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FinCEN Files — On US radar: Dawood Ibrahim’s financier, his laundering, funding of Lashkar, Jaish

The Financial Crimes Enforcement Network (FinCEN), the US regulatory agency for enforcing money laundering laws, has uncovered a web of transactions of a flourishing money laundering network run by Pakistani national Altaf Khanani who is also said to have been a key financier for fugitive terrorist Dawood Ibrahim, reveal Suspicious Activity Reports (SARs) filed by the Standard Chartered Bank, New York, and investigated by The Indian Express.

These SARs detail transactions of Khanani’s Money Laundering Organisation (MLO) and the Al Zarooni Exchange. For decades, Khanani and his MLO moved an estimated $14 billion-$16 billion annually for drug cartels and terror organisations like al-Qaeda, Hezbollah and the Taliban.

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On September 11, 2015, Khanani was arrested at the Panama airport following a trans-continental undercover operation, and put behind bars in a Miami prison. His detention ended in July 2020 and he was to be handed over to US immigration authorities for deportation. It is unclear whether he has been deported to Pakistan or the UAE.

Khanani’s relationship with Dawood Ibrahim was documented by the US Office of Foreign Assets Control (OFAC) when it issued the sanctions notice against him after his arrest.

Issued on December 11, 2015, the notice stated: “The Khanani MLO exploits its relationships with financial institutions to funnel billions of dollars across the globe on behalf of terrorists, drug traffickers and criminal organisations… Altaf Khanani, the head of the Khanani MLO, and Al Zarooni Exchange have been involved in the movement of funds for the Taliban, and Altaf Khanani is known to have had relationships with Lashkar-e-Tayiba, Dawood Ibrahim, al-Qaida and Jaish-e-Mohammed.”

The arrest of Khanani was seen as a breakthrough by Indian intelligence agencies given the Dawood Ibrahim connection and the fact that Lashkar-e-Toiba and Jaish-e-Mohammed had been specifically mentioned by the OFAC as terror organisations funded by him.

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Incidentally, a year after the original sanction notice, the OFAC, on October 10, 2016, sanctioned another list of individuals and entities for their links to the Khanani MLO. The individuals included members of Khanani’s family, mostly operating out of Pakistan, and several entities “supporting” the money laundering network.

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The list of entities is led by Mazaka General Trading LLC, based in Dubai, and four years after the sanctions were imposed, the FinCEN Files expose the extent of financial infiltration of the Khanani MLO via this company as well as others linked to what is referred to as “Moscow Mirror Network.”

Mirror trading is an “informal value transfer mechanism through which an individual or business purchases securities in one jurisdiction and sells them in another with no economic gain, thereby concealing the funds original source and final destination”.

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The FinCEN Files contain a 20-page “intelligence assessment” on the mirror network and list 54 shell companies which, they say, moved billions of dollars annually from Russia through European securities markets to other jurisdictions beginning as early as 2011.

FinCEN’s intelligence report says Mazaka General Trading LLC received $49.78 million from five Moscow Mirror Network entities between March 2013 and October 2016. Mazaka also received funds from Singapore-based Ask Trading PTE through the mirror trades.

Significantly, Mazaka was sanctioned by OFAC for having “materially assisted, sponsored, or supported the Khanani Money Laundering Organisation, which launders illicit funds for terrorists, drug traffickers and criminal organisations…”

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This is also where Indian links emerged in the functioning of the Altaf Khanani laundering operation. Besides JP Morgan Chase Bank (New York) and United Overseas Bank (Singapore), records show, the Dubai branch of Bank of Baroda that was being used by Mazaka General Trading LLC for transactions with Ask Trading PTE.

Besides this, a scrutiny of transactions of Mazaka General Trading show it traded with a New Delhi-based company, Rangoli International Pvt Limited. This company, dealing in wholesale trade and garment exports, was set up in 2009.

The FinCEN Files have around 70 transactions listed for Rangoli International, mostly with UAE-based entities with the remittances being routed through several Indian banks: the Punjab National Bank, Central Bank of India, Oriental Bank of Commerce, Corporation Bank, Vijaya Bank and Bank of Maharashtra.

There are 17 originators of these transactions totalling $10.65 million. Among them is a transaction dated June 18, 2014 with Mazaka General Trading for $136,254 sent via the Punjab National Bank.

Records of the Registrar of Companies (RoC) show that Rangoli International witnessed a sharp deterioration and decline in profitability in the year ending March 2014 and incurred a loss of Rs 74.87 crore over a sales revenue of Rs 339.19 crore. The company has not held an annual shareholders meeting since 2015, the year it also filed its last balance sheet.

Several banks have put out alerts on Rangoli’s default. The Bank of Maharashtra listed Rangoli as wilful defaulters as recently as February 2020. The Union Bank of India put out a notice for e-auction of immovable assets in July 2020 for part recovery of debts. The Corporation Bank put out a public notice for auction of the company’s immovable property for loan recoveries in October 2019. The Punjab National Bank listed the company for e-auctions of mortgaged properties in November 2019 and April 2016. The Allahabad Bank listed the company as among their top 50 NPAs (non-performing assets) in March 2015.

When contacted, Mel Black, lawyer for Altaf Khanani, told ICIJ media partner Süddeutsche Zeitung: “Mr Khanani has pled guilty and served a lengthy sentence, during which his brother died and he was separated from his family. He is in bad health. He is financially destitute and his ability to earn money is destroyed by his being blocked by an OFAC designation and the freezing of his accounts. He has not been involved in any business activities of any kind for five years. He looks forward to moving ahead in a simple law-abiding life.”

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When his comments were sought, Luv Bhardwaj, Managing Director of Rangoli International, said: “To the so-called ‘around 70 transactions concerning Rangoli International of the years 2013-2014’ that you refer in your query, of which we have no data for, responding in any manner would be a paradox.”

“We have been in the business of export of readymade garments and receiving payments towards the proceeds of the sale of our exported goods is as routine as it can get…On your specific query of a 18th June 2014 receipt in our Punjab National Bank account, we would like to formally confirm our bank account (more specifically, the one with Punjab National Bank) has no receipts on the said date that you mention… However, we have received a remittance of USD 1,36,280 on 20th June 2014 and that pertains to our invoice…to M/s Mideast Star Impex FZE. The consignment containing readymade garments was shipped out after customs clearance on 17/9/13. Our bank has received this remittance; to which it has acknowledged Value Date as 16th June 2014. After adjusting with our LC limit, it credited the balance to our account on 20th June 2014,” Bhardwaj said.

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“We have no business operations or relations with the said M/s Mazaka General Trading and/or Mr Altaf Khanani, nor are we acquainted,” he said.

© The Indian Express (P) Ltd

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