The fact that hawala circumvents amlctf measures to facilitate both. A case study on the misuse of hawala banking article in international journal of social economics 35september. A case study on the misuse of hawala banking request pdf. One definition from interpol is that hawala is money transfer without money movement. Informal value transfer systems, terrorism and money. There is a growing nexus between terrorist financers and the abuse of hawala. Guidelines on how to use hawala cash learning partnership. There exists a similar yet different perspective on hawala amongst scholars, making it difficult at times to mitigate the risks of being used in terrorist financing. Tracing hawala money transactions in india oneindia news. In a prototype hawala transaction figure 1, an expatriate worker ca uses a hawaladar ha to arrange a remittance to his home country. The role of hawala and other similar service providers in. It exists and operates outside of, or parallel to traditional banking or financial channels. Origins and practical applications michael bates intl453 b001 prof. In india a hawala transaction is punishable under the fema foreign exchange management act 2000 and pmla prevention of money laundering act 2002.
A guidance to understand hawala and to establish the nexus. The recipient can receive the funds without producing identity documents other than. It is a form of financial transaction developed in india and later spread across middleeast and northern africa. While hawala transactions are mostly initiated by emigrant workers living in a developed country, the hawala system can also be used to send funds from a developing country, even though the purpose of the funds transfer is usually different. Efficient and reliable a hawala remittance transaction for one individual. Hawala means transfer in arabic and the system works by transferring money without actually moving it. As we will see, the delivery associated with a hawala transaction is faster and more reliable than in bank transactions. The basic hawala transaction involves a sender, two trusted intermediaries, and a recipient. Since many hawala transactions legitimate and illegitimate are conducted in the context of importexport businesses, the manipulation of invoices, as discussed above, is a very common means of settling accounts after the transactions have been made.
A hawala remittance transaction takes place within one or two days. In addition to serving as a tutorial on hawala transaction, this paper will also discuss the way in which hawala is used to facilitate money laundering. Hawala 1 is an alternative or parallel remittance system. In india a hawala transaction is punishable under the fema foreign exchange management act 2000 and. Hawala remittance system and money laundering u4 anti.