Pardee-CFLP-Remittances-TF-Report

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ize the informal equal efforts to alter the age-old traditional networks, which successfullyresisted prohibitions and authoritarian regimes in the past” (Passas 2008,411). Passas suggests that compliance and transparency are more likely to occurif policymaking processes include the input of local hawaladars. As the localappeal of the hawala system is central to its resilience, “there must be incentivesin place for hawala dealers to register willingly with various national and internationalbodies” (Razavy 2005, 291). It is also important to consider competing legalparadigms and strive for their harmonization at local, national, and transnationallevels (Razavy 2005; Passas 2008).There is a growing recognition of the need for a contextual approach to the licensingand registration requirements of informal value transfer systems. For countrieswhere hawala-like networks exist alongside a functional formal financialsector, registration and record-keeping requirements have been suggested alongthe lines of FATF recommendations. In conflict-affected or post-conflict situations,formal banking systems may have broken down and supervisory capacity of thestate diminished. A nuanced and gradual approach to regulating the informalremittance sector has been recommended for such environments (El Qorchi,Maimbo, and Wilson 2003; Passas 2005, 221). In post-conflict Afghanistan, forexample, where the capacity of the Central Bank to exercise formal regulationsis extremely limited, the options for local hawaladars include self-regulationthrough a dealers association and existing business codes, or application of specialregulations through some degree of registration (although not licensing) andsome form of record-keeping and customer identification (Maimbo 2003, 17).Conflict-related insecurity sometimes also can result in an increased local scrutinyof remittance agents and transactions and lead to a greater compliance withinternational regulatory requirements, as the case of Somalia demonstrates.Omer and El Koury (2005) describe how post-conflict insecurity in Somalia ledto thorough screening and documentation practices of the staff and customers oflocal remittance agencies. Various types of written identifications, collaterals, andcommunity references were drawn upon by the Somali remittance entrepreneurs:“Their enforced innovativeness in protecting themselves against insecurity hasunknowingly brought them into compliance with the global sphere of financialregulations, particularly concerning the ‘know your customer’ and ‘know yourprocesses’ methods of anti-money laundering and terrorist financing regulations”(232). A flexible and locale-specific approach is therefore required when implementinganti-money laundering regulations in local remittance networks.Remittance Flows to Post-Conflict States: Perspectives on Human Security and Development 33
Despite the stringent regulatory environment, informal remittances remain a vitaleconomic resource in many areas. The main advantages of informal value transfersas compared to more formal mechanisms like licensed money transfer operators(MTOs), banks, and post offices include cheaper delivery services and greatergeographical reach, particularly in remote areas and among unbanked populations.Informal remittance transfer fees were recently estimated in the two to fivepercent range (Slota 2012). Maimbo (2003) has reported six to 12 hours as an averagedelivery time for hawala remittances in Afghanistan; various other sourcessuggest 24 to 48 hours as a maximum delivery time for international transfersin remote rural areas. Because of its fragmented nature, the hawala networkis capable of operating in environments with minimal physical or institutionalinfrastructure; it has flexibility and adaptability that are indispensable in settingsdevastated by violentconflict or natural disasters.Minimal documentary proceduresand identificationrequirements safeguardthe privacy of transfers andmake the service accessibleto populations inThe main advantages of informal value transfersas compared to more formal mechanismslike licensed money transfer operators(MTOs), banks, and post offices includecheaper delivery services and greater geographicalreach, particularly in remote areasand among unbanked populations.poor and marginal areas (Hariharan 2012, 296–297). The relative anonymity ofhawala transactions can minimize immigration concerns among its customers(Slota 2012), particularly relevant among frequently under-documented refugeepopulations. Hawala’s constitution of segmented chains of relational contractshighlights its personalized and socially embedded dimensions, managing riskand providing a