Chapter 4Hawala: An Alternative Remittance System

There are an estimated 232 million migrant workers around the world.1 Globalization, demographic shifts, regional conflicts, income disparities, and the instinctive search for a better life continue to encourage ever-more workers to cross borders in search of jobs and security.

Many countries are dependent on remittances as an economic lifeline. The World Bank estimates that global remittances will reach $707 billion by 2016.2 Western Union, Money Gram, Ria Money Transfer, Dahabshill are just a few of the well-known companies that provide official remittance services for the world's migrants. Of course, banks and nonbank financial institutions are also used. In 2013, some of the top recipients for officially recorded remittances were India (an estimated $71 billion), China ($60 billion), the Philippines ($26 billion), Mexico ($22 billion), Nigeria ($21 billion), and Egypt ($20 billion). Pakistan, Bangladesh, Vietnam, and the Ukraine were other large beneficiaries of remittances. As a percentage of GDP, some of the top recipients were Tajikistan (48 percent), the Kyrgyz Republic (31 percent), Lesotho (25 percent), and Moldova (24 percent).3

These are estimates of what is officially remitted. Unofficially, nobody knows. However, the International Monetary Fund believes, “Unrecorded flows through informal channels are believed to be at least 50 percent larger than recorded flows.”4 So using the above World Bank and IMF estimates, ...

Get Trade-Based Money Laundering now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.