SUNDAY, JANUARY 18, 2004
Dubai: A financial hub for terror funds
AP
DUBAI: Banks in this financial hub of the Arab world remain a key focus in the worldwide investigation of terror funding despite moves to tighten reporting rules, freeze accounts and control informal money transfers, US and Arab officials said.
The reason: Dubai's history of shady transactions and the difficulty of tracking a matrix of legal and illegal free trade.
About half the $250,000 spent on the Sept 11 attacks was wired to al-Qaeda terrorists in the US from Dubai banks, said officials of the US Treasury and Central Bank of the United Arab Emirates.
Al-Qaeda money in Dubai banks also has been linked to the 1998 US Embassy bombings in Kenya and Tanzania blamed on Osama bin Laden.
In addition, before Saddam Hussein's ouster, this Persian Gulf emirate was a favorite transit point for smugglers sneaking past US-led naval patrols enforcing UN trade sanctions. And it was through Dubai that Russian arms dealers supplied bin Laden's Taliban backers in Afghanistan before the US-led war ousted their Islamic government, officials say.
Sultan bin Nasser al-Suweidi, head of the Central Bank, said that financial officials are working closely with the US government to block terror funding. Central Bank officials have trained with US investigators and other international experts to help them identify money launderers and suspicious transactions, he said.
"We don't want wrongdoers. We totally don't need them," said the US-educated al-Suweidi, who arrives at his office before 8 am and is often seen working until 10 at night in the fortress-like Central Bank headquarters in the Emirates capital of Abu Dhabi.
Banks in Dubai, which were not required to report incoming transfers of less than $55,000 before the Sept 11 attacks, must now tell the Central Bank about any transfer of more $11,000, al-Suweidi said.
One of the Central Bank's greatest challenges, however, has been to regulate an informal system of money transfer known as hawala in which a person takes in money at one end, then instructs an agent in another country to hand a like amount to a beneficiary.
Widely used by migrant workers in Dubai and the rest of the Persian Gulf, hawala operators transfer money without a paper trail, raising suspicions the system could be abused by terrorists wanting to move money around.
In the Emirates, hawala operators have been ordered to register with the Central Bank and to report transfers larger than $550, although al-Suweidi conceded that not all the dozens of operators had come forward.
So far, there's no evidence the Sept 11 plotters used hawala to transfer money, instead operating through conventional banks.
For example, a year before the Sept 11 attacks, the United Arab Emirates reported to US officials a transfer of $69,985 from a Dubai bank to an account in the United States held by Marwan Al-Shehhi and Mohamed Atta, al-Suweidi said. The names meant little then but they turned out be among the suicide hijackers.
US authorities took no action, al-Suweidi said, with little to differentiate that transfer from thousands of others each day, even though it exceeded the US$10,000 ceiling of US reporting requirements.
Al-Suweidi points to that overlooked transaction as an illustration of the difficulties faced by banking officials in the United Arab Emirates.
"I don't want to apportion blame because we must all work together on fighting terrorism," al-Suweidi said. He added, however, that if US investigators were "unable to predict that the transaction was wrong when it was reported, how can they depend on us?"
Cutting off terrorists' funds is a key component of US President George W Bush's anti-terrorism strategy. And Dubai remains a focus of American efforts to stop the financing of terror along with other banking capitals, said a US Treasury official in Washington, speaking on condition of anonymity.
"There are opportunities for people to use those facilities for nefarious ends - terrorist financing, drug trafficking, money-laundering, or general fraud," the official said. "... We certainly do think there still is activity under way in the region and certainly activity that affects Dubai that we are interested in and we are looking at."
The Emirates Central Bank has frozen 18 suspected terrorist accounts with a total value of more than $3 million, and provided information to international organizations in 14 terror financing cases, al-Suweidi said.
The frozen accounts include those of Somali businessman Ahmed Nur Ali Jim'ale, whose al-Barakaat group of companies is under investigation by US authorities for suspected dealings with al-Qaeda.
Other frozen accounts belonged to Al-Shehhi, one of the Sept 11 hijackers from the Emirates, and Mustafa al-Hisawai, an alleged al-Qaida financier who was arrested in Pakistan last March, al-Suweidi said.
The Sept 11 plotters received close to $110,000 in transfers from the Emirates between July and August 2000, and wired back about $19,000 in the days before the attacks, according to a US Treasury official.
The Dubai scrutiny may be having an affect: There's no indication money for post-Sept 11 terrorist attacks have passed through banks in the Emirates, authorities said.
Most of the trade that flows through Dubai - along with millions of dollars and mounds of gold - is legitimate. But Dubai's seamier side lurks beneath its flashy exterior of glass-encased office towers, dreamy hotels, manicured golf courses and fancy restaurants.
Russian, Indian, Somali and Pakistani mafioso compete for a slice of a thriving prostitution racket here, catering to clients ranging from poor Asian construction workers to rich businessmen. Two years ago, authorities busted a scheme by Japanese Yakuza gangsters and the Russian mafia to smuggle stolen Japanese cars into Dubai for sale to buyers in Ireland.
Martin Comley, an official with Britain's National Criminal Intelligence Service, points to a potential crime-terrorism connection. "Crime money can go into buying a nice Ferrari or into buying bombs and explosives," he said on the sidelines of an anti-money laundering conference attended by al-Suweidi and other top bankers in Dubai.
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