Thank you Chairman Bayh for holding this hearing on such an important and timely issue.
We have known for years that terrorist groups have been able to move money successfully through conventional banking systems. Last month, this Committee passed meaningful money laundering legislation that will help banks and the Treasury Department work in a coordinated fashion to target terrorist operations.
However, in the wake of the September 11th terrorists attacks, we have been able to link the system of money transfers known as "hawala" to the financing of terrorism. This informal and centuries-old system operates outside the traditional banking world, with little or no paper trail to trace the sources of funds. Traditional means of tracking suspicious financial activities will not work within this system.
The "hawala" system has recently been the focus of significant attention both from law enforcement officials and from the media. The raiding of the Somali "hawala" firm Al-Barakaat last week demonstrates that our determination to cut off terrorist funding has expanded from traditional banking systems to these unconventional methods. If we are to continue to track terrorist activity through these sources, we must comprehend how they work and determine whether additional information is needed for banks and law enforcement officials.
I do want to emphasize today that the majority of hawala dealers are good, honest people who help fellow countrymen send money abroad. These dealers work to get money to friends and family members who don't have access to the modern banking system that we all enjoy.
Through this hearing today, we look forward to gaining a greater understanding of this system and developing ideas on how to curtail financing of terrorist networks such as Al-Queda.
Thank you again, Mr. Chairman, for holding this important hearing today.