Hawala: From the Abbasid to the Modern World
Hawala is a system of monetary exchange that circumvents the necessity to be involved with formal financial institutions. It is structured through the use of a third party so that physical money is only transferred at that current time from the initiator to the first hawaladar (or creditor) and from the second hawaladar to the intended receiver of the money. The first hawaladar then owes the second hawaladar a debt to be paid at a later date. Since hawaladars often establish relationships and work with each other many times, debts are often traded back and forth between every transaction.
The breakdown of a simple transaction involves the initiator telling the first hawaladar a code, password, or piece of information and paying them a fee. This hawaladar than contacts another and passes the information on to the new hawaladar. While this is occurring, the initiator of the transaction gives the intended receiver of the money the information as well. This allows the second hawaladar to verify the legitimacy of the debt that is owed to him by the original hawaladar and give the money to the receiver.
The earliest recorded use of the hawala system originates in the Abbasid Empire, which reigned from 750 to 1258 C.E. The large and powerful caliphate, spanning from modern day Tunisia in the west to Pakistan and Kyrgyzstan in the east, developed this new method of financial transfer to avoid the dangers inherent in the long distance transport of physical currency in areas of high trade-related traffic during the Middle Ages. Hawala was utilized under the institution of suftadja, which were mandates to transfer money, often to pay the government. The money was collected from farmers and peasant...
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...se of western ideology. In 2002, the Financial Action Task Force convinced many nations to sign on to the recommendation that extra anti-money laundering requirements be established to regulate alternative money transfer systems at a conference in the United Arab Emirates. In Afghanistan, more than one hundred international aid organizations have established relationships with hawaladars under the Taliban regime to provide relief funds in a secure manner than does not physically move cash from the west.
Hawala today ultimately creates a preferable alternative to the bloated and ineffectual bank institutions seen in places like Afghanistan or the almost total absence of infrastructure found in Somalia. The efficient and easy use of hawalas make far better in business transactions both legitimate and illegitimate throughout the Islamic and their diaspora communities.
Broker: a person or company who acts as a medium of bringing together two parties in a transaction.
The first leg of this trade was merchants from Europe bringing refined goods to Africa to trade for slaves. The merchants traded with chiefs and high authority leaders. The chiefs pretty much could and would trade whomever they
The trafficker: also known as the pimp, daddy or madam; this person would be friends his or her victim by developing a friendly relationship and then cohering to the friend, promising them a better way of life, how he or she can make lots of money. The trafficker will get the friend away from his or her safe place by cohering or kidnapping, now the friend becomes a victim. The trafficker holds the victim hostage, beats them, threatening to kill them or their family members if they don’t provide free labor or sexual acts by the victims the trafficker may also sell the victim to another trafficker.
President’s Commission on Organised Crime 1984, Interim Report to the President and Attorney General, The Cash Connection: Organized Crime, Financial Institutions, and Money Laundering, viewed 28 March 2014, https://www.ncjrs.gov/pdffiles1/Digitization/166517NCJRS.pdf
The concept of the slave trade came about in the 1430’s, when the Portuguese came to Africa in search of gold (not slaves). They traded copper ware, cloth, tools, wine, horses and later, guns and ammunition with African kingdoms in exchange for ivory, pepper, and gold (which were prized in Europe). There was not a very large demand for slaves in Europe, but the Portuguese realized that they could get a good profit from transporting slaves along the African coast from trading post to trading post. The slaves were bought greedily by Muslim merchants, who used them on the trans-Sahara trade routes and sold them in the Islamic Empire. The Portuguese continued to collect slaves from the whole west side of Africa, all the way down to the Cape of Good Hope (South Africa), and up the east side, traveling as far as Somalia. Along the way, Portugal established trade relations with many African kingdoms, which later helped begin the Atlantic Slave Trade. Because of Portugal’s good for...
But perhaps the innovation most constructive and destructive throughout western history, depending on whose hands it was in, was the use of paper money as a substitute for what had been used as real money in other civilizations-gold and silver. Gold and silver are still acknowledged as real money in every civilized nation as well as recognized commodities of real value in primitive societies. Paper money was introduced as a new idea to western civilization by Marco Polo in a chapter of his Travels entitled: "How the Great Khan Causes the Bark of Trees, Made into Something Like Paper, to Pass for Money All Over His Country". After reading the chapter title like that, Polo's readers probably thought the Great Khan to be the Great Con.
