It is Western Union without the hi-
tech gear and the exorbitant transfer fees.
Unfortunately, these networks have been hijacked and compromised by
drug traffickers (mainly in Afganistan and Pakistan), corrupt
officials, secret services, money launderers, organized crime, and
terrorists. Pakistani Hawala networks alone move up to 5 billion US
dollars annually according to estimates by Pakistan's Minister of
Finance, Shaukut Aziz. In 1999, Institutional Investor Magazine
identified 1100 money brokers in Pakistan and transactions that ran
as high as 10 million US dollars apiece. As opposed to stereotypes,
most Hawala networks are not controlled by Arabs, but by Indian and
Pakistani expatriates and immigrants in the Gulf. The Hawala network
in India has been brutally and ruthlessly demolished by Indira
Ghandi (during the emergency regime imposed in 1975), but Indian
nationals still play a big part in international Hawala networks.
Similar networks in Sri Lanka, the Philippines, and Bangladesh have
also been eradicated.
The OECD's Financial Action Task Force (FATF) says that:
"Hawala remains a significant method for large numbers of businesses
of all sizes and individuals to repatriate funds and purchase
gold.... It is favoured because it usually costs less than moving
funds through the banking system, it operates 24 hours per day and
every day of the year, it is virtually completely reliable, and
there is minimal paperwork required.
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