The hawala system is an ancient, trust-based method of sending money legally across borders that is now under threat from efforts to cut terrorists off from their sources of funds. Earlier this month, President Bush announced the freezing of assets belonging to Barakat, a financial, te-lecoms and construction group based in Dubai, American officials say that Barakat, a "hawala conglomerate", is a money mover for al-Qaeda, Osama bin Laden's loose terrorist network. But there is collateral damage: freezing Barakat has deprived one dirt-poor country, Somalia, of pretty much its only efficient payments system.rnIn mid-November, Britain gave its customs officers the power to inspect and seize evidence from money changers and transmission agents, including hawala dealers, all of whom must be registered with the authorities by next June. In America hawala dealers will come under money-transmission regulations at the end of the year. Over the next year, the Treasury's Financial Crimes Enforcement Network (FinciN) will study what further measures could be taken to control networks of informal money transfers.
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