German police raid global hawala banking ring
German authorities carried out a raid on an organized international network allegedly engaged in illegally transferring millions of euros to Turkey in a series of early morning raids that saw 60 apartments and offices searched.
Police say 27 people are suspected of being involved in the scheme; six arrest warrants have been issued. It is unclear whether the money being transferred was from illegal sources.
The suspects are accused of setting up and running a highly sophisticated informal banking network known as a hawala system.
Investigators estimate that money transferred through the informal network reached up to €1 million each day and more than €200 million ($222.4 million) in total.
The raids took place mostly in western Germany beginning from 6 a.m. (05:00 UTC), with most locations in the state of North Rhine-Westphalia, according to Süddeutsche Zeitung, WDR and NDR, who first reported the story. Raids also took place in Hesse, Berlin and in the Netherlands, which borders North Rhine-Westphalia.
German police taking part in the operation numbered 850, according to the AFP news agency.
The chief suspects are thought to have come from the western German city of Duisburg and worked in the metals trade.
Jewelers, precious metal companies as well as private apartments, were among the raided premises.
The operation was the result of a yearlong investigation led by a special division of the state criminal investigations office.
What is a hawala network and how did this one operate?
The suspects are accused of building up an informal network of bank accounts across Europe and in Turkey, designed to evade detection of money transfers.
Transfers via the hawala system are believed to have reached up to a million Euros each day
Hawala systems (hawala is Arabic for transfer) have been in use for centuries. People using the system deposit into the bank account of a network participator (known as hawaladars) in one country, then another operator withdraws the equivalent amount in the country the money was intended for.
The system means that no money is electronically transferred, and stays within that country at all times. The system has been traditionally used throughout Arabic countries.
Most payments were to Turkey rather than to Germany, but in order for bank accounts in Turkey to remain balanced, the banking ring established an additional cash transfer system, according to reports in German daily Süddeutsche Zeitung.
Investigators have evidence showing that the gang used the cash deposited in German bank accounts to buy up gold and other precious metals.
The accused are believed to have sold the precious metals to a part-Turkish-owned metal-processing company. Authorities suspect that criminals then transferred the money to Turkey through company accounts.
Who used the hawala network?
The North Rhine-Westphalia state criminal police believed it was used by organized criminals.
However, migrants who want to send money back to relatives back home may also use systems such as this one.
The activities are illegal under the German Payment Services Oversight Act (ZAG), which specifies that it is forbidden to offer services similar to a bank without a banking license. Activities that break the ZAG law carry up to five years in prison.