Hawala Banking

Hawala Banking

Katy Thorne QC

Barrister

Doughty Street Chambers

This seminar will cover

What is Hawala banking?

• informal money transfer systems or alternative remittance system

• money is passed on through a network of brokers or agents without the actual/physical movement of cash

• the transmission of money in ways other than the regular banking routes and hence sometimes called underground banking

• Based on trust, reputation and honour

Origins

• originating in South Asia, as silk trade developed, hawala is popular all around the world

• been in existence for hundreds of years, and pre-dates modern day financial systems

• Also known as “mirror banking” or “chops” in China, “Hundi” in parts of India, “black market peso exchange” in south America, albakarat (etc etc)

Often linked to travel/import-export businesses

Rajesh gives Dinesh money.

Kiran pays out hawala to Rajesh’s sister Smitha

Now Dinesh owes Kiran money

Dinesh pays Kiran’s customer’s Dubai hotel bill

Trust

• Very little paperwork – based on trust and honour

• Rejash must trust Dinesh. Smitha has to trust Kiran. Two brokers have to trust each other

• Hawala is often based on ethnic or family trust systems

Full speaker's notes are available in our Past Papers section