V Economic Analysis of Informal Hawala Transactions
Author:
Mr. Mohammed El Qorchi
Search for other papers by Mr. Mohammed El Qorchi in
Current site
Google Scholar Close
,
Mr. Samuel Munzele Maimbo
Search for other papers by Mr. Samuel Munzele Maimbo in
Current site
Google Scholar Close
, and
Mr. John F. Wilson
Search for other papers by Mr. John F. Wilson in
Current site
Google Scholar Close
Language:
English
Print Publication Date:
18 Aug 2003
Keywords:
OP; IFT system; transaction; remittance system; IFT; authority; hawala remittance; IFT transaction; payment instruction; Hawala transaction; hawala channel transaction; Currencies; Remittances; Commercial banks; Foreign exchange purchases; South Asia; Middle East

Abstract

Assertions that hawala “sends money without sending money” are misleading. Many discussions of remittances through the informal funds transfer systems give the impression that this kind of transaction is very different from making international payments through established institutions, such as banks or money exchanges.20 It is as if in informal hawala transactions, “money” simply submerges on one side of a border and pops up in a village on the other side, with no further complications, and in a manner unlike that of any other kind of financial transaction. Table 5.1 gives a summary overview of how value is transferred in various kinds of channels.

Cited By

Within Same Series

Other Publishers Content

  • Collapse
  • Expand
Cover Informal Funds Transfer Systems
Informal Funds Transfer Systems
An Analysis of the Informal Hawala System
ISBN:
9781589062269
ISSN:
0251-6365
Publication Date:
18 Aug 2003
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589062269.084
Pages:
64

  • Aggarwal, Chiranjiva Lal, 1966, The Law of Hundis and Negotiable Instruments, 8th ed. (Lucknow, India: Eastern Book Company).

  • Aglietta, Michel, and André Orléan, 2002, La Monnaie entre Violence et Confiance (Paris: Odile Jacob).

  • Al-Suhaimi, Jammaz, 2002, “Demystifying Hawala Business,” Banker (April), pp. 76–77.

  • Asia Pacific Group (APG) on Money Laundering Secretariat, 1998, “Money Laundering: The International and Regional Response,” Sydney, May.

    • Search Google Scholar
    • Export Citation

  • APG Typologies Working Group on Alternative Remittance & Underground Banking Systems, 2001, “Report for the APG Money Laundering Methods and Typologies Workshop,” Singapore, October 17-18.

    • Search Google Scholar
    • Export Citation

  • Carroll, Lisa C., 2001, “Alternative Remittance Systems Distinguishing Sub-systems of Ethnic Money Laundering in Interpol Member Countries on the Asian Continent.” Available via the Internet: http://www.interpol.int/Public/FinancialCrime/MoneyLaundering/EthnicMoney.

    • Search Google Scholar
    • Export Citation

  • Caskey, John P., 1994, Fringe Banking: Check-Cashing Outlets, Pawnshops, and the Poor (New York: Russell Sage).

  • Center for Central Banking Studies (CCBS), 1999, “Risk, Cost, and Liquidity in Alternative Payment Systems,” Bank of England Quarterly Bulletin, February.

    • Search Google Scholar
    • Export Citation

  • Cottle, Michele, 2001, “Hawala vs. the War on Terrorism,” New Republic, October 15. Available via the Internet: http://www.tnr.com.

  • Cox, James, 2001, “Hundi System May Foil Investigators,” USA Today, October 7.

  • Currency Data and Intelligence, Ltd., various years, World Currency Yearbook (formerly Pick’s Currency Year-book) (New York: Pick Publishing Corporation).

    • Search Google Scholar
    • Export Citation

  • Department of Foreign Affairs and Trade (Australia), East Asia Analytic Unit, 1994, India’s Economy at the Midnight Hour: Australia’s India Strategy (Canberra: Australian Government Publishing Service).

    • Search Google Scholar
    • Export Citation

  • Dev Raj, Ranjit, 2000, “Budget Fails to Tackle Huge Black Economy,” Asia Times, March 7.

  • Economist, 2001, “Cheap and Trusted,” November 24, p. 71.

  • Elbadawi, Ibrahim, and Robert de Rezende Rocha, 1992, “Determinants of Expatriate Workers’ Remittances in North Africa and Europe,” Policy Research Working Paper No. 1038 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation

  • Financial Action Task Force (FATF) on Money Laundering, various years, “Report on Money Laundering Typologies” (Appendixes to FATF Annual Reports) (Paris: FATF Secretariat, Organization for Economic Cooperation and Development). Available via the Internet: http://www1.oecd.org/fatf/FATDocs_en.htm#Annual.

