FinCEN Holds Law Enforcement Seminar on Informal Value Transfer Systems

A seminar to discuss issues surrounding informal value transfer systems, to include hawala, washeld yesterday at the Financial Crimes Enforcement Network (FinCEN). The seminar wasattended by over 50 representatives from the law enforcement community.Hawala is a method of monetary value transmission that is used in some parts of the world toconduct remittances, most often by individuals who seek to legitimately send money to familymembers in their home country. It has also been noted that hawala, and other such systems, arepossibly being used as conduits for terrorist financing and other illegal activity.Yesterday’s seminar was held to gather together government entities involved in the study ofnon-traditional banking systems to share insights and maximize efficiency of efforts. Topicsdiscussed included perceived vulnerabilities of informal value transfer systems, efforts tocoordinate and share information and strategies within the government, and the assessment of theneed for regulation.The conference was also designed to facilitate and focus an information exchange to support thedevelopment of the report to Congress that is required under section 359 of the USA Patriot Act.The report will assess the risks posed by systems such as hawala in terrorist financing; thechallenges to law enforcement raised by such systems; regulatory issues raised by the existenceof such systems; and possible regulatory initiatives that could be put in place to reduce oreliminate terrorist financing risks associated with such systems.“Our interest is not in stifling a system that is used for legitimate commerce,” said James F.Sloan, Director of FinCEN. “Through facilitating the sharing of information with ourcounterparts in the law enforcement community, we aim to develop solutions that will helpprevent the misuse and exploitation of these systems by terrorists and other criminals.”The conference concluded with a discussion of contemplated further action, including continuedinteraction among law enforcement and financial regulators; extending coordination to theinternational level; and giving consideration to a domestic outreach program with informal valuetransfer service providers concerning their regulatory responsibilities.