1. The Hawala alternative remittance system (or ‘Money Transfer without
Money Movement’),
June 2013, prepared by:
Dr. A. Coutroubis &
G. Kiourktsoglou, PhD Cand.

2. The Context: remittances to developing countries
Officially recorded remittance flows to developing countries (2012): $401 bil.
Annual growth : 5.3%
Expected aver. an. growth (up to 2015) : 8.8%
Current projection : $515 bil. by 2015
Source: World Bank, , [Accessed 03 June 2013]

3. Informal Value Transfer Systems (I.V.T.S.)
1. Undival (Tamil communities of Sri Lanka) ;
2. Hundi (India) ;
3. Fei Ch’ien (China) ;
4. Padala (Philippines) ;
5. Hui Kuan (Hong Kong) ;
6. Phei Kwan (Thailand) ;
Source: Dalhousie Marine Piracy Project: Beating the Banks - Hawala’s Place in the
Global Financial Environment and its Potential Links to Piracy, , [Accessed 03 June 2013]

4. The Hawala alternative remittance system (or ‘Money Transfer without
Money Movement’), I
1. Definition:
An informal system that allows quick, reliable & inexpensive (apr. 2% com.) transfers of money ;
2. Geography:
Somalia, Afghanistan, and Pakistan ;
Source: Dalhousie Marine Piracy Project: Beating the Banks - Hawala’s Place in the
Global Financial Environment and its Potential Links to Piracy, , [Accessed 03 June 2013]

5. The Hawala alternative remittance system (or ‘Money Transfer without
Money Movement’), II
3. Origins:
Unknown; first used in S. Asia and the M. East (Middle Ages); mentioned (8th cent.) in Islamic jurisprudence texts ;
4. Differentiating Features:
Trust ;
Informality ;
Anonymity ;
Source: Dalhousie Marine Piracy Project: Beating the Banks - Hawala’s Place in the
Global Financial Environment and its Potential Links to Piracy, , [Accessed 03 June 2013]

6. How does Hawala work? Yasmeen (Agent, Hawaladar, N.Y.) offers:
fee of 1 (total: $25) rupee for each $ transferred ;
exchange rate of 37 (31) rupees for a $ ;
delivery is (not, $40) included ;
Abdul is:
a Pakistani cabby in N.Y. ;
on a tourist visa (long expired) ;
to send $5,000 to Mohammad (Karachi) ;
Ghulam (Hawaladar / Trader, Karachi)
Mohammad (Recipient, Karachi)
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]

7. Beating the Banks Hawala Banks(s) Account No Yes Time to Delivery
48 hours
5 w. days
Exchange Rate
37 / $
31 / $
Commission / Fee
1 Rs / $
$25
Extras (Courier Serv.) No
$40
Remittance in Rs
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]

8. Hawala Bookkeeping Date Hawaladar Debt Ex. Rate $
Way of Settlement: Bank, Bank Check, Commodity (52 Tolas of Gold, Hindi)
Date
Hawaladar
Debt
Ex. Rate $
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]

9. Indicators of Hawala, I
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]

10. Indicators of Hawala, II
1. Bank Account features significant deposit activity in cash and/or checks from members of Afghan, Bangladeshi, Indian, Pakistani and Somali Communities ;
2. Checks may also have some kind of notation ;
3. Bank Account features significant (outgoing) transfer activity to a major financial center known to be involved in Hawala (G. Britain, Switzerland, Dubai…) ;
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]

11. ‘Black’ Hawala Money laundering consists of three phases :
1. Placement
2. Layering
3. Integration
Hawala can be used at any phase !
‘Black’ Hawala has been used in :
I. Piracy ;
II. Narcotics & Human trafficking ;
III. Terrorism ;
IV. Welfare Fraud ;
V. Insider training ;
VI. Customs and Tax Violations ;
VII. Gambling ;
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]

12. Motivations for the Use of Hawala
1. Effectiveness (low overhead, fav. exchange rate, integration with existing busin. activities) ;
2. Time Efficiency ;
3. Reliability ;
4. Lack of Bureaucracy ;
5. Lack of Paper Trail ;
6. Tax Evasion ;
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]

13. Thank you for your attention.
Any questions please?

14. Back-Up Slides

15. Businesses more likely to be involved in Hawala
1. Import / Export ;
2. Travel and Related Services ;
3. Jewelry (gold, precious stones) ;
4. FOR.EX. ;
5. Rugs / Carpets ;
6. Used Cars ;
Source: The Hawala Alternative Remittance System and its Role in Money Laundering, , [Accessed 03 June 2013]