Eight years’ prison for operator of illegal money transfer service

On 18 January, 48-year-old Asghar Gheshlaghian, operator of an unregulated money transfer service and a rug company – the latter a front for illegal activities – was found guilty of five charges related to money laundering and immigration-related offences:

• Contravention of a relevant requirement
• Transferring criminal property
• Processing criminal property
• Helping asylum seekers to enter the UK
• Assisting unlawful immigration

“Asghar Gheshlaghian knowingly ran an unregulated money service business to help criminal gangs smuggle people into the UK illegally,” said Michael Oatley, who leads the Crown Prosecution Service's Serious Economic, Organised Crime and International Directorate.

“Through his money laundering service, Gheshlaghian helped fund and facilitate dangerous criminals who exploited migrants and undermined UK border security for his own financial benefit.”

Gheshlaghian's money transfer business had been under investigation for two years leading up to his 2021 arrest. The business conducted hawala transfers – an informal method of remittance that operates largely on trust. 

Hawala banking is not illegal in the UK, as long as it is conducted by a registered money service bureau that is compliant with UK law. 

Gheshlaghian’s business was neither registered nor compliant. Established in 2018, the business quickly caught the attention of the National Crime Agency, which began investigating in 2019. 

The investigators uncovered links and payments made to people smugglers, received statements from asylum seekers who had paid money to Gheshlaghian, and obtained footage from an ITV documentary in which a people smuggler refers to ‘Mr G’.

Following Gheshlaghian’s arrest, the NCA also obtained a recording of a phone call in which he told an associate that between 70 and 80 per cent of his money transfer business was illegal. 

“By his own admission, Asghar Gheshlaghian was trusted by organised crime gangs to handle their payments and launder the money they made,” NCA Branch Commander Mark Howes said. 

The NCA also uncovered £50,000 in cash, ledgers recording transactions and evidence of Gheshlaghian having received payments totalling £1.6 million.

Hawala banking in the UK

Hawala banking is not illegal in the UK. As discussed above, it must only be conducted by regulated and registered businesses, and only in accordance with the law. 

It is a type of money or value transfer service (MVTS), the hallmark of which is the use of intermediaries. An intermediary accepts payment, and another payment is released to a final beneficiary – this may be one or several steps removed from the original payment through several intermediaries.

It is also recognised in playing an important role in facilitating humanitarian support in high-risk jurisdictions and conflict zones. 

Late last year, Baroness Bennett of Manor Castle tabled a question for the Foreign, Commonwealth and Development Office in the House of Lords. Bennett queried the government’s assessments of hawala baking in conflict zones, and the steps taken to protect hawala banking systems as tools for humanitarian aid. 

Lord Ahmad of Wimbledon responded, recognising the important role of hawala banking systems and businesses in conflict zones:

“Money Service Businesses (MSBs), including Hawala … are often the only way of transmitting money, including remittances, to remote communities where formal banking services are limited … In some cases, hawala are the only means of transferring funds into high-risk jurisdictions but the risks associated with their use need to be appropriately managed.”

Managing risk of hawala banking

Hawala is an important part of global financial systems and, as both Bennett and Ahmad emphasised, is particularly important in humanitarian support. 

It also carries risk, which must be assessed and addressed by any provider offering the service.

The Financial Action Task Force (FATF) sets international standards for hawala, as an MVTS. The standards specify:

• Registration and licensing of MVTS providers and their agents. In the case of agents, the standard allows for the provider to maintain records of agents rather than agents requiring registration. Those records must be accessible to authorities in any country in which the provider or an agent operates.
• Systems for monitoring and ensuring compliance 
• Sanctions for those providing MVTS services without licence
• Agents must be included in and compliant with providers’ AML/CFT programmes.

It also requires that MVTS providers that control both sides of a transaction conduct due diligence at both the ordering and the beneficiary side to assess whether any transaction is suspicious. If it is, a suspicious activity report must be submitted.