Hawala
A hawala, or Hundi is a traditional system of informal payments distributed. Its exact origin is not determined, but it seems to have emerged as a means of financing trade on major trade routes (like the Silk Road ) in the early Middle Ages. It is mentioned since the eighth century in texts of fiqh (the science of Islamic law ). In South Asia it has developed into a full banking system, only gradually replaced by the traditional banking system since the twentieth century. Nowadays it is mainly used for remittances by migrant workers to their countries of origin. The word "hawala" means "trust" or "exchange" in Hindi.
The basic principle of any Hawala is to move money in a network of brokers (the hawaladars): a client gives money to one of these agents, contact the agent most close to the recipient of this sum and asked him to pay this amount (less a commission, usually) in exchange for a promise to repay later.
This system works without transmitting payment means (a tool of representation of value, such as currency ), resting entirely on trust between the network agents. Since it does not depend on the legal enforcement of contracts, this system works even in the absence of a common legal framework. There is no central registry, and transactions through this system are generally not recorded: the only information required for operation is to maintain the total amount of outstanding debt between each system agent debts can be settled in any manner chosen by the agents.
This informal debt forgiveness allows a Hawala agents to circumvent the official exchange rates by practicing their own rates, which provides an opportunity for additional income while providing an alternative often attractive to customers. This transfer system escapes taxation, regulation and currency control of foreign trade by the state, which is why it is illegal in some countries (notably in several states of the United States ).
In the Indian subcontinent, the Hunde refer to a historical financial tool, used as payment and exchange, and consisting of a written order of payment by a creditor to a debtor for the benefit of a third person. At the time of the Kings or Rajha, they were used to transfer funds from long distance. Hunde have no legal status in India since the Negotiable Instruments Act of 1881 and have since been used as a check by local banks.
Hawala and the attacks of September 11, 2001
After the attacks of September 11, 2001 Hawala has been the attention of investigators to have been used to finance terrorism. In November 2001, the Bush Administration of the United States has frozen the assets of Al Barakat , a Somali hawala payment company widely used by the Diaspora Somali, and several officers were arrested this network. The official report of the 9 / 11 Commission later concluded that the bulk of funds used to organize these attacks had actually passed through the network for transfer of the SunTrust Bank of Florida , charges against Al-Barakat was abandoned and its agents relaxed and finally removed in August 2006 from the list of suspected terrorists used by U.S. federal agencies, but many of the company's assets remain frozen.
Despite this, under pressure from the U.S. federal government, international efforts have been undertaken to implement the Hawalas systematic measures of control against money laundering worldwide. Several Hawala networks have since been closed and some hawaladars convicted of money laundering.
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