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Hawalas under scrutiny after Times Square plot

FBI investigators move between a van and a

FBI investigators move between a van and a home at 39 Waverley Ave., in Watertown, Mass., Thursday. Federal agents arrested two people and are searching locations in Massachusetts and Long Island in connection with the failed Times Square car bomb, federal authorities said. (May 13, 2010) Photo Credit: AP

For centuries, people sending funds to distant places have relied on informal networks of money brokers - an off-the-books system that current and former U.S. Treasury officials said moves billions of dollars around the globe each year.

Known as hawala in South Asian and Muslim communities, the networks are under scrutiny because officials said Times Square bomb suspect Faisal Shahzad may have used them to get cash for his plot.

A number of Long Island Muslims interviewed Friday said they did not use such networks because they were risky or illegal. Some had never heard of hawala. Others said they were more likely to be used by recent immigrants or people without bank accounts.

"There are a lot of people who do it in Queens and Brooklyn," said Nayyar Imam, chair of the Long Island Muslim Alliance. "People who drive cabs, people who work at 7-Eleven and get some extra cash. But I don't think you'll see a lot of people sending money from Long Island via hawala."

Hawala networks have been used to move money between the United States and Iran, Afghanistan, Pakistan, Somalia and the Sudan. Similar networks called chiti or chop shops are used by some Chinese and people from Southeast Asia. Some Hispanic communities also use broker-remitter systems.

People involved in the underground systems often come from traditional societies "and have a mistrust of financial institutions in their countries" that they carry over to United States, said Edward Rodriguez, a former U.S. Treasury official who supervised investigations into illegal money transfers.

The underground brokers can often send money cheaply and quickly to remote areas and may offer better exchange rates than formal channels.

A legitimate remitter must register with the Treasury Department and be licensed by state banking departments. Rodriguez said he knew of three hawalas that had registered before he left the department a year and a half ago.

Hawalas operate mainly on trust and leave little in the way of a paper trail. That makes their services alluring for people who want to evade taxes, launder drug money - or send cash to terrorist organizations.

"If they are doing something illegal or not kosher, of course you have to do it this way," said Jamal Moshin, 55, a senior vice president for a Syosset investments firm. He's been approached before by people offering to help transfer money via hawala, also known as hundi. "I've never used hundi even for my personal things, because it's illegal," Moshin said.

Tahir Quereshi, a trustee at the Islamic Association of Long Island mosque in Selden, said those in his community rarely use hawala anymore. "We are not newcomers," said Quereshi, 45, of Mount Sinai. "They don't send money. All their immediate family is here."

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