Hawala channels used to fund sea piracy ransom ops: FATF

From Neelabh Srivastava
New Delhi, Aug 7 (PTI) The 'hawala' route of illegal
money transactions is being used to pay ransom for rescuing
ship crews from pirates, including those from Somalia, the top
global body setting standards for combating terror financing
and money laundering has said in its latest report.
In its latest report - Organised Maritime Piracy and
Related Kidnapping for Ransom, Financial Action Task Force
(FATF) - has also found that almost Rs 36 crore has been paid
as ransom money to Somali pirates since 2006.
The report warns that countries and regimes have to wake
up to strengthen measures of anti-money laundering and
counter-terror financing while "identifying and pursuing"
piracy for ransom cases.
India has been at the forefront of anti-piracy operations
in its territorial waters and beyond, especially in the Indian
Ocean region.
"Airdrops appeared to be the preferred means of
delivering ransoms but there was also evidence that ransom
payments were transferred through banks, intermediaries, and
alternative remittance systems such as hawalas," the
first-ever report on identifying and tracing money flows
stemming from piracy, said.
A senior financial intelligence official from an elite
department under the Indian Finance Ministry, however, said
they are still to detect any instance of 'hawala' funding in
sea piracy ransom incidents in the country, but they are
"alive" to such instances.
"Ransom payments are often, but not always, paid in the
form of physical cash. As learned in the case studies, the
ransoms can be air-dropped into waters in the hijack area, or
can be hand-delivered to an intermediary who subsequently
passes it on to pirate groups," the report said underlining
'hawala' transactions.
'Hawala' is a term used for illegal transactions which
are done through a circuitous route involving various people
and accounts, but by skipping the legal banking channels.
"Piracy has now become a financially lucrative criminal
activity. In five years, the average amount demanded for each
captured vessel has increased from USD 1,50,000 (2005) to USD
5.2 million (2010). All indications suggest ransom payments
will continue to rise," the report said.
The report goes on to add that while in 2006, the total
ransom money paid to Somali pirates was 5 million USD, it grew
to 180 million USD in 2010.
The ransom money was 25 million USD in 2007, 70 million
USD in 2008 and 80 million USD in 2009.
The project team (of FATF) compiled information on 13
Piracy For Ransom (PFR) hijackings and robberies involving
Somali pirates operating in the Gulf of Aden, the Indian Ocean
and Arabian Sea including others.
"PFR has been globalised, requiring pirates to
communicate with a variety of actors – legitimate and
otherwise – to plan and execute hijackings, negotiate ransoms,
arrange the method of payment, designate locations for
air-drops or the transfer of ransoms, and organise the
distribution of PFR proceeds to those directly involved and
others who support PFR networks.
"There is growing evidence, too, that Somali pirates are
becoming increasingly reliant on the international financial
system and other money service providers to move cash
off-shore to finance other activities. This information is
available, but obtaining the data is often difficult," the
report said.
These cases also illustrate a lack of coordination
between the traditional anti-money laundering and counter-
terror financing authorities and the private sector which
include the maritime industry, shippers, vessel owners and
their management companies, insurance companies, re-insurers,
private negotiators and cash couriers, it said.