-1970s. In 2020, then-US President Donald Trump recognized Morocco’s claim to Western Sahara in exchange for a Moroccan peace deal with Israel, Iran’s nemesis. This has worsened Morocco’s reputation in the Arab world and has made the region the focus of Iran’s proxy strategy.
The Lebanon-based Hezbollah faces the problem that the banking sector has partially collapsed in the Lebanese economic crisis and its own financial institutions have also been subject to sanctions. They also want to cover up their terrorist financing in Africa as much as possible. That is why they resort to hawala networks. Security circles assume that terrorist attacks against Western citizens on African soil will increase. However, training and supporting local militias costs a lot of money. Iran and Hezbollah have no direct access to the international financial system due to Western sanctions.
It has not yet been proven that the hawala network in Spain is used by Hezbollah. However, the initial investigations suggest so. If you want to transfer money to Western Sahara, you can hardly ignore A. and his “Hawaladars”. And on his own Facebook page he makes it clear that he maintains a positive attitude towards Iran, Hezbollah and the Polisario fighters.
A. repeatedly expressed his sympathy for Iran. He “stands by his allies through the darkest of times and is in a stranglehold,” he writes. What is meant is probably the western sanctions against the regime in Tehran – which can be circumvented by hawala banking.
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