Hawala can be simply defined as an alternative or parallel remittance system that exists and operates outside the traditional banking system. Typically, a hawala transaction transfers the value of money from one country to another without the corresponding movement of cash or cover across borders. Another way of looking at the transaction is that it is a transfer of debt.
In September 2004, Da Afghanistan Bank, the country’s central bank, introduced legislation to regulate and supervise the activities of money service providers in Afghanistan. This regulation applies to all individuals and legal entities that provide money services in Afghanistan, whether or not the individuals and legal entities are domiciled in Afghanistan. For the purposes of the regulation, money services are defined to include safekeeping, money transmission, check cashing, and currency exchange. A licensed money service provider is entitled to engage in all of the activities of a foreign exchange dealer, but a licensed foreign exchange dealer may not engage in safekeeping, money transmission, or check cashing without upgrading its license to that of a money service provider.1
On behalf of the Somali people, I would like to take this occasion to thank H.H. Sheikh Zayed bin Sultan Al Nahyan, the President of the United Arab Emirates (U.A.E.); Their Highnesses, the members of the Supreme Council; and the government and the people of the U.A.E. for their generous hospitality in accommodating such a big community of Somalis who live and work in their country. The U.A.E. has been our second home for a long time and especially during the past 14 years since the state of Somalia collapsed.
Hawala and other remittance systems have gained attention in recent years with the substantial growth of remittance flows from countries with large migrant labor forces and with increased focus on combating money laundering and the financing of terrorism. The IMF and the World Bank have been researching these systems since 2002 to better understand the interplay of historical, cultural, and economic factors that promote such systems. This book is a survey of regulatory practices and an overview of experiences in different countries, and includes articles on regulatory frameworks in remitting and receiving countries and on the problems that can arise when regulating remittance systems.
Hawala means “transfer” in Arabic and refers to a traditional informal and efficient funds transfer method used by millions of expatriates to send remittances to their families around the world. Several studies emphasize hawala’s economic and humanitarian significance. In the midst of calls to shut down all potential means used by militants to finance their terror, the First International Conference on Hawala, held in 2002 in Abu Dhabi, was successful in offering an opportunity to examine hawala beyond media sensationalism and rushed policy responses.
The purpose of this paper is to comment on the Brazilian foreign exchange system and to show why informal money transfers are not allowed. The sections that follow briefly describe Brazil’s financial system and its foreign exchange system and discuss the most important aspects of their regulation. The section “Monitoring of the Foreign Exchange System” comments on the surveillance procedure, which aims to maintain the regular operation of the system. The last part of this paper describes the treatment of informal money transfers.
The First International Conference on Hawala, hosted by the government of the United Arab Emirates under the leadership of the Central Bank of the U.A.E. in May 2002, was a groundbreaking event that produced the Abu Dhabi Declaration on Hawala. The IMF was very pleased that the government of the U.A.E., again with the leadership of the Central Bank, collaborated with the IMF to organize this second conference.
This paper discusses Colombia’s experience of implementing a regulatory framework for money transfers that is capable of attracting money remitters to cross the line to a formal system. It also describes the supervisory practices and procedures the country designed and has applied for the past 12 years to enforce those regulations.
The Eastern and Southern Africa Anti–Money Laundering Group (ESAAMLG) was conceived in 1999 and is a Financial Action Task Force–style (FATF-style) regional body with a membership of 14 countries—Botswana, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.