Hawala and Related Informal Value Transfer Systems--An Assessment in the Context of Organized Crime and Terrorist Finance: Is There Cause for Concern?

• NCJ Number: 219306
• Journal: Security Journal Volume: 20 Issue: 3 Dated: July 2007 Pages: 185-196
• Author(s): Shima Keena
• Date Published: July 2007
• Length: 12 pages
• Publication Format: Article
• Publication Type: Report (Study/Research)
• Language: English
• Country: United States of America

Annotation

This article attempts to develop a better understanding of informal value transfer systems (IVTS) within the context of organized crime and terrorist finance in order to establish whether the perceived threat and misuse of IVTS is justified.

Abstract

Informal value transfer systems (IVTS) have thrived typically in jurisdictions where the formal financial sector is either absent or weak. The majority of IVTS serve legitimate needs and are frequently the only option available, especially for communities who work away from their home country. However, IVTS face risks for misuse either for terrorist financing purposes or for money laundering purposes. In terms of regulation, the Western model may not be appropriate for IVTS. In attempting to introduce any type of regulation, a thorough understanding of the inner workings of the system is required together with the support of those involved, the IVTS operators. The primary aim of regulation would be to increase transparency which would make it easier for law enforcement to carry out investigations. However, prescribing regulation alone will not ensure compliance. An improved understanding of IVTS at a global level is recommended through international cooperation along with a better understanding of transnational crime. In addition, a better understanding of not only informal but formal money and value transfer mechanisms must be understood, as well as the modus operandi of organized crime gangs and terrorists. Future research is recommended in the field of financial crime. The September 11 attacks on the United States highlighted the importance of tackling terrorist finance. With the increased interest in terrorist financing methods came negative attention on hawala and related IVTS. The suspicion has been generated, in part, to the lack of transparency, making the money trail challenging for financial investigators. References