Schenectady man accused of illegal money transfers to Sudan Friday, January 18, 2008 By Steven Cook (Contact) Gazette Reporter
SCHENECTADY — A Schenectady man has been arrested on money transfer charges, accused of sending more than $1.2 million to Sudan over a 21-month period. State police, who announced the arrest today, investigated the case with the Albany Joint Terrorism Task Force, the FBI and various state agencies. Osman M. Osman, 52, of 32 Elm St., was arrested Dec. 5. He remains jailed in lieu of $100,000 bail. According to police: Osman acted as an unlicensed money transmitter, also known as a “hawala.” As a hawala, Osman used a series of individuals and businesses in an attempt to move money in secret to Sudan in order to avoid regulatory scrutiny. Most of the money was sent by individuals within the Sudanese community in the Capital Region to unidentified bank accounts and individuals in Sudan. In the hawala system’s most basic form, money is transferred by means of a network of hawala brokers. A customer approaches a hawala broker in one city and presents a sum of money to be transferred to a recipient in another city, usually abroad. The hawala broker calls, faxes or e-mails another hawala broker in the recipient’s city, gives instructions for forwarding the funds (minus a percentage fee for the transfer), and promises to settle the debt at a later date. Investigators target these illegal operations because criminal and terrorist organizations use hawalas as a means to move illicit funds to anywhere in the world, undetected. The 3-year-old investigation continues, police said, but at this time, there is no known connection to terrorism in Osman’s case.
By ROBERT GAVIN, Staff writer Friday, January 18, 2008 ALBANY - A three-year state investigation has snagged a Schenectady man accused of illegally funneling more than $1.2 million to Sudanese banks over a two-year period.
Osman Osman, 52, of 32 Elm St., faces several years in prison on charges he was a middleman who used a series of associates and businesses to send the dollars to the African nation to avoid regulatory scrutiny. Investigators, who obtained a search warrant for Osman's home, identified him as a "hawala," a term for brokers who illegally transmit money overseas. Authorities said hawala middlemen are typically approached in one city, given money and asked to send to another city, usually in another country. The hawala then contacts a counterpart in that city, instructs that broker, minus fees for the transfer, and promises to settle the date later, they said. Investigators said they target such networks because they can be linked to terrorist organizations to move money. Osman's case had no such known link, State Police said. Osman has been indicted on enterprise corruption charges and unlicensed money transmission. He and his wife, Hanan Saeed, were both also charged with filing a false instrument. He remains in the Albany County jail in lieu of $100,000 bail.
SCHENECTADY Police: Money sent illegally Man accused of transmitting $1.2M to Sudan BY STEVEN COOK Gazette Reporter
A city man is facing multiple felonies, accused of helping move $1.2 million illegally to Sudan, authorities said Friday. Osman Osman, 52, is accused of transmitting the money secretly outside the banking system to avoid scrutiny. His wife, Hanan Saeed, was also charged, accused of knowing about her husband’s transactions and signing for some, state police said. State police identified Osman as an unlicensed money transmitter, which is also called a hawala. He allegedly moved the cash over a 21-month period. “He was known in the community as a mover of money overseas,” said Chuck Sullivan, a senior investigator with the state police’s Special Investigations Unit. “They would drop money off to him, and he would transfer it for them to Sudan.” Money transactions to Sudan are particularly regulated because of U.S. sanctions against the wartorn country, officials said. Hawalas are defined as a system of sending money, primarily in Islamic societies, according to Dictionary.com. Money is sent through a third party. They are often based on trust, with no record of the transaction being made. The state police described hawala systems in general as a network of brokers who are targeted because they can often help criminal and terrorist organizations move money undetected. State police, however, said there is no evidence of a terrorism link in Osman’s case. Osman was arraigned and ordered held at the Albany County Jail on $100,000 bail. Osman faces four counts of unlicensed money transmission and three counts of offering a false instrument for fi ling, all felonies. Saeed was indicted on three counts of offering a false instrument for filing. She was released on her own recognizance. Saeed’s attorney did not return a call for comment Friday. Osman’s attorney, Andrew Safranko, said his client did nothing illegal. He helped send money to people’s families there, but he did so legally through a licensed company in Minnesota, Safranko said. “He is adamant that he didn’t do anything illegal,” Safranko said. Osman came to the United States 11 to 12 years ago from Sudan in eastern Africa. He worked as a driver for a pharmaceutical company, Safranko said. He is a permanent resident, not a U.S. citizen. Safranko was unsure what effect the arrest would have on that status. The current charges are also not the first money-related counts filed against Osman. Osman faces two counts of misdemeanor bad check charges. He is accused of writing two bad $5,000 checks to a man in Connecticut in July 2006, Schenectady City Court records show. Those charges remain pending. Osman’s initial arrest on the current charges happened Dec. 5, officials said. He was indicted Jan. 2. Officials delayed the announcement to coordinate among agencies. The state police Special Investigations Unit worked on the case in conjunction with the Albany Joint Terrorism Task Force, the FBI, the state Office of Tax Enforcement Criminal Investigations Division and the state Attorney General’s Organized Crime Task Force.
