-

 

 

 

 

 

 

 

 

 

 

 

 

 

stoneReport

TheCorner

Safeguarding America through 

Financial Investigations 

Volume VII: No. 2 • Summer 2010 

Inside This Issue 

Case Study – Mahmoud Banki . . . 2 

Operation Money Movers . . . . . . . 3 

Bulk Cash Smuggling Center . . . . 4 

Cornerstone is U.S. Immigration 

and Customs Enforcement’s 

(ICE’s) comprehensive investigative initiative for fighting 

financial crime. 

The Cornerstone Report is a quar 

terly bulletin highlighting key 

issues related to ICE Homeland 

Security Investigations (HSI) 

financial, narcotics and special 

operations investigations. 

Toll-Free Tip Line: 

1-866-DHS-2-ICE 

www.ice.gov/cornerstone 

Hawalas 

Hawala is an ancient, international method of transferring money that is based upon the personal 

relationship between the operators, 

rather than the international transmission of actual currency.The word 

“hawala” means “transfer” in Arabic 

and a “hawaladar” is the broker who 

facilitates the funds transfers. 

Investigations have shown that 

proceeds from narcotics trafficking, 

alien smuggling, credit card fraud, 

smuggling, counterfeit merchandise, and funds raised in support of 

terrorist groups have been remitted 

and laundered through the use of 

hawalas.The hawala system can be 

utilized by criminal organizations to 

transfer funds in or out of a country 

with little or no detection by law 

enforcement. Hawalas allow the 

transfer of millions, if not billions 

of dollars tracked only by a secret 

code and disposable scraps of paper. 

Transfers of money take place based 

on communications between members of a network of hawaladars. Hawala works by transferring money 

without actually moving it. 

For example, Salim is a Pakistani living in Washington, D.C. Salim wants 

to send $15,000 to his brother Abdul 

in Pakistan. Salim wants Abdul to get 

the money fast and he doesn’t want 

to pay high bank fees. Salim decides 

to go speak with his friend Malik 

who is a part time hawaladar. Mailik’s 

fees are much less than a bank and 

he can get the money to Abdul much 

faster than a bank. Salim decides to 

give Mailk his $15,000. Mailik calls 

his friend Aasim who is a hawaldar 

in Pakistan. Aasim arranges to get the 

$15,000 to Abdul within one day. 

One may wonder why anyone 

would want to send money using 

a hawala.The primary reason one 

would use a hawala is to save money 

on the transaction fees. A hawaladar 

will generally have a much better 

transfer rate than that of a financial 

institution. A second reason would 

be efficiency. A hawaladar can have 

your money “transferred” usually within a day, where a financial 

institution may take up to a week 

to complete the transaction. Other 

reasons would be convenience, anonymity, and avoiding paper trails. 

U.S. Immigration and Customs 

Enforcement (ICE) Homeland 

Security Investigations (HSI) agents 

have broad investigative authorities under the United States Code, 

permitting them to pursue complex 

banking and financial continued
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 	 	 	 	 	 	

	 	

	 	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	 	

	 	 	 	 	

	 	

stoneReport

TheCorner

Hawalas — Continued 

Page 2 of 4 

Volume VII: No. 2 

Summer 2010 

misconduct cases. 

These authorities enable ICE HSI 

agents to identify, 

disrupt and dismantle the criminal 

enterprises that exploit our Nation’s 

financial infrastructure, eliminating 

their ability to earn, store and move 

their criminally derived funds. 

Case Study—Mahmoud Banki 

In May 2009, U.S. Immigration and 

Customs Enforcement, Homeland 

Security Investigations, New York 

Field Office (HSI/NY) initiated an 

investigation into Mahmoud Banki 

for operating an Unlicensed Money 

Service Business (MSB) and facilitating in the avoidance of Office of 

Foreign Asset Control (OFAC) sanctions on Iran. Initial findings identified a number of bank accounts 

and showed a pattern of suspicious 

financial transactions. Investigators 

discovered a large quantity of wire 

activity and deposits made throughout the country into Banki’s personal accounts which were inconsistent 

with Banki’s listed employment 

as a chemical engineer and management consultant. 

