Rahim A. Bariek, age 46, of Herndon, Virginia, was sentenced today before the Honorable James C. Cacheris, United States District Judge for operating a money transfer business (commonly known as hawala) without a Virginia license in violation of provisions of the U.S.A. Patriot Act.
Bariek, who previously pled guilty to a single count indictment, charging him with operating Bariek Money Transfer from on or about November 1, 2001 through on or about August 8, 2003, was sentenced to 18 months incarceration and required to forfeit $32,343.29. Special agents from U.S. Immigration and Customs Enforcement (ICE) and agents from the Internal Revenue Service (IRS) arrested Bariek on April 15, 2005. Bariek and his business received at least $4.9 million in funds from individuals wishing to transfer money out of the United States from November 1, 2001, until August 8, 2003. In furtherance of Bariek’s money transmitting business, those funds were deposited in five bank accounts controlled by Bariek. Equivalent amounts of money were transferred to individuals in various Middle East countries, including Afghanistan, Pakistan and Iran, without a money transmission license from the Virginia State Corporation Commission as required by Virginia law.
On November 14, 2001, Bariek testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Subcommittee on International Trade and Finance, concerning hawalas and underground terrorist financing mechanisms. Among other things, Bariek told lawmakers, “I pay taxes on my hawala business and I comply with the law. I am happy to comply with the new federal law, which you wrote, and to register and to file suspicious activity reports”. He also stated that he knew his customers but the government presented evidence at sentencing showing that Bariek could not possibly have known all of his customers, and that he transmitted money to Afghanistan immediately after the September 11th terrorist attacks when Afghanistan was still under the control of the Taliban, and a base for Al-Qaeda operations.
Paul J. McNulty, United States Attorney for the Eastern District of Virginia, who prosecuted Bariek stated: “The first priority of law enforcement is to prevent terrorism. That is why we are cracking down on illegal financial systems that could be used to supply money to terrorists.” Allan J. Doody, Special Agent-in-Charge for U.S. Immigration and Customs Enforcement (ICE) in Washington, D.C. stated that ‘illegal money transmittal businesses and “hawalas” pose serious vulnerability because they provide criminals with a back-door mechanism to move dirty money around the globe undetected. What is particularly troubling is that Mr. Bariek testified before the U.S. Senate about the dangers posed by illegal hawalas while he was operating one himself at the same time.” “The use of money transfer business of “hawalas” is an emerging area of law enforcement because of potential use by money launderers and terrorists,” said Charles Pine, Special Agent in Charge, IRS- Criminal Investigation, Alexandria Field Office.
This case was investigated by the US Bureau of Immigration and Customs Enforcement and the Internal Revenue Service, Criminal Investigations Division, and prosecuted by Assistant United States Attorney David Laufman and Special Assistant Jessica Lombardo. Special assistance was provided by Virginia state authorities. Nicholas C. Kyrus, Deputy Commissioner of Financial Institutions at the Virginia State Corporation Commission stated that this case exemplifies the close cooperation of state and federal agencies in cracking down on unlicensed money transmitters.
The conviction of Bariek is the latest enforcement action in ICE’s nationwide crackdown on unlicensed money transmittal business. The U.S.A. Patriot Act enhanced ICE’s ability to combat the international movement of illicit funds through money transmittal businesses by amending 18 U.S.C. Section 1960 statute. As a result of the change in the law, money transmittal businesses in the United States must be registered with the Treasury Department and be licensed by appropriate state authorities.
Since the enactment of the U.S.A. Patriot Act in late 2001, ICE agents have aggressively targeted illegal money transmittal businesses and underground hawalas nationwide, given the vulnerabilities they pose. ICE investigations into unlicensed money service business have resulted in the arrest of 155 individuals, 142 criminal indictments and the seizure of some $25.8 million since the Patriot Act became law.