It was a quiet investigation into suburban money-transfer businesses that led Australian investigators to a man laundering billions of dollars a year for the world’s criminal and terrorist elite.
They had just begun monitoring what amounted to hundreds of millions of dollars flowing out of Australia when they realised the man behind the laundering was the seemingly untouchable Altaf Khanani, a Pakistani national based in the United Arab Emirates.
Khanani was infamous. He had close ties to one of the world’s most wealthiest gangsters, Dawood Ibrahim, and was laundering money for Mexican, Chinese and Colombian drug cartels. He moved money around the world for al-Qa’ida, Hezbollah and the Taliban. He undercut his competitors — offering commission rates as low as 3 per cent — but became far more successful by laundering billions — not millions — every year.
But, at the time the Australians began tracing drug proceeds to him in 2013, it’s understood that few countries were actively pursuing him.
Australian Federal Police assistant commissioner David Stewart, who chaired the international operations group in the Khanani investigation after first learning of him three years ago, said: “Our colleagues in the UK had a strong knowledge of him and his activities and most of our partner countries knew of him and the impacts upon their jurisdictions. Everyone was aware of him and, at different times, had tried various strategies.”
Now, as a result of a ground-breaking, four-year investigation by the AFP, the then Australian Crime Commission and the law-enforcement agencies of the other Five Eyes countries — New Zealand, the US, Canada and Britain — Khanani is behind bars in the US. The 56-year-old was sentenced to five years and eight months’ imprisonment in March, following a plea deal understood to have been struck in exchange for information about his clients.
Last December, within weeks of Khanini striking his plea deal in the US, his brother was found dead at the bottom of an under-construction high-rise tower in Karachi, Pakistan.
The family refused to allow authorities to examine the body of Javed Khanani, who had been tipped to take control of his brother’s criminal network.
The Australian Criminal Intelligence Commission’s investigations manager, Richard Grant, who headed the Eligo taskforce that traced the money movements to Khanani, said: “He either committed suicide or was murdered, we’re not quite sure what.”
Khanani’s list of clients is long. Drug Enforcement Administration spokesman Rusty Payne describes him as a “super facilitator” of crime. “This is a case where you really see the bad guys blur the line between drug trafficking, terrorism and organised crime,” Mr Payne said.
Khanani had been a director of one of Pakistan’s largest foreign-exchange companies, Khanani and Kalia International, until it was shut down amid a probe into illegal cash transfers into Afghanistan in 2008.
“I know that the British police … tried to arrest or did arrest Altaf Khanani about 16 years ago,” Mr Grant said. “The allegation was that some bribes were paid (in Pakistan) and he managed to get off those charges.”
That allegation was never proven, although Mr Stewart said: “Khanani constantly perpetuated the myth that he could potentially buy his way out of any problems that he encountered.”
Khanani moved his operations base to the UAE — an ideal location for his new vehicle, the Al Zarooni Exchange, due to the large number of itinerant workers wanting to send money back to their home countries.
From there, Khanani built an international network of money exchangers and “sub-contractors”. Through word of mouth, remittance businesses — including in Australia — joined his network. They were often hawalas, where one remittance provider would collect money from a customer, notify a partner business in another country, who would release the same amount from their own holdings — without any money physically leaving Australia.
Drug traffickers in Sydney and Melbourne became his biggest Australian customers, and his network even hired collectors to pick up cash from inner-city car parks. “Altaf Khanani and his network had a variety of different ways in which illicit funds would be moved, whether it be trade-based money laundering through offsetting … say (when) somebody’s got to move $5m out of Country A into Australia and crooks in Australia have got to move $5m out of Australia into Country A,” Mr Grant said.
“We’re talking about millions of dollars at a time, and we’re talking about multitudes of transactions every other day, globally. “That’s where they make that money on the 3 to 5 per cent (commission rate).”
Mr Stewart said it was the AFP’s “collective assessment that he was No 1” among money launderers.
Australian authorities had built a strong picture of his network, and brought it up during a meeting of the Five Eyes agencies in Vancouver three years ago. From the intelligence Britain and Australia separately collected, dozens of new investigations were launched in the US and Canada. “Significant” arrests were carried out in Australia, Mr Stewart said.
Undercover operations were launched in several countries, and the DEA was tasked with the actual arrest of Khanani.
“While the DEA played a critical role and was responsible for the (arrest), this was very much a joint operation with partner nations of which the AFP formulated the investigative strategy and played a co-ordination role,” Mr Stewart said.
Mr Payne said the Khanani investigation “required the assistance, expertise and resources of multiple law-enforcement agencies in several countries”.
On September 11, 2015, Khanani flew to Panama to meet what he thought were drug-trafficking clients for whom he had already laundered money.
He was arrested by the undercover DEA agents.
“We were reasonably confident that, shortly after his arrest … there was a fair chance that his brother Javed Khanani or his son Obaid Khanani would take over the operations and it would just simply be business as usual,” Mr Grant said.
Two months after his arrest, Khanani’s entire organisation was targeted with wide-ranging sanctions that prevented any US individual or entity from doing any business with them — cutting off a huge chunk of his client list.
It was the first time a money-laundering outfit had been subjected to such sanctions.
The UAE then took action, shutting down Al Zarooni.
“We know that had significant ramifications for money laundering — particularly in Australia — because we know the commission rates went up significantly for quite a while,” Mr Grant said.
“We know that it went up to close to 15 per cent. There was a lot of concern from all of those groups about moving money, certainly out of Australia and certainly in the US.”
With his network destroyed and while he was awaiting trial in the US, Khanani signed a plea agreement on October 28 last year that led to 13 of his 14 charges being dropped. Two weeks later, the US Treasury identified his son and other family members in new sanctions. On December 4, Javed Khanani was found dead.
Although no one would discuss exactly what Khanani had promised as part of the plea deal, there has been speculation in Pakistan that Dawood Ibrahim may be a target. Khanani has long been known as an associate of Ibrahim, the Mumbai gangster who reportedly heads a 5000-strong criminal syndicate and is the suspected mastermind of the 1993 bombings that killed 257 people in the Indian city.
Asked about the plea deal, Mr Payne said: “All I can tell you is that DEA has a vast global network of resources to go after these criminal networks and their facilitators, along with our foreign counterparts. These cases have national security implications for the United States and our allies and these efforts will continue to be a priority for DEA.”