This paper aims to illustrate the feasibility of circumventing the Swiss financial sector’s compliance mechanisms by financing terrorism through hawala networks.
Based upon a qualitative content analysis of 15 informal interviews with providers of illegal financial services and 15 formal interviews with compliance experts and law enforcement officers, the general suitability of hawala networks for the financing of terrorism was assessed and concrete methods of doing so were better understood. In addition, it is shown how terrorists can limit their risks in using the services of hawala bankers.
Hawala banking in Switzerland is extraordinarily useful for the financing of terrorism.
The findings are based on semi-standardized interviews limited to the perspectives of the 30 interviewees.
Law enforcement and intelligence agencies must be provided with additional tools, such as a broader scope of allowable activity for undercover police officers and the possibility of secretly conducting remote online searches of electronic devices. While this article focuses on Switzerland, its findings could be applied on a global level.
While the existing literature focuses on understanding the channels terrorists can use to finance their activities and on developing prevention mechanisms, this paper describes exactly how terrorism can be financed through hawala networks in Switzerland.
