HE was once one of the country’s largest currency dealers, but last week Altaf Khanani pleaded guilty to a money laundering charge before a United States court. He now faces a maximum penalty of 20 years in prison plus a fine of $250,000. The plea agreement between Khanani and the prosecutor was signed on Oct 27, 2016.

Khanani was arrested in September last year following a sting operation by the US Drug Enforcement Administra­tion (DEA), and has been in jail ever since.

According to unconfirmed reports, the arrest was made in Panama after a sealed grand jury indictment in the US District Court of the Southern District of Florida charged him on 14 counts of money laundering in June 2015.

One count was of conspiracy to launder money, while the remaining 13 charged him with conducting transactions defined as money laundering.

He has pleaded guilty to the first count and the US attorney’s office has agreed to seek dismissal of the remaining 13 counts.

The Pakistani money changer was reportedly nabbed in Panama last year in an American sting operation

The plea has been accepted because “the defendant has assisted authorities in the investigation or prosecution of his own misconduct”, according to the agreement which carries Khanani’s signature.

He now faces an investigation from the court’s probation officer about the nature of the offence to which he has pleaded guilty, and the terms of the agreement bind him “to make a full, accurate and complete disclosure to the probation office of the circumstances surrounding the relevant offence conduct”.

He has also agreed to voluntarily pay the fine of $250,000 immediately, as well as return the money he earned as commission from the funds that he laundered during the sting operation that led to his arrest.

Although the indictment relates only to the transfers that took place as part of the sting operation, it appears a lot of information has been volunteered by Khanani as part of his plea deal with his prosecutors.

On Oct 11, a little more than two weeks before the plea deal was signed, the Treasury department released a new and expanded list of organisations connected with Khanani’s enterprise, besides naming four additional individuals.

Those individuals were Altaf’s brother, son and nephew – Javed Khanani, 55, Obaid Khanani, 29, and Huzaifa Khanani, 29, respectively – and Atif Polani, 38, a manager at the Al Zarooni Exchange.

The plea agreement specifically says that the prosecutor will recommend leniency for Khanani during sentencing, unless he “is found to have misrepresented facts to the government prior to entering into this plea agreement”.

Sentencing is set for Nov 25.

The sting operation

Khanani was ensnared in the sting operation that began in December 2014 when one of his clients, who was an informer, introduced him to an undercover agent of the DEA.

The undercover agent told Khanani that he had some funds which were proceeds from the sale of drugs that needed to be laundered from outside the United States and wired into an account in Miami, Florida.

Details of the sting operation are given in court documents that Dawn has acquired. Khanani agreed to take the cash from the undercover officer and wire it back from business accounts held outside the United States to make it appear like they are proceeds from some legal activity.

The first pickup of $100,000 took place on Jan 7, 2015, in the parking lot of a Dunkin Donuts restaurant in North Arlington, New Jersey.

The DEA agent waited with the cash in a black duffel bag. He had a token given to him by Khanani: the serial number from a dollar bill. Khanani’s courier arrived on the scene and produced a photograph of the exact same serial number to identify himself.

Once the DEA agent matched the two tokens, he handed the black duffel bag containing the cash to the courier.

Khanani held several telephone conversations with the agent after that, discussing the pickup, the delivery date for the wire transfer, and future pickups of more drug money for laundering.

Five days later, on Jan 12, $96,936 were wired into an account set up by the DEA in a Bank of America branch in Miami from a Standard Chartered Bank account belonging to Mazaka General Trading, LLC, based in the UAE. Khanani received 3 per cent as his commission for his services.

The very next day, another pickup was made in New Jersey, this time of $200,000. There was a delay in the arrival of the laundered proceeds, which landed in a Miami account through the same route 13 days later on Jan 26.

The agent and Khanani held numerous telephone conversations during this period regarding the delay, during which Khanani was again informed that the funds were proceeds from sale of drugs.

In total, 13 such transactions were carried out between Khanani and the undercover DEA agent, totalling $1.2 million.

Aside from New Jersey, pickups were made in Dallas, Houston and Atlanta, involving a dozen couriers. The size of the sums involved varied, with the smallest being $14,975 and the largest $200,000.

The last transfer mentioned in the indictment was on April 16, 2015. All of them landed in accounts belonging to the DEA at the Bank of America in Miami, but the accounts from where the transfers originated differed.

The first five transfers into Miami were made from Mazaka LLC accounts held in various banks. Three more were made from accounts in Infinity International Ltd, whose website shows it to be a UK-based money transfer company.

One large transfer, on Feb 17, was made using an account connected with a company called Commodity Solutions Ltd, whose website presents it as a large and professional commodities trading enterprise but contains elementary spelling and grammatical errors, using an account in Intesa Sanpaolo, an Italian bank.

Two other transfers came from an account at Emirates NBD Bank belonging to a company called Jetlink Textiles Trading Ltd, apparently based in Dubai.

Throughout the operation, Khanani maintained an active channel of communication with the undercover agent.

“All of the telephone conversations were recorded and/or monitored. All of the text/BBM messages were retained. All of the Skype sessions were recorded as well. During those sessions, the defendant is easily identified as the person communicating with the [undercover agent]. During those sessions, the previous transactions (as well as future transactions) are discussed in detail, confirming the defendant was the person with whom the [undercover agent] had been communicating through the duration of the conspiracy,” according to one of the court documents.

The Khanani Money Laundering Organisation

Taken together, these and a string of other entities identified by US law enforcement agencies have collectively been designated as the Khanani Money Laundering Organisation (MLO), which the Treasury department claims “is responsible for laundering billions of dollars in organised crime proceeds annually”.

The action was taken in coordination with law enforcement and financial crimes units in Australia and the UAE, as well as the FBI, DEA and US Customs and Border Protection.

“The Khanani MLO launders illicit funds for organised crime groups, drug trafficking organisations, and designated terrorist groups throughout the world”, said a press release issued two months after his arrest, adding the name of Al Zarooni Exchange, a Dubai-based currency dealing company, to the list.

It said the Khanani MLO provides money laundering services to the “Chinese, Colombian, and Mexican organised crime groups and individuals associated with Hizballah (sic). 

The Khanani MLO has also laundered funds for designated terrorist 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-Taiba, Dawood Ibrahim, Al Qaeda, and Jaish-e-Mohammed.”

Read on: The endless case of Khanani and Kalia

Published in Dawn, November 7th, 2016