Money Remittance Systems
(1) Hawala
Hawala1 is an alternative or parallel remittance system. It exists and operates outside of, or parallel to traditional banking or financial channels. It was developed in India, before the introduction of Western banking practices, and is currently a major remittance system used around the world. It is but one of several such systems; another well-known example is the chop, chit or flying money system indigenous to China, and also, used around the world. These systems are often referred to as underground banking; this term is not always correct, as they often operate in the open with complete legitimacy, and these services are often heavily and effectively advertised. The components of hawala that distinguish it from other remittance systems are trust and the extensive use of connections such as family relationships or regional affiliations. Unlike traditional banking or even the chop system, hawala makes minimal (often no) use of any sort of negotiable instrument. Transfers of money take place based on communications between members of a network of hawaladars, or hawala dealers .
Following diagram summarizes the transaction:
Andrew wants to send some money to Paul, inquire from Hawala agent.
Transfer the amount through a call
Collect all the necessary details
Ultimate Receiver get it easily(Paul)
Hawala works by transferring money without actually moving it. In fact, money transfer without money movement is a definition of hawala that was used, successfully, in a hawala money laundering case.
I request you to send your true comments,critics to update my works. Thank you !.
ReplyDelete