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A case study on the misuse ofhawalabanking

Author

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  • Henk van de Bunt

Abstract

Purpose - Since 9/11,hawalabanking (financial service providers who carry out financial transactions whereby cash, cheques or other valuable goods are accepted at one location and a corresponding sum in cash or other remuneration is paid at another location) has attracted a great deal of attention. Much has been written on the subject, but so far little empirical research has been conducted into the misuse ofhawalabanking for criminal purposes. This paper aims to fill this gap. Design/methodology/approach - The paper contains an analysis of 12 police files on the use ofhawalabanks by perpetrators of crime. The data gathered from these cases are compared to what has been reported onhawalabanking in the existing literature. Findings - The literature emphasises the importance of trust between client and banker, as well as betweenhawalabankers themselves. Trust is supposedly based on strong social ties (ethnic and family ties). The 12 cases studied (almost all of which concerned the misuse ofhawalabanking by drug dealers) put the significance of trust into perspective: the importance of ethnicity and personal trust should not be exaggerated. When the stakes are high, a common social background and shared ethnicity between bankers, as well as between bankers and their clients, seems to be less important than is often assumed. Originality/value - The paper goes beyond the traditional focus on trust and strong social ties.

Suggested Citation

  • Henk van de Bunt, 2008. "A case study on the misuse ofhawalabanking," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 35(9), pages 691-702, August.
    • Handle: RePEc:eme:ijsepp:v:35:y:2008:i:9:p:691-702
    DOI: 10.1108/03068290810896316
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    Citations

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    Cited by:

    1. Dulce Redín & Reyes Calderón & Ignacio Ferrero, 2014. "Exploring the Ethical Dimension of Hawala," Journal of Business Ethics, Springer, vol. 124(2), pages 327-337, October.
    2. Alexander Lascaux, 2015. "Crowding Out Trust in the Informal Monetary Relationships: The Curious Case of the Hawala System," Forum for Social Economics, Taylor & Francis Journals, vol. 44(1), pages 87-107, April.
    3. Claudius Gräbner & Wolfram Elsner & Alex Lascaux, 2021. "Trust and Social Control: Sources of Cooperation, Performance, and Stability in Informal Value Transfer Systems," Computational Economics, Springer;Society for Computational Economics, vol. 58(4), pages 1077-1102, December.

    More about this item

    Keywords

    Banking; Trust; Money markets; Crimes;
    All these keywords.

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