From January 2006 to September 

2009, Banki, a U.S. citizen and 

resident of Manhattan, N.Y., provided money transmitting services 

to residents of Iran by participating 

in the operation of a hawala. Banki 

used the hawala network to receive 

wire transfers totaling approximately 

$3.4 million from companies and 

individuals located in the United 

States and several other countries. 

The transfers into Banki’s account 

were arranged by a relative residing in Iran who was associated with 

hawala operators in Tehran. 

The relative 

would pay 

Tehran-based 

hawala operators millions 

of dollars in 

Iranian currency, and 

the hawala 

operators 

would arrange to have 

corresponding amounts 

of U.S. dollars, which were already 

in the United States or in bank accounts abroad deposited into Banki’s 

personal account by wire transfer 

or check.The owners of the dollars 

deposited into Banki’s account were 

dozens of companies and individuals in the U.S. and abroad who 

wanted to transfer funds to Iran, 

something restricted by the Iran 

Trade Embargo. 

Banki facilitated these illegal transfers by accepting deposits into his 

personal bank accounts and then 

notifying his relative or one of the 

Tehran-based hawala operators, so 

that a corresponding amount of 

Iranian currency, called Tomans or 

Rials, could be disbursed in Iran.The 

hawaladars profited by manipulating 

the dollar/Toman exchange rate to 

their benefit, and Banki benefitted 

by using the millions of dollars he 

received into his NewYork account 

to purchase real estate and securities, 

and to pay hundreds of thousands of 

dollars toward personal expenses. 

On January 7, 2010, HSI/NY agents 

arrested Banki in his NewYork apartment. Agents also filed a Lis Pendens 

on Banki’s $2.4 million Manhattan apartment, executed restraining 

orders on numerous bank accounts 

(Right) Approximately $50,000 dollars was seized at Banki’s residence. 

The currency was discovered in envelopes with Farsi writing describing the 

amount of currency in each envelope. (Left) Lis Pendens served on Banki’s 

$2.4 million dollar condo, which is located inside this renovated church.

containing nearly $1 million and 

executed a search warrant at his residence.The search warrant resulted 

in the seizure four laptop computers, 

four external hard drives, six USB 

thumb drives, seven cellular telephones, boxes of evidentiary documents and approximately $30,000 

in U.S. and foreign currency. 

On June 4, 2010, following a month 

long trial, Banki was found guilty of 

one count of conspiracy to violate 

IEEPA and to operate an Unlicensed 

MSB; one substantive count of violating IEEPA; one substantive count 

of operating an Unlicensed MSB; 

and two counts of making false 

statements to a federal agency. 

Banki was subsequently sentenced 

to 30 months incarceration and ordered to forfeit $3,314,047, which 

represents the sum of money involved in the offenses and the 

proceeds derived there from. n

Red Flag Indicators 

•	Frequent wire transfer activity from U.S. and

international bank accounts.

•	Large check deposits at bank locationsin

different areas of the U.S.

•	Occupation listed for the subject ofsuspicious

financial activitiesthat are not commensurate

with their employment.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 	 	 	 	 	 	 	 	

	 	 	 	 	

	 	 	 	

	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	

	 	 	 	 	 	

	 	 	 	 	

	 	 	 	 	

	 	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	

	 	 	 	 	 	

	 	 	 	 	

	 	 	 	 	 	

	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 		

	 	 	 	 	

	 	 	 	 	 	

	 	 	 	 	 	 	

	 	 	 	 	

	 	 	 	 		

	 	

	 	 	 	 	

	 	 	 	 	 	 		

	 	 	 	

	 	 	 		

	 	

stoneReport

TheCorner

Operation Money Movers 

Page 3 of 4 

Volume VII: No. 2 

Summer 2010 

Money Services 

Businesses 

Section 359(a) of 

the USA PATRIOT Act amended 

the definition of an MSB to include 

any person who engages as a business in an informal money transfer 

system or any network of people 

who engage as a business in 

facilitating the transfer of 

money domestically or internationally outside of the 

conventional financial institutions system. By combining its money laundering 

and immigration expertise, ICE HSI is uniquely 

positioned to effectively 

combat the threat posed 

by unlicensed MSBs. 