    • Search Google Scholar
    • Export Citation

  • Findeisen, Michael, 2000, Underground Banking in Germany: Interface Between Illegal “Remittance Services” Within the Meaning of Section I(Ia)(6) of the Banking Act (KWG) and Legal Banking Business, official document.

    • Search Google Scholar
    • Export Citation

  • Forex Association of Pakistan, 2002, Press Release, January 6.

  • Fry, Maxwell J., 1974, The Afghan Economy: Money, Finance, and Critical Constraints to Economic Development (Leiden, Netherlands: Brill).

    • Search Google Scholar
    • Export Citation

  • G–10 Committee on Banking Regulations & Supervisory Practices, 1988, “Prevention of Criminal Use of the Banking System for the Purpose of Money Laundering,” Basel Statement of Principles. Available via Internet: http://www.imolin.org/conventi.htm.

    • Search Google Scholar
    • Export Citation

  • Ganguly, Meenakshi, 2001, “A Banking System Built for Terrorism,” Time, October 21. Available via the Internet: http://www.time.com/time/magazine/contents.

    • Search Google Scholar
    • Export Citation

  • Grabbe, J. Orlin., 2002, “In Praise of Hawala,” Laissez Faire Electronic Times, May 13. Available via the Internet: http://freedom,orlingrabbe.com/lfetimes/hawala.htm.

    • Search Google Scholar
    • Export Citation

  • Howlett, Christine, 2000, “Investigation and Control of Money Laundering via Alternative Remittance and Underground Banking Systems” (Canberra: Churchill Trust).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, various years, Annual Report on Exchange Arrangements and Exchange Restrictions (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, various years, 1997a, India: Recent Economic Developments, IMF Staff Country Report No. 97/73 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, various years, 1997b, Pakistan: Recent Economic Developments, IMF Staff Country Report No. 97/120 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, various years, 1999, Philippines: Selected Issues, IMF Staff Country Report No. 99/92 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, various years, 2001a, “Financial System Abuse, Financial Crime, and Money Laundering—Background Paper,” IMF Background Paper, February 12.

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, various years, 2001b, India: Recent Economic Developments and Selected Issues, IMF Staff Country Report No. 01/81 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, various years, 2001c, Sri Lanka: Recent Economic Developments, IMF Staff Country Report No. 01/70 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Jost, Patrick, and Harjit Singh Sandhu, 2000, “The Hawala Alternative Remittance System and Its Role in Money Laundering” (Lyon: Interpol General Secretariat). Available via the Internet: http://www.interpol.int/Public/FinancialCrime/MoneyLaundering/hawala.

    • Search Google Scholar
    • Export Citation

  • Kaplan, Edward H., 1997, “Chinese Economic History from Stone Age to Mao’s Age” (unpublished; Bellingham: Western Washington University).

    • Search Google Scholar
    • Export Citation

  • Kapoor, Sanjay, 1996, Bad Money, Bad Politics: The Untold Hawala Story (New Delhi: Har-Anand).

  • Kletzer, Kenneth, and Renu Kohli, 2001, “Financial Repression and Exchange Rate Management: Theory and Evidence for India,” IMF Working Paper 01/103 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Kohli, Renu 2001, “Capital Flows and Their Macroeconomic Effects in India,” IMF Working Paper 01/192 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Lambert, Larry, 1996, “Underground Banking and National Security,” Security and Political Risk Analysis India (SAPRA) Bulletin, March.

    • Search Google Scholar
    • Export Citation

  • Latter, Tony, 1996, Choice of Exchange Rate Regime (London: Bank of England, Center for Central Banking Studies).

  • Luttikhuizen, Ronald, and Kazemier,Brug 1998, “A Systematic Approach to the Hidden and Informal Activities” (Voorburg: Statistics Netherlands).

    • Search Google Scholar
    • Export Citation

  • Maimbo, Samuel M., 1999, “The Money Exchange Dealers of Kabul: A Study of the Informal Funds Transfer Market in Afghanistan” (unpublished; Washington: World Bank).

    • Search Google Scholar
    • Export Citation

  • Miller, Matt, 1999, “Underground Banking,” Institutional Investor Magazine, January. Available via the Internet http://www.institutionalinvestor.com/platinum/archives.

    • Search Google Scholar
    • Export Citation

  • Pakistan Ministry of Finance, 2000-01, Economic Survey.

  • Passas, Nikos, 2000, “Informal Value Transfer Systems and Criminal Organizations: A Study into So-Called Underground Banking Networks” (The Hague: Netherlands Ministry of Justice).

    • Search Google Scholar
    • Export Citation

  • Pohit, Sanjib, and Nisha Taneja, 2000, “India’s Informal Trade with Bangladesh and Nepal: A Qualitative Assessment,” Working Paper 58(New Delhi: Council for Research on International Economic Relations).

