Difference between revisions of "Hawala (Middle East, India and Pakistan)"

[[File:Hawala Market Afghanistan.jpg|400px|thumb|right|]]

[[File:Hawala Market Afghanistan.jpg|400px|thumb|right|]]

<blockquote>“A kind of bill of exchange or written order for payment that its drawers used much in the same way that the Americans used checks to draw on their checking accounts. In order to draw a Hundi, a client had to open up an account and maintain a correspondence relationship with a [private] banker.”<ref>Padayachee, V., Morrell, R. 1991. ‘Indian merchants and dukawallahs in the natal economy’. Journal of South African Studies, 17 (1): 71-102.</ref></blockquote><br><br>Essentially, ''hawala'' and ''hundi'' have the same meanings and are used interchangeably, especially now that the system has gained international notoriety. However, ''hawala'' is an Arabic term while ''hundi'' is its Indian and Pakistani variant. It has been suggested that ''hundi'' and ''hawala'' have amalgamated into one network and their distinctions have been dissolved <ref>Jost, P. and  Sandu, H. S. 2000.  The Hawala alternative remittance system and its role in money laundering.  Interpol General Secretariat, Lyon.</ref>.<br><br>Every year billions of dollars are transferred across countries and continents using Informal Value Transfer Systems (IVTS).  The Financial Crimes Enforcement Network (FinCEN) defines IVTS as, “Any system, mechanism, or network of people that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location, or not in the same form.”  ''Hawala'' is one of the key forms of IVTS.  It is estimated that every year US$100 billion to US$300 billion flow through the Informal Value Transfer Systems <ref>Buencamino, L. and Gorbunov, S. 2002.  Informal money transfer systems: Opportunities and challenges for development finance.  Discussion Paper of the United Nations Department of Economics and Social Affairs, Discussion Paper No. 26.  Obtained through the Internet: http://www.un.org/esa/desa/papers/2002/esa02dp26.pdf, [accessed 10/4/2009]</ref>. <br>[[File:Hawala Market Photo.jpg|400px|thumb|left|Stacks of cash in a Hawala market in Afghanistan]]

<blockquote>“A kind of bill of exchange or written order for payment that its drawers used much in the same way that the Americans used checks to draw on their checking accounts. In order to draw a Hundi, a client had to open up an account and maintain a correspondence relationship with a [private] banker.”<ref>Padayachee, V., Morrell, R. 1991. ‘Indian merchants and dukawallahs in the natal economy’. Journal of South African Studies, 17 (1): 71-102.</ref></blockquote><br><br>Essentially, ''hawala'' and ''hundi'' have the same meanings and are used interchangeably, especially now that the system has gained international notoriety. However, ''hawala'' is an Arabic term while ''hundi'' is its Indian and Pakistani variant. It has been suggested that ''hundi'' and ''hawala'' have amalgamated into one network and their distinctions have been dissolved <ref>Jost, P. and  Sandu, H. S. 2000.  The Hawala alternative remittance system and its role in money laundering.  Interpol General Secretariat, Lyon.</ref>.<br><br>Every year billions of dollars are transferred across countries and continents using Informal Value Transfer Systems (IVTS).  The Financial Crimes Enforcement Network (FinCEN) defines IVTS as, “Any system, mechanism, or network of people that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location, or not in the same form.”  ''Hawala'' is one of the key forms of IVTS.  It is estimated that every year US$100 billion to US$300 billion flow through the Informal Value Transfer Systems <ref>Buencamino, L. and Gorbunov, S. 2002.  Informal money transfer systems: Opportunities and challenges for development finance.  Discussion Paper of the United Nations Department of Economics and Social Affairs, Discussion Paper No. 26.  Obtained through the Internet: http://www.un.org/esa/desa/papers/2002/esa02dp26.pdf, [accessed 10/4/2009]</ref>. <br>[[File:Hawala Market Photo.jpg|400px|thumb|left|Stacks of cash in a Hawala market in Afghanistan]]

Informal Value Transfer Systems were established means of transferring valuables and money long before any of the formal methods were conceived. However, since the growth of formal value transfer systems, informal systems have operated in the shadows, albeit maintaining a devoted following. Many of today’s IVTS originated among ethnic Asian peoples who based codes of conduct for value/money transfer on mutual trust within groups and individuals. The various systems derived their names from the geographical locations and the ethnicity of the groups that practised them. Passas has summarised some of the more common names for IVTS practices in different parts of the world:<ref>Passas, N. (1999). Informal value transfer systems and criminal organizations: A study into so-called underground banking networks. Netherlands Ministerie Van Justice, The Hague, Netherlands. Obtained through the Internet: http://www.minjust.nl:8080/b_organ/wodcpublications/ivts.pdf [accessed 1/5/2003].</ref>

Informal Value Transfer Systems were established means of transferring valuables and money long before any of the formal methods were conceived. However, since the growth of formal value transfer systems, informal systems have operated in the shadows, albeit maintaining a devoted following. Many of today’s IVTS originated among ethnic Asian peoples who based codes of conduct for value/money transfer on mutual trust within groups and individuals. The various systems derived their names from the geographical locations and the ethnicity of the groups that practised them. Passas has summarised some of the more common names for IVTS practices in different parts of the world:<ref>Passas, N. (1999). Informal value transfer systems and criminal organizations: A study into so-called underground banking networks. Netherlands Ministerie Van Justice, The Hague, Netherlands. Obtained through the Internet: http://www.minjust.nl:8080/b_organ/wodcpublications/ivts.pdf [accessed 1/5/2003].</ref>