MSBs encompass a variety of financial services, but predominantly 

involve the movement 

of funds on behalf of 

clientele generally 

comprised of foreign 

nationals who have not 

established a traditional account relationship with financial institutions. 

This system offers relative anonymity to the clientele, adding levels of 

insulation from detection by law enforcement.This anonymous feature 

provided by MSBs can be exploited 

on a number of levels by terrorist 

and other criminal organizations that 

conduct criminal activities investigated by ICE HSI.These criminal 

activities include the laundering of 

illicit proceeds, the movement of 

illicit proceeds into and out of the 

U.S., payroll schemes to disguise an 

illegal workforce, document fraud 

and terrorist financing. 

MSBs typically provide a financial 

service to the “un-banked” segment 

of the U.S. population, catering to 

illegal immigrants, ethnic populations, students and transients. HSI 

has learned that many MSBs are 

owned and operated by foreign nationals who facilitate money transfers on behalf of citizens from their 

region or country of origin. 

While many 

MSBs provide 

a legitimate 

service to their 

customers, 

those acting illegally 

evade federal 

reporting and 

record-keeping 

requirements. In 

an effort to address this vulnerability and force 

more transparency 

within the MSB 

industry, ICE HSI is 

aggressively investigating illegal MSBs 

and hawalas and has 

implemented an MSB/Informal 

Value Transfer System (IVTS) initiative built upon a three-tiered 

strategy of identification, compliance, and prosecution.The goal is to 

identify as many unlicensed MSBs as 

possible, investigate and prosecute 

any MSB that is linked to an ongoing ICE criminal investigation or 

meets federal prosecution guidelines 

for violation of 18 USC 1960, and 

work with the IRS and the Financial Crimes Enforcement Network 

(FinCEN) to educate and bring into 

compliance those unlicensed MSBs 

not within prosecutorial guidelines 

of the initiative. 

Operation Money Movers was officially re-launched in November 

2009. As a result, Operation Money 

Movers has resulted in more ICEled arrests and indictments in the 

first five months of 2010 than all of 

2009. ICE HSI has a unique ability to handle cross-border financial 

crimes, unparalleled anti-money 

laundering expertise, and a commitment to working with the private 

sector and our law enforcement 

partners to initiate and investigate 

financial crimes. n

Red Flag Indicators 

If you are operating as an MSB,some examples

of“red flag”indicators may include:

•	Customer conductstransaction utilizing

products orservicesthat inherently favor

a degree of anonymity or can readily cross

international borders,such as online money

transfers,stored value cards, money orders,

or money transfers by mobile phone.

•	Customer who travels unexplained distances

to locationsto conduct transactions with no

apparent business or lawful purpose.

•	Customersendsfrequent wire transfersto

foreign countries but does notseem to have

any connection to the destination countries.

•	Customer conductstransactionsso that they

fall beneath the identification ($2,000), Suspicious Activity Report ($5,000), or Currency

Transaction Report ($10,000) thresholds.

If you are a bank or financial institution,some

examples of“red flag”indicators may include:

•Business accounts used to receive or disburse

large sums of money butshow virtually no

normal businessrelated activities,such as

the payment of payrolls, invoices, etc.

•	Frequent deposits of third party checks

and money ordersinto business or personal

accounts.

•	Frequent international wire transfersfrom

bank accounts which appear inconsistent

with stated business.

•	Frequent deposits by multiple individuals

into a single bank account, followed by

international wire transfers and/or international withdrawalsthrough automated

teller machines(ATMs).
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stoneReport

TheCorner

Bulk Cash Smuggling Center (BCSC) 

O

Page 4 of 4 

Volume VII: No. 2 

Summer 2010 

n August 11, 

2009, ICE 

officially launched 

the national Bulk 

Cash Smuggling 

Center (BCSC) colocated at the Law Enforcement Support Center (LESC) in Williston,Vt. 

