presentatie hawala banking english version

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“HAWALA-BANKING”

Geert DELRUE

Detective Commissioner

Belgian Federal Criminal Police

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TYPOLOGY

HAWALA

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Contents of the exposé

HAWALA-WHAT

HAWALA-WHO

HAWALA-HOW

HAWALA-WHERE


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HAWALA-WHAT

OTHER DENOMINATIONS

„Hawala’ means ‘transfer’ – ‘certificate’ ‘Hundi’ in Pakistani and means ‘trust’ ‘Fei-chien’ in Chinese and means ‘flying money’ ‘Padala’ in Filipino ‘Nging sing kek’ ‘PHOW kuan’ ‘Chiao hui’ ‘Hui kuan’ ...

“HAWALA”

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HAWALA-WHAT

OTHER DENOMINATIONS

underground banking informal money transfer system ethnic banking informal financial services informal value transfer system alternative remittance system …. typology for money laundering

“HAWALA-BANKING” Western Union Ad Warning

Potential Hawala Users

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HAWALA-WHAT

ORIGIN:

traditional way of banking, from Asia and the Middle-East, originating from silk route between Asia and Europe

existed already before our actual Western system its pratical use is mainly for legitimate business

and innocent transactions (personal investments, traveler costs, medical costs, education, financial support of family in the homeland, ….. BUT

is also misused


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HAWALA-WHAT


DESCRIPTION

Hawala is an informal money transfer system and a basic means of transferring sums of money through the whole world in a safe and paperless way

The Eastern Western Union

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TYPOLOGIE

HAWALA-WHAT

TWO SORTS:

1. Hawala as supplemental activity by merchantse.g. telephone shops, food supply shops,

nightshops, …

2. Hawala as a part from professional informal bankers


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MTOMTO

beneficiarysender

…and vice versasender

sender beneficiary

beneficiary

Phone-house,

fax, gsm

“call houses”,

fax, gsm

The UK-Nigeria Remittance Corridor The U.S.-Guatemala Remittance Corridor The Netherlands-Morocco Remittance Corridor The Netherlands-Suriname Remittance Corridor The Germany-Serbia Remittance Corridor The Italy-Albania Remittance Corridor The Canada-Vietnam Remittance Corridor The U.S.-Mexico Remittance Corridor

TYPOLOGY

HAWALA-WHAT

CORRIDORS

CORRIDORSUnderground financial centra

F.i. Karachi, Dubai

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TYPOLOGIE

HAWALA-WHAT

LEGAL

financial support of family

legal trade

payment of ZAKAT

...

Which payments?

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ILLEGAL

capital flight

tax fraud (import duties, excise duties, income tax, …

terrorism-financing

evasion of currency restrictions

drugs- and human-smuggling

evasion of international sanctions and embargos

payments in the informal economy

….

TYPOLOGIE

HAWALA-WHATWhich payment?

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Which customers?

foreigners

illegals

foreign people who have a legal status, but prefer familiarity and efficiency

people who got money from illegal activities

etnicity: Nigerians, Pakistanis, Afghans, ...

international organisations and NGO`s

immigrant-workers

…

TYPOLOGY

HAWALA-WHO

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TYPOLOGY

HAWALA-WHOHAWALADARS

foreigners

money-transmitters (bankers)

usually merchants: call-houses, traveling agencies, jewelers, food stores, …

supplementary activities: change of currency, money lending

…

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Characteristics- voordelen?

currency / payment in euro

efficiency / quickness

user-friendly

reliable

no legal restraints, e.g. KYC

family, friends, more social control

mistrust of formal authorities in the homeland

low transaction costs / favorable exchange rates

…

TYPOLOGIE

HAWALA

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Charateristics – Misuse - RISCS?

small risc of getting caught by the autorities

no obligation for identification –anonymity

no paper-trail

difficult detection (no physical money remittance)

trust

...

TYPOLOGY

HAWALA

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HOW DOES IT WORK?

Sender A, banker A’, banker B’, beneficiary B• A gives 100 euro to A’, with the request to transfer the money to B• A’ calls in B’ and B’ pays the sum to B

(euro or local currency)• B’ has a credit on A’: solution through balancing,

by:a) transactions to and fro, b) physcial correction,c) flow of goods from B’ to A’

Balancing: besides moving also changing

TYPOLOGY

HAWALA-HOW

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Scheme?

SENDER A €100HAWALADAR A’

BELGIUM

CASH COURIER and/or BALANCING

HAWALADAR B’ HOME-LAND

BENEFICIARY B €90

owner transfer services

CASH COURIER

COURIERCOURIER

telephone, fax, e-mail, …

other “hawaladar”

€ 95

COURIERCOURIER

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bank of the

sender

central bank

SWIFT

Money-transfer (wire transfer)

through

the bank (correspondent banking) SWIFT

bank of the

beneficiary

sender beneficiary

TYPOLOGY

HAWALA-HOWTRANSFER

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TYPOLOGYHAWALA-HOW

family/sender

beneficiary/family

Paperless

Difficult detection

Based on trust

Posibble in both ways

$

$

spoken exchange(sum, transaction code

usually no money)

Hawaladar

Hawaladar

Example of a “one way” transaction

HOW DOES IT WORK?

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BALANCING

Dependent of some elements:

nature of the client

quantity of the money

relation with the customer

background activities of the hawaladars

TYPOLOGIE

HAWALA-HOW

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BALANCING MONEYSTREAM TO AND FRO

Ways of getting the money to the homeland

‘cash couriers’ (professionals or as a favor) –physical transport

hiding of the money in goods, which are shipped

transfer through the formal banking system

mixture of legal and illegal funds

through trade in goods, such as…

…

TYPOLOGIE

HAWALA-HOW

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BALANCING VIA TRADING IN GOODS

2d hands clothing

cars and working tools

agrarian products

electronics

package materials

animal food

beer

goods with a great value, e.g. diamonds

….

TYPOLOGY

HAWALA-HOW

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Characteristics of “terrorism financing”

Transactions by terrorists are usually unique and

with large amounts of money (aid by states,

donations from sympathisants, legal economic

activities and criminal activities) and the use of

underground networks which play an essential

role in their activities

This in contrast with other payments by workers-

migrants which happen more often to family and

in smaller amounts

TYPOLOGY

HAWALA-HOW

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TYPOLOGIE

HAWALA

Hawala is an informal money transfer system, a

means of sending money through the whole

world in a safe and paperless manner

Islamic Banking carried out as described in the

Koran, is used for legal money collection and

payment. This is particularly in the case of

ZAKAT FUNDS

Characteristics of “terrorism financing”

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Zakat is a form of giving

charity for the benefit of the

poor and the preach (learning)

of the Islam

According to the Koran every

Muslim must give 2,5% of his

fortune, on top of what he

needs himself

“Take from their wealth a portion for charity,

in order to clean them thereby, and sanctify them.”

Giving Bread

and Milk

ZAKAT

TYPOLOGIE

HAWALA

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ZAKAT

Zakat is given at the beginning

of the month of „Muharram‟,

which indicates the beginning

of the moon newyear

Zakat is one of the five

keystones of the Islam and is

considered as the basis of

social justice and prosperity in

the Muslim-world

Ukrainian mosque

Built with Zakat

funds

TYPOLOGY

HAWALA

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HAWALACONCLUSION

POINTS OF INTEREST:

- during a house search : fax-, telephone-

and portable-accountants

- separate notes of bookkeeping

- outprints from fax-traffic

- maybe already bookkeeping on the

computer or e-mail-traffic

- …

presentatie hawala banking english version

Economy & Finance