Of Terrorists and Money Laundering

I must admit to a certain nervousness the first time I agreed to receive payment through the hawala system for editing work I had done for an organization in Mogadishu, Somalia. I vaguely knew émigré communities all over the world used such informal banking networks to send and receive money from home. But I knew for certain that within weeks of the September 2001 attacks U.S. president George Bush declared that the hawala had been used to finance terrorism, prompting U.S. authorities to freeze the assets of a number of operators and to force one of the largest—al-Barakaat—to close.

My client assured me the transfer was perfectly legal and would not land me in a U.S. jail or worse. Besides, I had little choice. Somalia, the ultimate failed state, has no formal banking system. So I agreed and he arranged the payment in Mogadishu. The next day I received an email: “Hello, my name is Ahmed and I have something for you. Please call me at the following...