Hawala

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The hawala financial system ( Arabic حوالة, DMG Ḥawāla , fromحَوَّلَ / ḥawwala  / 'change, transfer'; Hindi: trust ; The term guarantee credit also refers to it) is an informal payment method that exists worldwide in payment transactions , in which transactions are carried out exclusively with cash .

General

Hawala has its roots in the early medieval trading company of the Middle East . However, it is not part of Islamic banking today because credit institutions are not involved.

With the hawala system, cash can be transferred quickly, confidentially, anonymously and very inexpensively. In Germany, hawala banking is prohibited without the approval and control of BaFin . Hawala transactions made nevertheless are punishable by law .

The transfer of cash promotes anonymity for cash deposits and cash withdrawals , because the payer and recipient are not registered. The entire payment chain, including the hawala, is part of the illicit money transaction .

functionality

How hawala works (see text): 1 - A hands over money (red) to X and gives him the code (blue); 2a / 2b: Code is communicated to B and M independently of each other ; 3a: B calls over M the codeword 3b whereupon M knows that B rightful recipients, and hand over the money to him.

Hawala is mainly based on trust .

example

Person A ( payer ) who wants to transfer cash to person B ( payee ) must trust the “hawaladar” ( merchant ) to whom he or she hands over the cash. Person B , on the other hand, must trust their hawaladar. In addition, a code agreed between A and B is used for authentication against the Hawaladar. This code can be e.g. B. be a word or numbers.

Person A hands over $ 10,000 cash to Hawaladar X in New York . This is related to Hawaladar M in Karachi , who pays person B the exchanged value in cash. Here are bank charges or taxes evaded. The commission retained by the Hawaladar amounts to 0.25 to 1.25 percent of the transferred amount. If A and B are at their hawaladars ( X and M ) at the same time, the entire transaction can take place within a few minutes.

The system is similar to the designed for speed international transfer systems of Western Union and MoneyGram , with the difference that in hawala X and M are independent persons acting, whereas in the mentioned banking systems each have the same bank, both the role of X and by M takes over. Another difference is that A and B normally neither identify themselves to the hawaladars X and M nor do they have to prove the origin of the money. In addition, with Hawala A and B, the code word can be agreed beforehand instead of being assigned a reference number by X.

Now, the hawalader X 10,000 US dollars debt to hawalader M . These debts will be settled again with the next transactions that have nothing to do with persons A and B. This " offsetting ", which is often not necessary, is then carried out in the context of mutual deliveries of goods, services or in the form of jewelry, gold or other valuables. In reality this system is much more complex.

A hawaladar who cheats or gets involved with criminal organizations will sooner or later be ostracized by his national and international colleagues and usually banned from his profession. He no longer receives any orders and, conversely, no further orders are accepted from him. The punished person loses at least his deposit, his business and the reputation in his religious or ethnic community.

A hawala dealer's office is often located within a regular business such as a retail store, an import-export company, or a religious or social institution. Doing business in a café or on the park bench is possible.

Legal issues

In a typical hawala system, cash transfers are secret: no records are kept or accounting records are issued of who is the sender and who is the recipient of a particular transfer. As a result, all measures aimed at identifying undesirable activities based on the associated financial flows (such as the Money Laundering Act ) are in vain . This also applies to government measures

Therefore the hawala system is forbidden by law in some states (as in India ). In other states, the system is not prohibited in itself, but there are regulations about what records must be kept in financial transactions (most western countries).

In Germany

In 1998, BaFin's predecessor institution , the former Federal Banking Supervisory Office (BaKred), investigated 201 administrative proceedings against companies that illegally offered cross-border transfer services. In 1999 a further 284 proceedings were opened. Some transfer offices have been given regular BaKred approval to offer financial transfers according to the hawala principle completely legally and permanently - in compliance with the generally applicable banking law regulations. In 2002, 120 administrative proceedings were initiated against unauthorized cross-border money transferring companies and in 2003 another 210 proceedings.

