Date of Award

Spring 5-19-2017

Degree Type

Thesis

Degree Name

Master of Science (MS)

Department

Interdisciplinary Studies

First Advisor

Margaret McCoey

Abstract

Informal value transfer systems (IVTS') predate not only traditional banking systems, but the entire Western European civilization as well. Used as a reliable method to transfer value from one geographic region to another through a close-knit network of trusted individuals, IVTS' serve as an invaluable facilitator for the movement of billions of dollars across international borders without ever leaving a paper trail. The term “hawala”, which is Arabic for “transfer” or “trust”, is an IVTS that serves as a parallel banking system for those wishing to send value (often in the form of currency) overseas. Hawala has historically thrived as a connection to the global economy in parts of the world where sociopolitical unrest may have disrupted day-to-day financial activities and its resilience, among other factors, has propelled it to the preferred method of value movement by its customers (Viles, 2008).

With conservative estimates between $100 billion to $300 billion annually, the massive movement of value through hawala on a global scale continues to be unregulated and operates in secrecy through trusted networks that have been in place for centuries. Consumers of hawala range from individuals wanting to send remittances to relatives in a foreign country to terrorists attempting to fund their activities under the radar of government surveillance (Dougherty, 2006). While there are obvious and glaring money laundering risks associated with hawala, do the dangers of regulating such a robust IVTS outweigh the benefits of complying with U.S. laws and regulations?