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

Occasional Papers, August 18, 2003

Source details

Canonical URL

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

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Mohammed El Qorchi, Samuel Munzele Maimbo, John F. Wilson
• Published: August 18, 2003
• Series: Occasional Papers
• DOI: https://doi.org/10.5089/9781589062269.084

Overview and scope

• Title: Informal Funds Transfer Systems: An Analysis of the Informal Hawala System
• Authors: Mohammed El Qorchi, Samuel Munzele Maimbo, John F. Wilson
• Date of publication: August 18, 2003
• Series: Occasional Paper No. 2003/004
• Issue: 004
• Pages: 64
• Volume: 2003
• ISBN: 9781589062269
• ISSN: 0251-6365
• DOI: https://doi.org/10.5089/9781589062269.084

Central findings and focus

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

Subject classifications and keywords

• Subject: Balance of payments, Banking, Commercial banks, Currencies, Economic sectors, Financial institutions, Financial sector, Foreign exchange, Money, Remittances
• Keywords: authority, Commercial banks, Currencies, Financial sector, Hawala transaction, IFT, IFT system, IFT transaction, Middle East, North America, OP, remittance system, Remittances, South America, South Asia, Southeast Asia, transaction, transfer system

Operational features and vulnerabilities (as examined)

• Historical evolution and socioeconomic drivers shaping hawala operations.
• Features that increase susceptibility to financial abuse:
  • Informality of record-keeping and settlement mechanisms.
  • Cross-border settlement practices that may bypass formal banking channels.
  • Reliance on trust, reputation, and community networks rather than formal documentation.

Macroeconomic and fiscal implications examined

• Implications for hawala-remitting countries:
  • Effects on official balance of payments reporting and foreign exchange flows.
  • Potential tax revenue and fiscal policy consequences where transactions occur outside formal channels.
• Implications for hawala-recipient countries:
  • Influence on monetary aggregates and informal liquidity circulation.
  • Challenges for monetary policy implementation when significant remittance flows bypass banking systems.

Regulatory and supervisory responses covered

• Survey of current regulatory and supervisory measures addressing hawala-related risks.
• Consideration of approaches to reduce susceptibility to financial abuse while recognizing socioeconomic functions of hawala in affected regions.

Access and publication notes

• Formats and distribution:
  • Listed as an IMF Occasional Paper with more formats available on the IMF eLibrary.
  • Citation format example provided in Chicago style.
• Related administrative metadata:
  • Stock No: S222EA

Source: Informal Funds Transfer Systems: An Analysis of the Informal Hawala System, Mohammed El Qorchi, Samuel Munzele Maimbo, John F. Wilson, Occasional Paper No. 2003/004, August 18, 2003.