Hawala: How an ancient monetary system combines crime and help

Hawala: How an ancient monetary system combines crime and help

In recent years, the informal money transfer system Hawala has come into focus from investigative authorities. This method, which has its origin in the 8th century in the Abbasid caliphate, is used by criminals to finance illegal business and terrorism as well as legal organizations and aid organizations. Hawala, which means "transfer" in Arabic, is based on trust and simplified transfers for migrants and refugees.

The functionality of Hawala is unique and works without direct money transactions. A payer hands over a amount of money to a local Hawaladar, who then contacts a colleague at the payout location in order to transmit the amount and a code. The recipient receives the money in cash and in the corresponding state currency. Due to this structure, which works according to the "system of two pots", the flow of money often remains unobserved and difficult to understand, which makes it difficult to uncover illegal activities.

crime and regulation

The Bafin and the Federal Criminal Police Office are concerned about being used for money laundering and terrorist financing due to their non-regulated nature. The lack of a direct supervision ensures that these systems can thrive in many parts of the world. It is estimated that around $ 200 billion flow over Hawala every year, with up to 65 percent of funds being transferred in regions such as southern Africa in this way.

Investigations, such as that of Achim Schmitz from LKA NRW, show that the authorities actively act against opaque money transfers. 400,000 euros of illegal funds were secured on a so-called “action day”. In addition, numerous people in Germany are suspected of having transferred more than 200 million euros unauthorized. These practices illustrate the challenges that the security authorities have in dealing with Hawala.

Hawala in the humanitarian context

Despite the risks associated with Hawala, the system is also used by aid organizations to provide humanitarian aid. For example, Welthungerhilfe resorted to Hawala in exceptional cases in order to provide help after the Taliban's takeover in Afghanistan. According to Sabine Pott from Welthungerhilfe, more than two million people were kept alive through these transfers.

Welthungerhilfe, however, only works with certified cash agents who do not have a license but can still help those in need. This aspect is a particularly delicate balance, since the use of the Hawala methods for charitable purposes must also be seen as an expression of emergency aid.

outlook on the future of Hawala

The regulatory challenges are enormous, and experts such as Matthias Casper, professor of capital market law, doubt that Hawala can ever be legalized as long as it is not operated commercially. In view of the estimated transfer volumes and the associated potential criminal acts, it remains to be seen how the authorities will react to these problems in the future.

The debate about Hawala is therefore complex and complex because it illuminates both the need for regulation and humanitarian aspects. The legal framework for money transfers remains uncertain, while more and more people have to fall back on alternative systems to support their relatives and communities.

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