WRITTEN QUESTION E-3385/01

by Ioannis Marínos (PPE-DE) to the Commission

(7 December 2001)

Subject: 'Jihad levy'

According to reports in the European press, a system of collecting a jihad levy allied to an illicit banking system is operating among illegal, semi-legal and legal Muslim immigrants in Europe (and especially in Germany). This banking system is operating in western European countries and enables illegal immigrants (who cannot legally conduct business with the banks) to send money to their countries of origin.

This system is known as Hawala and operates through agents in the immigrants' country of residence who undertake to send the money, for a commission, to the countries of origin of legal and illegal immigrants. During this transaction, and with the full consent of those involved, a jihad levy is withheld which is intended as financial support for the Taliban.

Is the Commission aware of this illicit banking system and what will it do to put an end to such financial support for terrorism in compliance with the decisions of the Council, Parliament and the UN?

Answer given by Mr Patten on behalf of the Commission

(28 January 2002)

The Commission has taken note of allegations that the Hawala system of money transfers has played a major role in the financing of activities of certain terrorist groups. It is aware that there are often no written records of transactions in this system, which is based on trust, and that it is therefore difficult to verify or substantiate the allegations which have been made.

In general terms, transfers of money between the Community and third countries benefit from the EC Treaty provisions on the free movements of capital and payments. However, the transfers referred to by the Honourable Member might fall foul of national banking laws (for example in Germany, where a banking licence is required for

money transmission business), Community legislation to combat money laundering (depending on the origin of the funds) or Community Regulations imposing financial sanctions (depending on the recipient or destination). The mere fact that these money transfer facilities would also be offered to illegal immigrants does not of itself render them illegal.

In view of the allegations concerning financing of terrorist activities, the Financial Action Task Force on Money Laundering (FATF/GAFI) recommended, on 30 October 2001, that, among other actions, those that provide a service for the transmission of money or value, including transmission through an informal money or value transfer system or network, should be licensed or registered, and that they should be subject to the laws and regulations aimed at preventing money laundering that apply to financial institutions. The FATF also agreed that persons or legal entities that carry out this service illegally should be subject to administrative, civil or criminal sanctions (Special Recommendation No VI).

If, as alleged, a specific sum is levied which is intended as financial support for the Taliban, the transfer of such financial support to the Taliban is likely to be in breach of Council Regulation (EC) No 467/2001 of 6 March 2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan(1). However, the Commission does not have any evidence at its disposal that would show that one or more persons or entities in the Community or under its jurisdiction have engaged in a transfer of financial resources in breach of Council Regulation (EC) No 467/2001.

The Commission will keep the matter of financial transfers by means of the Hawala system under review and propose amendments to relevant Community instruments, where appropriate.

(1) OJ L 67, 9.3.2001.