Recently, three men were indicted and arrested in New York City for allegedly working together to run an unlicensed money transmitting business servicing customers in the Middle East (specifically in Yemen, Turkey, Iraq, the UAE, and Jordan, among other places). Though many places in the Middle East have traditionally relied upon informal money transmitting systems known as hawala, this particular arrangement resulted in serious charges for Mohanad Al-Zubaidi, Shaker Saleh Mohammed Hauter, and Abdulkader Noori Hamza. They purportedly transmitted 65 million dollars for their clients over the years, typically keeping a few percent of each transaction for themselves as payment. Though hawala proponents might argue that this system is necessary in light of the shortcomings of the banking systems in the Middle East, it unfortunately also presents problems for American efforts to prevent the laundering of illegal proceeds from the United States, as there is no monitoring of these transactions. Money transmittal businesses can be operated legally with the proper licenses and registration, but obviously some operators prefer not to be openly registered or licensed for a variety of reasons. Each of these defendants now faces up to five years in prison for running this unregulated money transmittal business, in violation of 18 USC 1960. Notably, Mr. Al-Zubaidi also faces up to thirty years in prison for alleged bank fraud, for purportedly creating bank accounts in the names of fictitious “shell” corporations, in violation of 18 USC 1344. The government will also likely seek to impose huge financial penalties on these defendants, and to disgorge any and all profits they may have earned; indeed, they make seek to hold the transmitters responsible for the amount of money they illegal transmitted. A copy of the indictment is available here.
There are a variety of possible defenses in this case, most of which will depend upon the particular role that each individual is alleged to have played, and what if any knowledge they had of the overall scheme.
Matthew Galluzzo is an experienced federal criminal defense attorney. He has successfully represented individuals accused of operating unlicensed money transmittal businesses with connections to the Middle East. For many years, he has been one of the go-to criminal defense attorneys for the Consulate General of the Kingdom of Saudi Arabia, and has represented over sixty of their citizens in criminal cases across the United States. He practices primarily in federal court.