1 / 9

The Hawala remittance system

The Hawala remittance system. Nuno Rogeiro IEA-Euro Atlantic Institute Lisbon. Definition and reality. What: An alternative, informal, financial remittance system Where: Middle East, Africa, Asia When: Middle Ages to today

selah
Download Presentation

The Hawala remittance system

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Hawala remittance system Nuno Rogeiro IEA-Euro Atlantic Institute Lisbon

  2. Definition and reality • What: An alternative, informal, financial remittance system • Where: Middle East, Africa, Asia • When: Middle Ages to today • For whom? Initially, people living far away. After, poor and migrant populations. Now, migrant workforce.

  3. Principles • Contractual oral /personal trust • Oral (amply) defined mandate (the origin of Italian “Avalo” and French and Portuguese “Aval”) • Flexible network of Hawaladars, generally chosen according to route • Service commission, no profit • No document trail (except in Hundi) • Personal settlement of arising problems

  4. Advantages for users • Informal value transmission system (IVTS) • Discretion • No unexpected fees • No continued fees • Tax, immigration,money rating, legal avoidance • “Mission Impossible” type of task for couriers • Possibility of supplementary income for brokers

  5. How relevant • 100 billion USD in transactions, pre 911 • Increased migrant populations in Europe • A decline after 911 • Still very relevant in India and Pakistan • Formal Banking losses

  6. What it is not, in principle • A true, full fledged, all operations bank • A multi-service structure • A legal, registered business • A totally “invisible” structure • An always presumed money laundering scheme • A true charity or uninterested public service

  7. The Al Barakhat case • Founded in 1985 in Somalia, by Ahmed Jumala • Main initial reasons: collapse of the administrative system, important migrant population, difficult communications, etc. • Originality: non typical Hawala, combining formal and informal elements • Under fire in the Horn of Africa and the US • Danger: easily penetrated

  8. What you do not see... • A true dilemma is the need to have publicity and transparency, and at the same time the inclination not to precipitate social crises among migrant workers • The growth of formal “popular banks”, with reduced rates and flexible, tailored services • Is it possible to fully integrate Hawala into the open air economy?

  9. What you do not see (2) • 911 was not funded by Hawala mechanisms • Part of the March 11, 2005, Madrid operation may have been • Some signs in Bali, Mombassa, Dar es Salam and Nairobi • Hawala and bulk cash carrying: the network and its parts

More Related