When compared to a 'traditional' means of remitting money, such as obtaining a check or ordering a wire transfer, hawala seems cumbersome and risky. In this section, we will examine the motivations for using the hawala system.
The primary reason is cost effectiveness. As was shown in this example, Abdul was able to obtain nearly Rs 30,000 more (averaging exchange rates, this is about US$ 880), a significant savings by using the hawala system. Some of the reasons for this cost effectiveness, namely low overhead, exchange rate speculation and integration with existing business activities, will be discussed in the next section of this paper.
The second reason is efficiency. A hawala remittance takes place in, at most, one or two days. This can be contrasted with the week or so required for an international wire transfer involving at least one correspondent bank (as well as delays due to holidays, weekends and time differences) or about the same amount of time required to send a bank draft from North America to South Asia via a courier service (surface mail is not a reliable option where the contents are valuable, and it can also take several weeks to arrive).
The third reason is reliability. Complex international transactions, which might involve the client's local bank, its correspondent bank, the main office of a foreign bank and a branch office of the recipient's foreign bank, have the potential to be problematic. In at least once instance reported to the authors, money for a large commercial transaction (money being sent from the United States to South Asia) was lost 'in transit' for several weeks while trying to conduct such a transaction. When the bank located the money, it was returned to the customer. He enlisted the services of a local hawaladar, who was able to complete the transaction in less than a day.
The fourth reason is the lack of bureaucracy. Abdul is living and working in the United States on an expired student visa; he does not have a social security number (and since he deals almost exclusively in cash, he really does not need one). It would be difficult, if not impossible for him to open a bank account as he does not have adequate identification. In addition, he does not completely trust banks and would prefer not to use them if at all possible. Iqbal and Yasmeen do not operate in a 'bureaucratic' framework, making them a preferable alternative to the bank.
The fifth reason is the lack of a paper trail. Even though Abdul earned the money that he sent to Mohammad legally, he would prefer to remain anonymous (this is a much more important consideration in illicit hawala transactions). Since it is rare for hawaladars to keep records of individual transactions, it is unlikely that Abdul's remittance will ever be identified as part of the business dealings between Yasmeen, Ghulam and their associates.
The sixth reason is tax evasion. In South Asia, the 'black' or parallel economy is 30%-50% of the 'white' or documented economy. Money remitted through official channels might invite scrutiny from tax authorities - hawala provides a scrutiny-free remittance channel.
In brief, hawala 'works' - or competes effectively with other remittance mechanisms - because of its cost effectiveness. A secondary consideration is that hawala is often related or even integral to existing business dealings.
One reason for hawala's cost effectiveness is low overhead. A business like Yasmeen's 'Music Bazaar and Travel Services Agency' operates out of a rented storefront as opposed to a bank building (which has expensive vaults and alarm systems), and may even share space with another business (e.g. a sari or gold shop), further reducing rental expenses. Yasmeen's employees are paid less than bank officers, and they probably do not have insurance or access to a retirement plan. Some hawaladars operate with even less, using a table in a tea shop as an office and having little more than a cellular phone and notebook as overhead expenses.
