Hawala Method in Terrorism Financing and Money Laundering

ŞAFAK ERTAN ÇOMAKLI, MURAT UZUN

Abstract


The Hawala method and informal value transfer systems used for hundreds of years enable the transfer of value without the use of formal financial institutions. Especially in societies where the banking system is not developed, the contribution Hawala and informal value transfer systems give to the society when it is used for legal purposes like humanitarian aid cannot be denied. However, today it is not possible to say that Hawala method is used for human purposes only.

The Hawala system can be used for various purposes such as getting rid of high transaction costs in the banking system, avoiding auditing and capital controls and tax evasion. Also, Hawala as an informal value transfer system which provides anonymity and requires minimum documentation is accompanied by the risk of exploitation by terrorist organizations and organized crime groups. Especially after the September 11 attacks sensitive monitoring of organizational money traffics has strengthened the possibility that Hawala could be used as a method of money laundering.

In this study, Hawala method, the role of Hawala on terrorism financing and money laundering and in this context the policies that can be developed aiming at prevention of the abuse of terrorist organizations and organized crime groups will be pointed out.


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