The BCSC is the latest tool designed 

to combat the very lifeline that fuels 

criminal enterprises: illicit proceeds. 

Federal, state and local law enforcement agencies, as well as worldwide 

partners, now have a single, central source for information that is 

mission-dedicated to support interdiction and disruption efforts aimed 

at the illicit movement of proceeds 

generated through criminal activity. 

ICE HSI combats Bulk Cash Smuggling (BCS) by targeting transnational criminal organizations seeking 

to repatriate illicit proceeds.The full 

array of BCS methods are targeted 

including commercial and private 

aircraft and vehicles, maritime vessels and pedestrians crossing U.S. 

borders with Mexico and Canada. 

The BCSC is a 24/7 intelligence 

and operations facility providing 

real-time tactical intelligence to 

federal, state and local officers involved in enforcement and interdiction of BCS and the transportation 

of illicit funds.This is accomplished 

through the examination and exploitation of evidence obtained at 

our borders, during traffic interdictions, and through other law enforcement operations. 

The BCSC supports HSI special agents 

responding to domestic and international currency seizures by providing 

an analytical and coordination center 

to exploit all investigative leads at the 

onset of a seizure. Financial investigations, specifically BCS, remain a high 

priority for ICE and the Department 

of Homeland Security. 

Bulk Currency Smuggling 

Case Examples 

In 2008, Resident Agent in Charge 

(RAC) Gulfport agents responded to 

assist the Laurel Police Department 

with a vehicle stop on Interstate 59 

in Laurel, Miss.The two occupants 

granted consent to search the vehicle. 

The search revealed $109,650 in U.S. 

currency in a purse in the back seat. 

RAC Gulfport agents interviewed the 

subjects who admitted to being paid 

to transport the money from Atlanta, 

Ga. to Mexico.The subjects were subsequently indicted in the Southern 

District of Miss. for The Hobbs Act/ 

Travel Act; InterstateTravel orTransportation in Aid of Racketeering, (18 

USC 1952) and Bulk Cash Smuggling 

(31 USC 5332).The subjects were 

sentenced to 15 months incarceration. One subject remains a fugitive. 

In May 2010, New Mexico state 

police conducted a traffic stop on a 

vehicle for a speeding infraction. A 

consensual search of the vehicle by 

New Mexico Department of Public 

Safety revealed a total of $9,890 

within the door frame and rocker 

panel of the driver’s side door. RAC 

Albuquerque agents were notified, responded and subsequently 

seized the currency.The subject was 

charged with Title 18 USC 1960, 

The vehicle door frame where U.S. currency 

was discovered.

Prohibition of an Unlicensed Money Transmitting Business. Although 

a small amount of U.S. currency was 

recovered, this is a great example 

of the partnerships ICE has formed 

with our state and local counterparts, and the U.S. Attorney’s Office. 

Bank Secrecy Act 

The Bank Secrecy Act of 1970 (or 

BSA, or otherwise known as the 

Currency and Foreign Transactions 

Reporting Act) requires U.S.A. financial institutions to assist U.S. government agencies to detect and prevent 

money laundering. Specifically, the 

act requires financial institutions to 

keep records of cash purchases of 

negotiable instruments, file reports 

of cash transactions exceeding 

$10,000 (daily aggregate amount), 

and to report suspicious activity that 

might signify money laundering, tax 

evasion, or other criminal activities. 

ICE utilizes data from BSA reports 

such as CurrencyTransaction Reports 

(CTRs) and Currency and Monetary 

Instrument Reports (CMIRs) as a 

critical tool to support its money 

laundering, bulk cash smuggling 

and other financial investigations. 

BSA data is used not only to initiate 

investigations but as support to ongoing investigations. BSA data aids 

in the identification of suspects, accounts, and criminal activities. n

The vehicle door frame where U.S. currency 

was discovered.