Criminal Misuses of an Informal Money Transfer System

HAWALA is a cultural, clan-based, or ethnic system that was originally rooted in a legitimate practice. It is fast and inexpensive, and the community network also ensures its reliability. In fact, the system has gained significant popularity. However, the lack of specific information on users ensures their anonymity, and the inability to trace funds-due to the transfer of claims alone-has made this practice vulnerable to exploitation by criminal and terrorist organizations. While European anti-money laundering directives provide some guidance, lessons learned from a specific case reveal the areas on which verification efforts should focus, particularly with regard to the broker. Finally, the existing legal framework-though underutilized-calls for the pooling of expertise and authority among different stakeholders operating within an interministerial framework, thereby ensuring success in the fight against this phenomenon.