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Tuesday, 30 October, 2001, 13:52 GMT
Eight held in money laundering probe
A man counts dollar bills while using a laptop
The hawala system dates back to ancient times but uses modern technology
Eight people have been arrested in London on suspicion of involvement in a huge money laundering operations which used the ancient hawala system.

Seven men and one woman were arrested at their homes and at a business premises in the capital on Tuesday by Customs and Excise officers.

They are suspected of laundering up to 100m for criminals worldwide.

Although the hawala system is thought to have been used by Osama Bin Laden's al-Qaeda network to move money around the world, Customs say Tuesday's arrests were not connected to terrorism.

A Customs spokeswoman said those arrested were five Iranians and three Indians, all of whom were UK residents.

'Electronic transfers'

She said: "The arrests follow an investigation into London businesses believed to be laundering under the cover of a hawala banking service and a computer firm, both of which are thought to have used electronic transfers to move money around the world."

She said they had identified links to Iran, United Arab Emirates and the United States, but said London was thought to be the hub of the operation.

Searches were being carried out at homes and business addresses on Tuesday and investigations are continuing.

Old system

Hawala is an alternative banking system hundreds of years old, and is known in Iran, the Middle East and Pakistan as hundi.

It involves hawala brokers - often local small businessmen - all over the world who know each other.

It enables people to transfer money from one part of the world to the other without having to go through banks.

There is no paper trail and no money ever crosses a border.

Discrepancies in the two-way flow are settled up at the end of the month, or perhaps every half year.

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