Three men, including a father-son duo from NJ, allegedly operated an unlicensed money transfer business, funneling over $65 million to Middle Eastern countries. The accused utilized the intricate network system called "hawala," an alternative funds transfer system that originated in South Asia during the 8th century. Unlike traditional bank wire transfers, hawala transactions are facilitated through a network of "hawaladars" or dealers who maintain informal journals to record transactions. These dealers can settle debts in various forms, including cash, property, or services.
Mohanad Al-Zubaidi, 36, and his father, Abdulkader Noori Hamza, 62, of Piscataway, and Shaker Saleh Mohammed Hauter, 51, of the Bronx, face charges for operating an unlicensed money transmitting business. Al-Zubaidi also faces bank fraud charges which carries a maximum penalty of 30 years. They earned 1-6% commission per transaction.
Federal authorities are targeting "hawala" networks due to their association with money laundering and the funding of criminal organizations. The accused individuals are being represented by federal public defenders.
The hawala system, while facing scrutiny in this legal case, serves as a vital financial lifeline for many. It is widely used today, especially within the Islamic community. One of its advantages is its facilitation of money flow between countries, making it particularly valuable for migrant workers sending remittances to relatives in regions with limited access to formal banking. The informal nature of hawala transactions, however, has also been exploited for illicit activities, prompting federal authorities to disrupt these networks to combat money laundering and criminal funding.