The second reason is exchange rate speculation. In India, for example, the Foreign Exchange Regulation Act (FERA), 8(2) ( states that '(e)xcept with the previous general or special percussion of the Reserve Bank, no person, whether an authorised dealer or a moneychanger or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for time being authorised by the Reserve Bank'. Since hawala dealers do not, in many if not most cases comply with such regulations, their transactions may be illegal (a more detailed discussion of the legality of hawala follows).
Depending on one's perspective (and possibly jurisdiction), hawaladars are either engaging in foreign exchange speculation or black market currency dealing. In any case, they exploit naturally occurring fluctuations in the demand for different currencies. This enables them to turn a profit from hawala transactions (which, in addition to being remittances, almost always have a foreign exchange component), and they are also able to offer their customers rates that are better than those offered by banks (most banks will only transact at authorized rates of exchange).
The rates cited in this paper (35 Rs/$ for Iqbal, 37 Rs/$ for Yasmeen and the official rate of 31 Rs/$ as cited by the bank) reflect a difference of 12-19% over the official rate. These may actually be a little high. A U.S. hawaladar (9) involved in the laundering of drug proceeds as well as legitimate remittances told one of the authors of this paper that he could still make a profit on an exchange rate margin as small as 2%, making him much more competitive than a bank.
In addition, since many hawaladars are also involved in businesses where money transfers are necessary, providing remittance services fits well into these businesses' existing activities. Monies from remittances and business transfers are processed through the same bank accounts, and few, if any, additional operational costs are incurred by a business that offers hawala remittance services.
Finally, an important component of hawala is trust. Hawala dealers are almost always honest in their dealings with customers and fellow hawaladars. Breaches of trust are extremely rare. It is worth noting that one of the meanings attached to the word hawala is 'trust'!
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
ALBANY Man who transmitted funds to Sudan sentenced to prison BY JILL BRYCE Gazette Reporter Reach Gazette reporter Jill Bryce at 432-4391 or jbryce@dailygazette.net.
A Schenectady man accused of helping move $1.2 million illegally to Sudan was sentenced Thursday to 1 1 /3 to four years in prison. Osman Osman, 52, who was accused of transmitting the money secretly outside the banking system to avoid scrutiny, had faced up to 28 years in prison amid allegations he used businesses to transfer the currency. Osman’s wife, Hanan Saeed, was also charged with three counts of offering a false instrument for fi ling. She was not sentenced to any jail time Thursday and was given probation. State police identified Osman as an “hawala,” an unlicensed money transmitter, and say that he moved the cash over a 21-month period. He was charged in December with seven felonies in connection with the bank transactions, including four counts of unlicensed money transmission and three counts of offering a false instrument for filing, all felonies. Chuck Sullivan, a senior investigator with the state police’s Special Investigations Unit, said when Osman was indicted he was known in the community as a mover of money overseas. People would drop off money to him and he would transfer it for them to Sudan, according to Sullivan. Money transactions to Sudan are strictly regulated because of U.S. sanctions against the country, authorities said. The state police described hawala systems as a network of brokers who are targeted because they can often help criminal and terrorist organizations move money undetected. State police said there was no evidence of a terrorism link in Osman’s case. Osman came to the United States 11 or 12 years ago from Sudan. He worked as a driver for a pharmaceutical company and is a permanent resident, not a U.S. citizen, his attorney Andrew Safranko has said. Safranko could not be reached on Thursday to comment on the sentencing.
If this man is in trouble for sending money to another country, shouldn't we be able to throw everyone in Congress in jail for sending money overseas? I mean, tell me where in our Constitution it says that they should have the power to give foreign nations money.
If this man is in trouble for sending money to another country, shouldn't we be able to throw everyone in Congress in jail for sending money overseas? I mean, tell me where in our Constitution it says that they should have the power to give foreign nations money.
Aint that a fact BIGK-----that just deserved a bigK punctuation..........
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
Logged
states that '(e)xcept with the previous general or special percussion of the Reserve Bank, no person, whether an authorised dealer or a moneychanger or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for time being authorised by the Reserve Bank'. Since hawala dealers do not, in many if not most cases comply with such regulations, their transactions may be illegal (a more detailed discussion of the legality of hawala follows).
