Group Members

introduction

History

Its leagal or illegal

introduction

What is hwala system?

The word "Hawala" means trust. which works outside the circle of banks and formal financial systems. It is also sometimes referred to as “Underground Banking”. "Hawala" consists of transferring money (usually across borders and in order to avoid taxes or the need to bribe officials) without physical or electronic transfer of funds

History of hawala

the Indian sub-continent for use in trade and credit transactions. Hundis are

used as a form of remittance instrument to transfer money from place to

placeas a form of credit instrument or IOU to borrow money and as a bill of

exchange in trade transactions. The Reserve Bank of India describes the Hundi

as "an unconditional order in writing made by a person directing another to

pay a certain sum of money to a person named in the order.

Its legale or ilegale

Yes, Hawala has been made illegal in many countries, as it is seen to be a form of money laundering and can be used to move wealth anonymously.

Why illegal?

As hawala transactions are not routed through banks they cannot be regulated by the government agencies and have thus emerged as a major cause of concern. This network is being used extensively across the globe to circulate black money and to provide funds for terrorism.

How Hawala works?

Hawala works by transferring money without actually moving it. In a hawala transacIn the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladarstion. There are more than 200 Islamic banks in the USA alone and many thousands in Europe, North and South Africa, Saudi Arabia and pakistan.

Role of the hawala system in the economic

development of Pakistan

The hawala system can exist outside of the traditional legal system it based

on long trem trust in mutul fund.it have negative efect on the development

of the economy as its transfer of money with out any legale channels such as

banks ,post offices and EC’s etc.

Pakistani policy maker are strongly criticize the hawala system as dangerous

because transactions are extremely private,and no advantage to economy

such as no paying any tex and other marginal costs on currences.

Cont...

As its illegale this type of transfer of money can be used by terriorist of

luondering money that is high disadvantege of it as in pakistan now day war

on terrior been going on so we have need of implement rule for hawala

system to minimize this kind of activity.

In hawala system we concern with individual money not comulativaly thats

why its do not any help in devlopment.

Its have no tax on it.

Cont....

Advantage if we make hawala system legal such that remittance will be boost

our economy.

Illegal econmy in the region of pakistan

Pakistan is uniquely challenged by the nexus between crime and the illegal economy due to its geographic location as our relation with nighbours as Afghanistan complicated by croos boder crimnalty which allow sumgling and other activities that can informal and formal organized criminal networks of supplier rings, wholesalers, financiers, protectors and patrons.

The proceeds of illegal and criminal economic activities, in proportion to GDP, appear to be generally higher in developing countries.

Pakistan’s GDP was approximately US $169.6 billioin 2009/10.In 2003, the size of the informal economy was estimated at 30 percent of the GDP. The State Bank of Pakistan (SBP) suggests that this had droppedto below 20 percentby 2008. This SBP estimate means that Pakistan’s informal economy was approximately US $34 billion in 2009/10 as 4.2% in GDP of pakistan.

Settlements of accounts in hawala

system

Cash recive with any physical transfer:

e.g Fareed U.S. resident of Pakistan descent wishes to send money to his family

in Pakistan.' Fareed then approaches Khalid,a hawaladar,or money remitter,inthe

United States who has acounter part in Pakistan,Nawaz. Both Khalid and Nawaz

own jewelry stores.and hwaldar as side business freed gave him mony to send it

and some commesion.so Khalid cal nawaz to pay to fareed family at pakistan and

contact fareed family via email or sent message and send the asociated code

with transction get money from nawaz and minus comesion.

How Hawala works?

criminal

•Who donot want to show his income source

Financial comp

•Who do not want to pay any tex while transpering money

Commercial bank

•Some time comecial bank want to invest black money such offshore banks

Terorrest fiancing

Hawala agenceis

Hawal use as promissory notes

Italy was the first country in the world to enact a law to protect remittances

in 1901.

while Spain was the first country to sign an international treaty (with

Argentina in 1960) to lower the cost of the remittances received.

