Historical Traces of Hundi, Sociocultural Understanding, and Criminal Abuses of Hawala

Abstract

This article presents a descriptive and exploratory analysis of informal money transfer systems like Hundi and Hawala starting with a historical account of Hundi, its decline, and re-emergence as a Hawala-like system in South Asia and the Middle East. Hawala is a consequence of a number of factors, such as poor banking infrastructure, global migration, economic crimes, and political corruption. It gained global notoriety after it was suspected that the September 11, 2001, attacks on the United States were carried out with the money that was transferred from the Middle East through Hawala. The article highlights legal, illegal, and criminal abuses of Hawala. By understanding the larger sociocultural, economic, and historical framework, the model of Hawala can be applied to other forms of informal banking that could eventually help in regulating these systems without alienating immigrant and refugee populations. The article makes use of both primary and secondary data.