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37 Denv. J. Int'l L. & Pol'y 379 (2008-2009)
Hawala, Money Laundering, and Terrorism Finance: Mirco-Lending as an End to Illicit Remittance

handle is hein.journals/denilp37 and id is 385 raw text is: HAWALA, MONEY LAUNDERING, AND TERRORISM FINANCE: MICRO-LENDING AS AN END TO ILLICIT REMITTANCE CHARLES B. BOWERS* I. INTRODUCTION Hawala, in Arabic, means to transfer;' it is also known as Hundi, meaning to collect - from Sanskrit root.2 Though the term might be a new addition to the western lexicon, it is used quite readily the world-over in some form. A traveler's check, for example, is known as hawala safir from parts of Africa to Asia and throughout the Middle East.3 This paper, as interlocutor, seeks to introduce (to re-introduce to some) not only the term hawala, but the unique security challenges this concept - that of an informal, and less than transparent, value transfer system - presents. Beyond examining the role of hawala in money laundering and terrorism finance, the objective of this work is to weigh the effectiveness of current efforts in addressing these issues, both at the street-level and in the legislative realm, post September 11, 2001 (9/11). Lastly, the author offers recommendations based on US, UAE, Turkey, and Netherlands-based research coupled with numerous interviews with various subject-matter experts ranging from international bankers to legislators to diplomats to federal agents. II. THE HAWALA TRANSACTION Hawala, in its most basic delineation, is money transfer without money movement,4 without movement in formal financial institutions that is. Upon customer request, a US-based hawaladar - a hawala operator will call, fax, or email their hawaladar associate in Pakistan, for example, with the specifics of the transaction (i.e. amount and password only - no names are used). This Pakistan- based hawaladar will then pay the requested amount out of his/her own funds, and in local currency, upon receiving the agreed upon password from the recipient. The only paper trail might be a notation, often encoded or in a little-known dialect . An attorney living in Washington, D.C. Special thanks to FinCEN, the Grameen Foundation, professor Marilyn Cane, and Mr. John Cassara. 1. Samuel Munzele Maimbo, The Money Exchange Dealers of Kabul: A Study of the Hawala Systems in Afghanistan v n. 1 (World Bank Publication, Working Paper No. 13, 2003). 2. Saeed Al-Hamiz, Hawala: U.A.E. Perspective, in REGULATORY FRAMEWORKS FOR HAWALA AND OTHER REMITTANCE SYSTEMS 30, 31 (Int'l Monetary Fund, 2005). 3. Id. 4. JOHN A. CASSARA, HIDE & SEEK: INTELLIGENCE, LAW ENFORCEMENT, AND THE STALLED WAR ON TERRORIST FINANCE 145 (Potomac Books 2006).