strong economic incentive to reciprocate (Schramm and Taube2003; Hariharan 2012). The security of hawala is thus enhanced by its reliance onsocially accepted mechanisms of solidarity that effectively permeate the networksof transnational diaspora.Seeking Harmony between the Formal and Informal:integrating Financial Institutions for Post-ConflictdevelopmentSome degree of regulation of informal remittance transfers is needed to counteractthe threats of organized crime and terrorism. Unrecorded remittance flowscan undermine national economies and contribute to macroeconomic instability(Slota 2012; El Qorchi, Maimbo, and Wilson 2003). At the same time, remittancesflowing through unofficial channels can be indispensable for post-conflict recon-34 A Pardee Center Task Force Report | October 2013
Page 1 and 2: Pardee Center TASK FORCE Report oct
Page 3 and 4: This series of papers, Pardee Cente
Page 5 and 6: AcknowledgementsThis Task Force on
Page 7 and 8: ITU International Telecommunication
Page 9 and 10: networks and migrant associations i
Page 11 and 12: to developing countries than other
Page 13 and 14: But most importantly, remittances a
Page 15 and 16: often mix in the countries of desti
Page 17 and 18: According to the World Bank estimat
Page 19 and 20: Because of its focus on the multidi
Page 21 and 22: eceiving remittances provides an en
Page 23 and 24: associations for post-conflict inst
Page 25 and 26: are proposed to avoid the associate
Page 27 and 28: Terry, D. 2005. Remittances as a De
Page 29 and 30: oader approach to post-conflict rem
Page 31 and 32: networks can be seen as “homogeno
Page 33 and 34: That personalized nature of hawala
Page 35 and 36: Customary law (xeer) and other trad
Page 37 and 38: the world (Lindley 2009, 531). Much
Page 42 and 43: struction and development. Means sh
Page 44 and 45: opportunities should focus on exist
Page 46 and 47: 2. Dodd-Frank Act and Remittances t
Page 48 and 49: leadership. Formal payments systems
Page 50 and 51: and financial institutions. 26 Reso
Page 52 and 53: closures should be both in English
Page 54 and 55: issued a new proposed regulation De
Page 56 and 57: “closed network,” in which all
Page 58 and 59: Some guidance may be found in the p
Page 60 and 61: the use of mobile devices for money
Page 62 and 63: Foreign TaxesUnder the 2012 regulat
Page 64 and 65: will be available in all cases. CFP
Page 66 and 67: Section II: Remittances in Post-Con
Page 68 and 69: Sri Lanka. The conflict also result
Page 70 and 71: Figure 2: Current Account, Trade Ba
Page 72 and 73: flows came from migrant workers in
Page 74 and 75: Informal Remittance Channels in Sri
Page 76 and 77: tory authorities, with some calls f
Page 78 and 79: 4. The Role of Remittances in Post-
Page 80 and 81: Figure 1: Liberia Per Capita Income
Page 82 and 83: associations, women’s groups, alu
Page 84 and 85: Remittances to LiberiaValue of Remi
Page 86 and 87: credit because of the need to be li
Page 88 and 89: Remittance Transfers in Sierra Leon
Page 90 and 91:
Knowledge RemittanceThe Liberian di
Page 92 and 93:
process furthermore was a pioneerin
Page 94 and 95:
Levitt, Peggy and Deepak Lamba-Niev
Page 96 and 97:
Section III: Diaspora Networks andC
Page 98 and 99:
Post-Conflict Development,” this
Page 100 and 101:
One of the main challenges for mobi
Page 102 and 103:
6. Transnational Remittances and De
Page 104 and 105:
The Salvadoran Diaspora is very sig
Page 106 and 107:
annually during the 1990s to less t
Page 108 and 109:
Figure 2: Transnational Vicious Cyc
Page 110 and 111:
The transnational vicious cycle not
Page 112 and 113:
emittance flows is mixed, as initia
Page 114 and 115:
individuals, communities, and famil
Page 116 and 117:
areas. This issue can potentially b
Page 118 and 119:
This is a breakthrough moment: afte
Page 120 and 121:
Edwards, Sebastian and I. Igal Mage
Page 122 and 123:
y La Distribucion Del Ingreso, 1st
Page 124 and 125:
7. Remittances and Community Resili
Page 126 and 127:
For quantitative data collection, a
Page 128 and 129:
Remittances are perceived as playin
Page 130 and 131:
the affected population. Internatio
Page 132 and 133:
ReferencesAddleton, J. 1984. The im
Page 134 and 135:
8. Filling the Gap in Health Staffi
Page 136 and 137:
The alternative is for donors to se
Page 138 and 139:
cians in the U.S. in 2000 (Clemens
Page 141 and 142:
1. Remittances, Financial Inclusion
Page 143 and 144:
networks, and communities. The role
Page 145 and 146:
• In the present era of heightene
Page 147 and 148:
the island of Kosrae, in the Federa
Page 149 and 150:
and Sweden and has held visiting pr
Page 151 and 152:
he organized a number of workshops
Page 153 and 154:
Pardee Center Conference ReportsDev
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