Terrorists exploit informal money-transfer networks, known as “hawala networks,” to circumvent institutionalized banking sstems and covertly move money. The U.S. has managed to unearth and even sanction some of these networks, but terrorists continue to use them to finance their operations, especially in countries with poor-to-nonexistent banking networks and underdeveloped law enforcement and legal systems.
- Hawala networks are informal transaction systems based largely on mutual trust. Working through brokers with no paper trail and informal accounting systems, physical money isn’t moved. Hawala brokers maintain records of payments and settle debts at a later point.
- Terrorist groups including the Taliban, al Qaida and ISIS employ hawala networks to transfer money to their global affiliates and members. These funds are used to plan operations, procure resources and launch attacks.
- The U.S. Treasury Department has sanctioned several known hawala organizations with links to terrorist groups, but U.S. unilateral action is only a first step. Cooperation with countries where these networks are located is essential to achieve tangible results.
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