Curbing the use of Hawala for money laundering and terrorist financing: global regulatory response and future challenges

Farooqi, M. Nauman

doi:10.1504/ijbge.2010.029556

Cited by 5 publications

(7 citation statements)

References 5 publications

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“…This consolidatory behaviour exhibited by the Hawaladars is indicative of a desire to preserve collective reputation of the Hawala system (Humphrey & Schmitz, 1996). The offender, if caught, had to face the Hawala jury who then decide on the appropriate course of corrective action or punishment (Farooqi, 2010). A point worth highlighted is that according to the interviewed respondents, and based on the key findings of this study, there were no reported acts of financial misconduct impressing the high level of trust and confidence that exists within HNets.…”

Section: Materials Arrangements Of Hnets: Building and Consolidating Tmentioning

confidence: 84%

“…There have been cases (even though quite rare) where illegal businesses and criminal activity have been known to be funded through Hawala transfers (Passas, 1999). The minimal transaction record with no legal coverage has resulted in fraud (very few cases) due to the untraceable nature of the Hawala tranfers (Schramm & Taube, 2002;Farooqi, 2010). Additionally, the speed of Hawala transaction completion (in most cases) is faster than fromal channel transfers.…”

Section: Hnets In the Gulf Cooperation Council (Gcc) Regionmentioning

confidence: 99%

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Management, Control and Governance of Hawala Networks in the Gulf Cooperation Council Region

Sharif¹,

Mahama²,

Farooqi³

2017

AAMJAF

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Section: Materials Arrangements Of Hnets: Building and Consolidating Tmentioning

confidence: 84%

Section: Hnets In the Gulf Cooperation Council (Gcc) Regionmentioning

confidence: 99%

Management, Control and Governance of Hawala Networks in the Gulf Cooperation Council Region

Sharif¹,

Mahama²,

Farooqi³

2017

AAMJAF

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“…In HN, carefully controlled and cautiously constituted relationship development, laced with verifications, checks and monitoring, was indicative of an exchange examination regime that was meticulous and elaborate. A fundamental reason for this watchful path to association augmentation was high-risk stature of HN (Farooqi, 2010).…”

Section: Discussionmentioning

confidence: 99%

“…This includes no reporting processes, absence of formal documentation and lack of transparency (Ali, 2017). All this is achieved in the absence of a conventional structure where there are no signed contracts or legally agreed set of conditions (Farooqi, 2010). HN work efficiently in dispensing their services.…”

Section: Introductionmentioning

confidence: 99%

Analyzing informal value transfer networks through the lens of social exchanges

Sharif

Farooqi

Kassim

et al. 2021

SBR

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Purpose This study aims to focus on how informal value transfer networks, Hawala business in particular, used social exchanges in their business dealings. More specifically, the conducted research looked into how social exchange theory was used in Hawala business relationship initiation and management. Design/methodology/approach Twenty-one depth interviews were conducted with Hawala Network members, and Hawala customers, in Qatar, Saudi Arabia and Pakistan. The collected qualitative data were analyzed through content analysis and NVivo 11 software. Findings The study outcome indicated that Social Exchange Theory was a principal relationship driver in Hawala Networks. Especially, trust had a pivotal role in evolvement and nurturing of Hawala Network business and social exchanges. Other relationship variables, namely, reciprocity, religious affiliation, reputation and information sharing had a significant part in relationship building as well. Results supported a prominent influence of time in carefully controlled and rigorously assessed transformation of Hawala relationships. This metamorphosis converted an exchange from short-term into a long-term orientation where limited amount transactions changed into large sum transactions and restricted information exchange moved to elaborate information sharing. In addition, findings revealed that monetary and non-monetary interactions between Hawala Network members took the form of a homogeneous club, with shared social, cultural, religious and ethnic values. In particular, financially constrained and illiterate social groups preferred Hawala services due to ease of servicing in the form of minimal bureaucracy, fast transfers and low service charges. These marginalized fractions of society had limited access to formal banking which made Hawala business their main (and in most cases only) source for sending and receiving financial remittances. Hawala Networks provided an effective alternative to formal banking for disadvantaged communities. Originality/value This study provided unique and useful insights into the nature of social exchanges within Hawala Networks. Especially, it provided clarification on how informal networked businesses used Social Exchange Theory to by-pass the need for legal protection and formal contracts. Furthermore, the study highlighted the role Hawala business played in providing essential banking services (e.g. transfer of money and micro-lending) to educationally and economically deprived individuals.

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“…Underground banking, often known as illegal Hawala service, is a type of informal banking that allows money to be transferred locally and internationally without the use of formal/legitimate financial institutions. As a cheap, fast and reliable money transfer system, they are primarily used by overseas migrant workers for sending remittances to their families in their home countries (Farooqi, 2009).…”

Section: Underground/illicit Banking Activitiesmentioning

confidence: 99%

Why money laundering is nurtured in Ethiopia?

Gobena

2021

JMLC

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Purpose The purpose of this paper is to examine the divers and facilitators of money laundering in Ethiopia. Specifically, it looks at the risk factors that existed in the country’s economic and political system, which provide an appealing environment for money laundering to grow. Design/methodology/approach This qualitative study relies on primary data generated from interviewees drawn from the National Bank of Ethiopia, Ethiopian Financial Intelligence Center, Ethiopian Customs Commission, selected financial institutions and certain non-financial businesses and professions and law enforcement agencies, as well as secondary data from government reports, media press, statutes and other online and offline sources. Findings This study finds that the risk factors for the growth of money laundering in Ethiopia are highly reliant on the country’s economic and political system. Accordingly, the nature of Ethiopia’s economy, which is cash-intensive, loosely regulated economic growth and the raise associated criminality, the development of underground banking activities, scarcity of foreign currency reserves and the existence of societal demand for illicit goods and services are all risk factors for the growth of money laundering. The raise of an elite cartel model type of systematic corruption, limited institutional capacity to prevent and suppress money laundering and the absence of a national identity card system are also identified as risk factors for the rife of money laundering in Ethiopia. Moreover, the geopolitical location of the country, its porous borders, limited cross-border cooperation and information sharing add further fuel to the vulnerability of the country to money laundering and associated predicate offense. Originality/value To the best of the author’s knowledge, this paper provides a first-of-its-kind analytical perspective on the risk factors for the raise of money laundering in Ethiopia.

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Curbing the use of Hawala for money laundering and terrorist financing: global regulatory response and future challenges

Cited by 5 publications

References 5 publications

Management, Control and Governance of Hawala Networks in the Gulf Cooperation Council Region

Management, Control and Governance of Hawala Networks in the Gulf Cooperation Council Region

Analyzing informal value transfer networks through the lens of social exchanges

Why money laundering is nurtured in Ethiopia?

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