How to create better Hawala regulations: a case study of Hawala regulations in Afghanistan

This article studies the recent failed attempt by Afghanistan ’s Central Bank to regulateHawala markets to illustrate the shortcomings of the dominant approach. It illustrates how, in Afghanistan,Hawaladars help finance supply chains. It then proposes a new approach toHawala regulations: formalizing informal credit practices ofHawaladars. Instead of outlawingHawaladars ’ credit practices, Afghanistan should use the offer of inclusion in the formal financial system to incentivizeHawaladars to comply with anti-money laundering regulations. This approach will also improve access to credit for Afghan merchants by ensuring the continued supply of credit byHawaladars. While here this approach is applied toHawala regulations, it has broader applications.
Source: Crime, Law and Social Change - Category: Criminology Source Type: research