Occasional Papers

Informal Funds Transfer Systems: An Analysis of the Informal Hawala System

Author/Editor:

Mohammed El Qorchi ; Samuel Munzele Maimbo ; John F. Wilson

Publication Date:

August 18, 2003

Electronic Access:

Link to Abstract

Summary:

Since the terrorist attacks of September 11, 2001, there has been increased public interest in informal funds transfer (IFT) systems. This paper examines the informal hawala system, an IFT system found predominantly in the Middle East and South Asia. The paper examines the historical and socioeconomic context within which the hawala has evolved, the operational features that make it susceptible to potential financial abuse, the fiscal and monetary implications for hawala-remitting and hawala-recipient countries, and current regulatory and supervisory responses.

Series:

Occasional Paper No. 2003/004

Subject:

Balance of payments Banking Commercial banks Currencies Economic sectors Financial institutions Financial sector Foreign exchange Money Remittances