Since 9/11, hawala banking (financial service providers who carry out financial transactions whereby cash, cheques or other valuable goods are accepted at one location and a corresponding sum in cash or other remuneration is paid at another location) has attracted a great deal of attention. Much has been written on the subject, but so far little empirical research has been conducted into the misuse of hawala banking for criminal purposes. This paper aims to fill this gap.
The paper contains an analysis of 12 police files on the use of hawala banks by perpetrators of crime. The data gathered from these cases are compared to what has been reported on hawala banking in the existing literature.
The literature emphasises the importance of trust between client and banker, as well as between hawala bankers themselves. Trust is supposedly based on strong social ties (ethnic and family ties). The 12 cases studied (almost all of which concerned the misuse of hawala banking by drug dealers) put the significance of trust into perspective: the importance of ethnicity and personal trust should not be exaggerated. When the stakes are high, a common social background and shared ethnicity between bankers, as well as between bankers and their clients, seems to be less important than is often assumed.
The paper goes beyond the traditional focus on trust and strong social ties.
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