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The Money War: America's Efforts to Police Terrorist Financing and Its Impact on Hawala Networks
Mines, Charlotte
Mines, Charlotte
Abstract
For millions of migrant workers, transnational families, and unbanked populations, hawala facilitates essential monetary services and is, for many, the default financial system, allowing for the almost immediate transfer of any amount, in any currency, without the physical movement of cash and any documentation or identification. The tangible improvements hawala can make to the lives of families has been overshadowed by the supposed threat it poses to the national security of Western countries as a tool of Islamic terrorists. These contrasting views of hawala—as an essential financial provider and an embedded cultural tradition in the East, and as a terrorist’s financial laundromat in the West—clashed forcefully during the post-9/11 period. American and European governments shouldered the task of securing the financial sector, targeting counterterrorism efforts at small terror cells whose transactions would generally pass undetected. Through both domestic and international regulation schemes, Western countries declared war on hawala networks as the “lifeblood” of terrorists.This thesis considers the societal costs of American policies seeking to monitor, regulate, and choke off hawala systems, efforts that started in the 1990s and intensified with post-9/11 regulations. Weaving together discussions of hawala, counterterrorism policy, financial regulation, and informal value transfer systems, as well as government documents, and contemporary news sources, it examines the reasons behind hawala’s survival, and the challenges it presents to regulators. The debate over the nature of hawala networks -- as a criminal force and danger to the formal financial system, and as a traditional community-based service for those excluded from Western banking -- is relevant for understanding the dynamics of American hegemony over international finance. It also reveals the need for cultural sensitivity and customized structures in international regulatory efforts to ensure effectiveness and minimize unintended consequences for the states and populations impacted. Ultimately, the West’s deeply flawed conception of hawala as an enemy and a threat undermined the value of regulating hawala; to do so effectively would require a significant reorientation away from Western priorities and toward the needs of the people who use hawala every day.
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2021-05-01
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Global Studies