Since 2000, remittances have increased sharply worldwide, having almost

tripled to $529 billion in 2012. In 2012, migrants from India and China alone

sent more than $130 billion to their home countries.

In September 2008, the World Bank established the first international

database of remittance prices.

kistan Remttance or transfer of money cam on the official chanels like banks EC’s

and pakistan post offices .if its came on unofficial chanels then its illegale

such like hawala and money cam through hands.

In November 2008 Munaf Kalia (Chief Executive Officer of Khanani and

Kalia International (Pvt.) Ltd.), Yusuf Kalia, and associates, were charged

for illegally transferring funds from Pakistan to Afghanistan.

Pakistan is now try to compansate legal transfer of money by minimizing

the cost of its transfer compare to illegal transfermation.

SA28%

UAE22%USA

17%

UK12%

GCC11%

other 10%

remittance

SA UAE USA UK GCC other

Bank:Are the market player in remittance 5 big banks in pakstan such like

UBL, NBP,HBL,MCB,ABL are providing services in remittance market.

Exchange companies:these companies are enforced in 2002 to bring exchange

and reittance bussines under proper financial decipline.these transfer are

online and proper ducumented.zeroc exchange partener with Wester

union,wall street exchanges,

Post offices:pakistan have post offics over 13419 all over pakistan thy are

providing the services of remitance too.

20000003000000

2000000

5000000

10000000

3000000 30000002000000

0

80000009000000

28000000

3200000033000000

42000000

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Rimittance inflow in pakistan

Pakistan Workers remittances and compensation of employees .The value for Personal remittances, paid (current US$) in Pakistan was 28b as of 2011. As the graph shows, over the past 13 years this indicator reached a maximum value of $42b in 2014 and a minimum value of $0.00 in 2008.

Pakistan the 1980s appeared to be the golden period when around half of the remittances inflowto South Asia was received as compared to 12 percentin 2009.The foreign remittances to Pakistan according to official data declined from US$ 1467 million in 1991 to US$1086 million in 2000/01 butsubsequentlythe remittance registered a large increase to US$ 5.6 billion in 2008-09.

In 2014 our remiiance was 6.5 billion

Wich was 9% of gdp and in Q3 of 2014 it have 9.3 % transfer cost.

Our rermittance is equale to our export.

T.C

Column1

0

20

40

60

80

100

transfer cost GDP i pak economy 42 billion

9.3 9

100

90.7 91100

T.C Column1

the hawala system It is less expensive, swifter, more reliable, more

convenient, and less bureaucratic than the formal financial sector.

And remittance is full confidencial and their is no fraude but in the hawala

system their is high risk at low cost her in the Remttance high cost but no risk

of damaging of your transfermation.

so what do you prefer is your own decsion.

H&RFei-chain (China)

Padala (Philpine)

Hunidi (India)

Pei kawan (thieland)

Hui kuan (HongKong)

The methodology of analyzing Most of the remittance we analysis for

individual instead of analyzing agregative flows of remittance.

We have to make these kind of instiute that they can estimate the remitance

and make investment plane for them.

One aspect is its potential impact on the monetary accounts of countries on

either end of the hawala transaction. Because these transactions are not

reflected in official statistics, the remittance of funds from one country to

another is not recorded as an increase in the recipient country's foreign assets

or in the remitting country's liabilities, unlike funds transferred through the

formal sector. As a consequence, value changes hands, but broad money is

unaltered. However, hawala transactions may affect the composition of broad

money in a recipient country.

Books

1. Remittances in Pakistan: Why Have They Gone Up, and Why Aren't They Coming Down By Udo Kock,

Yan Sun

Migrant Labor Remittances in South Asia By Samuel Munzele Maimbo, Richard Adams, Nikos Passas,

Reena Aggarwal

Iamges from google