Anyone who provides payment transaction services without the permission of the Federal Financial Supervisory Authority (BaFin) is liable to prosecution under Section 54 of the German Banking Act .

The hawaladars can also make themselves liable to prosecution under other regulations, for example because of commercial tax evasion or violation of the Foreign Trade Act (AWG) (e.g. Iraq embargo in accordance with Section 74 (1) Foreign Trade Ordinance (AWV)). The risk of criminal liability due to the Foreign Trade Act exists because of the transfer of goods, which takes place to compensate for the transfer of money. As soon as goods leave Germany to be transferred to the destination country, it must be checked whether there is an embargo .

Money Laundering Act

Since there are neither records of the debtor nor the payee, it is not possible to identify the parties involved by establishing their identity (collecting information) and checking their identity in accordance with Section 1 (3) of the GwG . Since the beneficial owner in accordance with Section 3 of the GwG cannot be identified either, it is a question of money laundering under Section 1 (1) of the GwG , which is a criminal offense under Section 261 of the German Criminal Code .

Legal position since June 2009

Since June 25, 2009, the criminal liability of hawala banking has been based on the newly enacted Payment Services Supervision Act (ZAG). A detailed set of facts was created according to which hawala banking, which was carried out without approval and control by BaFin, is punishable. The criminal liability is therefore based on Section 1 Paragraph 1, 2 No. 6 ZAG, Section 31 Paragraph 1 No. 2 ZAG in conjunction with Section 8 Paragraph 1 ZAG. For the purposes of criminal prosecution, the time at which the offense was committed is important for the application of the ZAG or the KWG: If the banking was carried out before June 25, 2009, the old KWG applies, after this time the current ZAG applies.

Hawala banking case in November 2019 in Germany

In November 2019, money, vehicles, gold and jewelry worth 22 million euros were confiscated in a nationwide raid against illegal hawala banking. The head of the organization is said to be a Düsseldorf owner of a jewelry chain who ran the hawala banking business in his jewelry branches and pawn shops in Berlin.

distribution

Hawala is mainly used by Muslim migrants for remittances to their families in their home countries. In particular, hawala banking is carried out when there is no functioning banking system in the home country. For example, Iraq has not had a banking system for many years, which is why regular transfers from Europe to Iraq are not possible. Since this transfer system is mainly used by migrants, the individual payers only receive small amounts of money (e.g. as monthly maintenance payments) in their home countries, so that regular transfers by migrants via the international banking system are often too expensive. Therefore, the migrants try to avoid expensive transfer fees for international payments with the help of hawala banking.

In practice, this monetary system is open to everyone. It is also used by German companies and international aid organizations for transfers if required.

The same money transfer system also exists in East Asia; it is under the names “ Hundi ”, “Fei Chien” ( Chinese  飛 錢  /  飞 钱 , Pinyin fēiqián , W.-G. fei 1 -ch'ien 2  - “flying money”), “Huikuan” ( 匯款  /  汇款 , huìkuǎn  - "transfer"), "chop", "chit" or "flying money". The "Colombian System" has existed in Latin America since the 1970s; it is the result of the black peso market .

According to statements from supranational organizations, around 200 billion dollars are transferred annually worldwide in this way. According to estimates by Pakistani Finance Minister Shaukat Aziz , of the $ 6 billion transferred to Pakistan in 2000, only $ 1.2 billion went through his country's regular banking system. According to estimates by experts from the Financial Action Task Force on Money Laundering (FATF), which is affiliated with the OECD , half of the Indian economy uses the hawala system for money transfers.

According to a Swedish study of 280 money transfer offices, in 2003 the 244 “official” ( Western Union , MoneyGram etc.) transferred 1 billion kroner, but only 36 “alternative”, unofficial money transfer offices transferred 1.1 billion kroner. The international financial and trading center Dubai is considered a center of the hawala system , where larger transfers and the settlement of the hawaladars are made. Experts predict an increased use of automatic teller machines (ATM) for home transfers by migrant workers, which will lead to a lower market share for the hawala system.

