By Paul Weinberg
TORONTO, Dec 3 2001 (IPS)

The ability of immigrants here to support their families back home is emerging as a casualty of the U.S.-led “war against terrorism”, experts say.

At issue is Canada’s decision to join the United States in freezing the assets of Barakaat North America Inc., identified by U.S. authorities as having links to Osama bin Laden and the al- Qaeda network.

The ten-year-old al-Barakaat, based in Dubai, is the largest of the ‘hawalas’, or largely unregulated money transfer networks, among Somalis living outside their country. It was set up to assist millions of starving and destitute people back home in Somalia following the collapse of all banking, government, and postal institutions there.

Its assets frozen, the hawala (taken from the Hindi word for trust), is unable to fulfil its purpose. Furthermore, it now poses a risk to anyone who has used it to send money home as authorities scrutinise its records.

“Innocent people may get scooped up,” says Sharryn Aiken, an Osgoode Hall Law School professor and member of York University’s Centre for Refugee Studies. “Next on the list might be grassroots community associations that provide English classes and day care.”

Yet, she adds, “I haven’t seen any connection between Somalis and al-Qaeda.”

Somalia and developing countries throughout Africa, Asia, and the Middle East that have experienced “transnational Diasporas” rely heavily on remittances sent through hawalas, says Aiken.

“We are seeing a major distribution of wealth to the South. Remittances provide more direct benefits than foreign aid,” she notes.

Filipino women working as nannies in Canada, for instance, generally prefer using a local remittance shop within their community to send earnings back to their families in the Philippines, says Flor Dandal, a coordinator of the Kababayan Community Centre in Toronto. “Their relatives may live in a remote area and not have a bank account.”

Typically, the system used is much like that found at Western Union and other mainstream commercial money-transfer businesses in the United States and around the world.

A payment is made to a remittance agent who provides a receipt and then faxes a message to the home country requesting that the network deliver the equivalent amount of money within 24 hours to the relative’s home. With banks, by contrast, a money transfer overseas can take weeks.

The customer is generally charged somewhere between three percent and five percent for the transaction, for which an identification code is used to maintain confidentiality.

Most hawalas are regarded as legitimate and honest businesses – although Dandal reports that one remittance shop recently went bankrupt in the Toronto Filipino community and its customers lost money in the process.

Hawalas are a “sexy” subject even though intelligence services have long understood that Swiss trusts are a more important conduit for the laundering of money by al-Qaeda and other fundamentalist groups, says Chris Mathers, a former Royal Canadian Mounted Police (RCMP) official who now heads KPMG Corporate Intelligence Inc.

Mathers says hawalas handle small money transfers in the range of 10-20 dollars per transaction but are less useful for large amounts of cash. “It is very hard to move laundered money for drug trafficking through someone’s pants,” he says.

On the other hand, Colombian drug gangs have adapted the hawala form of money transfer for their own illegal transfers of money, says Stephen Schneider, a research associate with the Nathanson Centre for the Study of Organised Crime and Corruption at Osgoode Hall Law School. “It is called the black market peso exchange,” he says.

Very few countries have brought in any regulations regarding the activity of hawalas, says Schneider, who is writing a report on money laundering for the RCMP. Regarding the size and value of hawala-style money transfers, “there is very little data. No studies have been conducted,” he adds.

The closure of Barakaat’s offices has left the Somali community in Canada scrambling to find an alternative money transfer system during the holy month of Ramadan, and Canadian officials have shown no understanding of problem this poses for Somali families and communities, says Mohamed Tabit, programme manager for the Midaynta (Unity) Association of Somali Service Agencies in Toronto.

“They ask us, ‘Why don’t you just send a cheque to Somalia or wire the money?”‘ says Tabit. “But there is no post office.”

U.S. President George W. Bush has deemed Barakaat a terrorist organisation but among Somalis, he adds, “Barakaat is a recognised business like Bell Canada,” Canada’s major telecommunications company.

Rather than shut down Barakaat, Tabit asserts that U.S. and Canadian authorities should have obtained access to the hawala’s computer system and tracked down any questionable transactions.

The Somali community leader concedes that Barakaat may, at some level, have been infiltrated by negative elements. But he says it is a large organisation that should not have been tarred with a broad brush.

Members of the public seeking further explanation regarding Barakaat can contact the Canadian Department of Foreign Affairs, says a spokesperson in Ottawa.

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