Hawala Banking

Speaker: Kathy Thorne QC
Chambers: Doughty Street Chambers

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

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