This week’s update to the list of Transnational
Criminal Organizations released by the Department of Treasury contains an
unusual component. While money laundering and terrorist financier organizations
make frequent appearances on the Treasury’s designations of transnational criminal
organizations, family-run criminal groups are an anomaly. However, the Altaf
Khanani Money Laundering Organization (Khanani MLO), run by members of the
Pakistani origin Khanani family, accused of laundering money for organized crime
groups, drug traffickers, and terrorist groups around the world, is an equally
unconventional and disturbing case of terrorist financing.
In November 2015, the U.S.
Department of the Treasury’s Office of Foreign Assets Control designated
Khanani MLO as a transnational criminal organization for its role in laundering “billions of dollars” through financial institutions on
behalf of drug traffickers and terrorist organizations. According to the Treasury report, Khanani MLO, run by Pakistani
national Altaf Khanani, facilitated the movement of proceeds from Chinese,
Colombian, Mexican and Hezbollah-affiliated organized crime groups through
countries such as the US, UK, UAE, and others. Khanani MLO was also accused of
laundering money for the Taliban while Altaf Khanani reportedly has had
relationships with notorious terrorist groups such as the Lashkar-e-Tayyiba,
Dawood Ibrahim, al-Qaeda, and Jaish-e-Mohammed. The 2015 Treasury announcement
included a freeze on all U.S. assets tied to Khanani MLO and a ban on all U.S.
business with the organization.
In creating a global money
laundering service, Mr. Khanani exploited his relationships with financial
institutions around the world and funneled money through his Dubai-based Al Zarooni Exchange,
which was also subject to U.S. sanctions. His suspicious activity caught the
attention of UAE authorities when, in November 2015, the Gulf country suspended Al Zarooni Exchange’s business in remittances, currency exchange, and payment of wages. More
recently, the central bank of the UAE has revoked Al Zarooni Exchange’s license
for violating the country’s anti-money laundering compliance laws. Khanani MLO
and its subsidiary group Al Zarooni Exchange constitute the Treasury’s first
target of a “professional money laundering network” under its authority against
transnational organized crime groups.
Earlier this week, almost a year
after the 2015 UAE and Treasury announcements, new details emerged in
the Khanani money laundering and terrorist financing scandal. Resulting from
“close coordination with our partners in the United Arab Emirates”, the U.S.
Treasury placed sanctions on the son, nephew, and brother of Altaf Khanani, all
of whom it accused of managing the money laundering organization. Obaid
Khanani, Altaf’s 28 year-old son, served as senior manager of Al Zarooni
Exchange and held a leadership role in Khanani MLO. Javed Khanani, Altaf’s
brother, laundered criminal proceeds through Al Zarooni Exchange and other
money services on behalf of Khanani MLO. Hozaifa Khanani, Altaf’s nephew,
laundered money through real-estate investments on behalf of Khanani MLO.
In addition, Treasury identified nine entities based in the UAE and Pakistan for having supported the Khanani MLO, including four companies
owned or controlled between Obaid Khanani and Hozaifa Khanani. The Treasury
noted that general trading companies (six of the nine identified entities were
trading companies) fulfilled an important role in the Khanani MLO by acting as
payment intermediaries or money transmitters to launder Khanani MLO’s funds. Also
named in the Treasury’s press release was Dubai-based Pakistani national Atif Polani, who managed
Al Zarooni Exchange.
a year after the first release of news surrounding the Khanani MLO, many
questions still remain about the organization’s connections and finances. Unlike
previous Treasury designations, the names of drug trafficking organizations
aligned with Khanani MLO and the amounts laundered on behalf of the drug
traffickers and listed terrorist organizations are absent from the report. Yet,
having been identified as money launderers and terrorist financiers and without
a license in their country of operation or access to the U.S. financial system,
the family-run Khanani MLO and its affiliate Al Zarooni Exchange appear to be
headed for a quick decline. Not only have these coordinated actions landed the
Khanani family in trouble, but they should also eliminate a major money
laundering service for drug traffickers and terrorist organizations around the