Contents Foreword ...................................................................................................................................iv Acknowledgments ................................................................................................................... v Acronyms and Abbreviations ..............................................................................................vi Author’s Biography ...............................................................................................................vii 1. Introduction .......................................................................................................................... 1 2. Anatomy of the System ....................................................................................................... 3 3. Vulnerability to Terrorism Financing............................................................................. 7 4. Risk Mitigation Measures................................................................................................ 13 Detecting Informal ARS ................................................................................................... 14 The Debate on Licensing and Registration ................................................................... 16 The Essential Role of Enforcement................................................................................. 18 5. Conclusion ........................................................................................................................... 21 Appendix. ARS Settlement Models .................................................................................. 23 Reverse Transaction ......................................................................................................... 23 Bilateral Financial Settlement ........................................................................................ 24 Multilateral Financial Settlement .................................................................................. 24 Bilateral Trade ................................................................................................................. 25 Multilateral Trade ........................................................................................................... 25 Under/Overstatement of Trade Values ........................................................................ 27 Smuggling.......................................................................................................................... 27 References ............................................................................................................................... 28 Figures Figure 2.1. Basic ARS Transaction Model............................................................................. 3 Figure 3.1. Ranjha Case Alleged Transfer Network, 2004–2007 ....................................... 9 Figure 4.1. Remittance Inflow Recurring Patterns, 1994–2007 ........................................ 15 Figure A.1. Offsetting Transaction Settlement.................................................................... 23 Figure A.2. Bilateral Financial Settlement........................................................................... 24 Figure A.3. Multilateral Financial Settlement .................................................................... 25 Figure A.4. Bilateral Trade Settlement ................................................................................ 26 Figure A.5. Multilateral Trade Settlement .......................................................................... 26 Figure A.6. Smuggling Settlement......................................................................................... 27 Boxes Box 3.1. Al Barakaat: An Essential Chronology................................................................... 11
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