In July 2005, the Russian Drug Control Agency discovered a criminal organization . It conducted illegal monetary transactions made from the profits of drug and contraband trade in Russia. The money transfer has been processed via the hawala system since 2003.

Terrorist organizations such as the Islamic State are also financed with donations.

literature

See also

Web links

Individual evidence

  1. ↑ a b c Principles of order of supranational transaction security in the Islamic hawala financial system M. Schramm and M. Taube, University of Duisburg, July 2002
  2. ↑ Informal Money Transfer Systems: Opportunities and Challenges for Development Finance (PDF; 276 kB) Leonides Buencamino and Sergei Gorbunov, Discussion Paper of the United Nations Department of Economic and Social Affairs , November 2002, page 2
  3. ↑ FAZ of February 25, 2011, page 25: No questions, no names, no receipt
  4. ^ Michael Findeisen: Underground Banking in Germany - Interfaces between illegal "Remittance Services" i. S. v. Section 1 (1a) No. 6 KWG and the legal banking business, in: WM - Wertpapiermitteilungen, Zeitschrift für Wirtschafts- und Bankrecht, 54th year, issue 43, October 2000: 2125–2133
  5. ↑ a b c Islamist Terrorism - Inventory and Combat Options ( Memento from July 3, 2007 in the Internet Archive ) Volker Foertsch / Klaus Lange (Eds.) Hanns Seidel Foundation, Munich, 2005 ISBN 3-88795-282-0  : Role of ethnic diasporas and migrants in the formation of conditions to finance international terrorism, Irina Abramova, p. 100
  6. ↑ Islamist Terrorism - Inventory and Combat Options ( Memento from July 3, 2007 in the Internet Archive ) Volker Foertsch / Klaus Lange (Eds.) Hanns Seidel Foundation, Munich, 2005 ISBN 3-88795-282-0 Michael Findeisen, Measures of the FATF against Terrorism Financing, page 128
  7. ↑ The misuse of the financial system by "underground banking" - inventory and countermeasures ( Memento from January 31, 2012 in the Internet Archive ) Dt. Federal Ministry of Finance, monthly report 10/2004
  8. ↑ corresponding prison sentences in the Berlin terrorist trial: "Training for terror fliers in Strausberg?" Die Welt, July 5, 2003, "Revision of the Al-Qaeda Judgment in Berlin" BBV, April 8, 2005
  9. ^ "BRD justice is doing its duty" Junge welt from November 29, 2006, BGH judgment 1 StR 73/02 ( Memento from August 21, 2008 in the Internet Archive )
  10. ↑ Handelsblatt dated November 20, 2019, “Hawala-Banking”: Values ​​of 22 million euros were seized during the raid , accessed on November 24, 2019
  11. ↑ Spiegel No. 37/2002, p. 86
  12. ↑ Opium for the whole world By Lutz Kleveman DIE ZEIT 48/2002
  13. ^ The banking system of the poor Alfred Hackensberger, Telepolis of May 21, 2004
  14. ↑ Islamist Terrorism - Inventory and Combat Options ( Memento of July 3, 2007 in the Internet Archive ) Volker Foertsch / Klaus Lange (Eds.) Hanns Seidel Foundation, Munich, 2005 ISBN 3-88795-282-0 The Economy of Terrorism - Transfer of Money, Dan Magnusson, 185
  15. ^ Alfred Hackensberger: This is how the Islamic State is financed . In: Welt Online , November 17, 2015. Accessed November 18, 2015. 
  16. ↑ Elizabeth Dickinson: Playing with Fire: Why Private Gulf Financing for Syria's Extremist Rebels Risks Igniting Sectarian Conflict at Home. In: Brookings Institution ANALYSIS PAPER Number 16, December 2013. Archived from the original on February 6, 2016 ; Retrieved November 18, 2015 .