    • Search Google Scholar
    • Export Citation

  • Quirk, Peter, 1996, “Macroeconomic Implications of Money Laundering,” IMF Working Paper 96/66 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Reddy, Y.V., 1997, “Gold Banking in India,” address to the World Gold Council Conference, New Delhi, August 2. Reprinted in BIS Review, 1997.

    • Search Google Scholar
    • Export Citation

  • Reinhart, Carmen, and Kenneth Rogoff, 2002, “The Modern History of Exchange Rate Arrangements: A Reinterpretation,” NBER Working Paper 8963 (Cambridge, Massachusetts: NBER). Available via the Internet: http://papers.nber.org/papers/w8963.pdf.

    • Search Google Scholar
    • Export Citation

  • Rodriguez, Edgard, and Susan Horton, 1995, “International Return Migration and Remittances in the Philippines,” Working Paper UT ECIPA Horton 95-01 (Toronto: University of Toronto, Department of Economics).

    • Search Google Scholar
    • Export Citation

  • Saudi Arabian Monetary Agency, 1981, Rules Regulating the Money Changing Business, No. 3/920, dated 16-2-1402 (Riyadh), December.

  • Saudi Arabian Monetary Agency, 1994, A Collection of the Monetary and Banking Laws and Regulations (Riyadh).

  • Shabsigh, Ghiath, 1995, “The Underground Economy: Estimation and Policy Implications: The Case of Pakistan,” IMF Working Paper 95/101 (Washington: International Monetrary Fund).

    • Search Google Scholar
    • Export Citation

  • Sharma, Rajendra, 1997, “Hawala: A Popular Mode of Transactions in Gujarat,” Indian Express.

  • Siddiki, Jalal, 2000, “Black Market Exchange Rates in India: An Empirical Analysis,” Empirical Economics, Vol. 25, pp. 297– 313.

  • State Bank of Pakistan, 2002a, Annual Report FY 2001. (Karachi: State Bank of Pakistan).

  • State Bank of Pakistan, 2002b, First Quarterly Report for FY 2002 (Karachi: State Bank of Pakistan).

  • Tanzi, Vito, 1996, “Money Laundering and the International Financial System,” IMF Working Paper 96/55 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • “Underground Forex Market Feels the Pinch,” 2001, Indian Express, October 5.

  • United Arab Emirates, 2002, Abu Dhabi Declaration on Hawala (Abu Dhabi).

  • U.S. Customs Service, 1999, Black Market Peso Exchange: A Trade-Based Money Laundering System (Washington: U.S. Treasury Department).

  • U.S. Department of State, Bureau for International Narcotics and Law Enforcement Affairs, 1999, International Narcotics Control Strategy Report, 1999 (Washington: U.S. Department of State).

    • Search Google Scholar
    • Export Citation

  • U.S. House of Representatives, Committee on Financial Services, 2001, Hearings on Dismantling Terrorist Financial Networks: Testimony of Jimmy Gurule, Treasury Undersecretary for Enforcement, October 3.

    • Search Google Scholar
    • Export Citation

  • U.S. Senate, 2001, “Bayh Amendments Will Starve Terror Groups of Funding in U.S. and Abroad,” Press Release, October 4.

  • U.S. Senate, Committee on Banking, 2001a, Hearings on the Administration’s National Money Laundering Strategy: Testimony of Alvin James, September 26.

    • Search Google Scholar
    • Export Citation

  • U.S. Senate, Committee on Banking, Subcommittee on International Trade and Finance, 2001b, Hearing on Hawala and Underground Financing Terrorist Mechanisms: Testimony of Rahim Bariek, Bariek Money Transfer, November 14.

    • Search Google Scholar
    • Export Citation

  • U.S. Senate, Committee on Banking, Subcommittee on International Trade and Finance, 2001c, Hearing on Hawala and Underground Terrorist Financing Mechanisms: Prepared Statement of Mr. Patrick Jost, SRA International, November 14.

    • Search Google Scholar
    • Export Citation

  • U.S. Treasury, Financial Crimes Enforcement Network, 1997, “The Colombian Black Market Peso Exchange,” Advisory No. 9, November.

  • Wall Street Journal, 2002, “Money Network Tied to Terrorism Survives Assault,” April 22, p. A1.

  • Wilson, John F. 1992, “Physical Currency Movements and Capital Flows,” Report on the Measurement of International Capital Flows: Background Papers (Washington: International Monetary Fund), pp. 91– 97.

    • Search Google Scholar
    • Export Citation

  • Wood, Adrian, 1988, “Global Trends in Real Exchange Rates: 1960-1984,” Discussion Paper No. 35 (Washington: World Bank).