Money Wars: Hawala and Its Use to Finance Terrorism

After the horrible attacks on September 11, 2001, an ancient
informal money transfer system called hawala came under
scrutiny for its possible involvement in the financing. This book
explores what other, similar informal transfer systems exist, and
what their percentage of total remittances is. After an analysis of
its competitors, hawala is further explained through a sample
transaction, followed by an insight on its bookkeeping. Later the
institutional framework is analyzed and, most important, its
considerable incentives to the customer are outlined.
The work then tries to define the ‘ideal’ characteristics of a
transfer system in respect to terrorist financing and explores the
current and actual use of hawala to finance terrorism. How are
the necessary funds generated and moved? A brief outlook into
the future of terrorist financing will end this chapter.
Being aware of the incentives to the regular customer as well
as to the terrorist organizations to use hawala , the major policies
to stop the financing of terrorism will be evaluated as to their
efficiency. Are they enough to dry up terrorist funding?