Woda, K. (2006). Money laundering techniques with electronic payment systems. Information & Security International Journal, 18, 27–47.
users to send money, using computers. The same can be done by means of mobile phones that are support Web.
Many groups of people use money laundering today, and many ways exist to launder money. Money laundering has become more sophisticated over the years. It is much different then when Al Capone laundered his bootleg profits. The United States is doing what they can to combat this illegal activity but without the help of others it is an impossible task. Many countries have teamed up with the Unites States to help. The only way to truly combat it is to persuade the other countries to develop anti-laundering standards. Along with developing these standards, banks need to train their staff on how to catch different transactions and policies to catch money laundering. Because laundering is so easy in these less developed countries laundering will continue, and while this illegal activity continues the activity itself will continue to destroy the economy in which it exists.
The invention of money was a major improvement in peoples’ lives. In the past, people usually had to travel all day to find the person who is willing to exchange their goods. In addition, the goods people want to exchange did not have the standard value of measurement. This led to unequal exchanges. Furthermore, it is not convenient to carry heavy goods from one place to another for an exchange. To solve these issues, money will be the only solution. Later, people tend to develop money from cowry shells to credit cards for the convenience and to improve their society.
...sive, unaffordable yet basic commodities, spurring economic growth and supporting the legal economy. This is a critical provision as it fosters the aspects of trade in the world. It is also important to agree that this transaction in almost every tradable commodity and services both genuine and counterfeit supports the dealings shown in black market trade. According to Bahmani-Oskooee & Goswami (2005), the supporters of black market cite many reasons for its embracement. The fact that the trade involves transaction in almost every tradable commodity and services both genuine and counterfeit makes it very difficult to curb. This is demonstrated explicitly by the supporters of black market who cite numerous reasons for its existence. The economic support, employment creation, money circulation, and many others have anchored this trade within various world economies.
The second part is the transport. This is where the police officers and border controls plays a major part. In an instance, “internationally trafficking requires the help with making sure the goods has reached their destination without not much of a hassle” (George, 2012). They take bribes that are
...ng an acceptable form of transaction.Governments need to be more transparent to the public.A lot of ‘under table’ transaction take place in the most basic everyday services(passport,license, tax).Such services has the capability to go online reducing the red tape as money is only used via online transaction.
To begin with, a cashless society could be regarded as a world where all bills and debits are paid for with the use of electronic money such as bank and credit cards, direct debits, and online payment. (Business Defintion for: Cashless Society, 2009). Looking back to history, we could see that our ancestors once lived in a cashless world. One might asked how this was possible. The system was based on barter trade in which goods are exchange for something else. My dad once told me how people from the neighboring town used to come to our town back in Edo State, Nigeria using a gallon of red oil, palm wine, cattle, and cow in exchange for a plot of land for farming. Furthermore, people from the city also exchange materials such as clothing, shoes etc in order to get a plot of land for farming. When money became available, the pace at which people uses barter trading system substantially reduce in the sense that only few people were still adopted to barter trade after the use of money was institutionalized as a means of exchange.
A cashless society will further improve the globalisation that characterise our present time. The computerised systems can be used to decrease the quantity of paper trail therefore substituting paper cash with cashless credits or electronic money transfers. However, in a cashless economy, this will change with certain crimes almost eradicated. It will also be faster to generate electronic payments than cash as Near Field Communications (NFC) chips make their way into more payments cards and mobile handsets as well providing protection not applicable to purchases made using cash. This technology is simple with low power wireless link evolved from radio-frequency identification (RFID) tech that can transfer small amounts of data between two devices identifying us and our bank account to a computer. Another benefit of drawing nearer to a cashless society is that other companies are providing pioneering cash-free solutions to the payment related problems we come across. For example, WisePay, a provider of e-payments services, is deploying technologies that ensure parents no longer have to worry about sending their children to school with cash to pay for meals, excursions and other fees that will eliminate the likelihood of being caught short for cash or children misplacing money. The Government also has valuable explanations why they may deem to turn away from cash. Due the main factor of printing and distributing cash, not to mention ensuring the economy is free from forgeries which are all costly endeavours estimating that the cost to society of using cash is between 0.5 and 1.5% of GDP annually. In addition, there are many technological innovations that propose there is a real enthusiasm for an alternative to cash with the upsurge...