Hawala

Since Abram roamed the Levant, a banking system for transferring money existed today called hawala, and such an agent is a hawaladar.  A California lawyer explains it, as does wikipedia.  In a free market, banks do two things:  1. Store money (usually gold or silver) for a fee, and 2. transfer money, also for a fee.  A hawala performs function #2. Charging interest, if defined as making money on lending money, is not part of a hawala.

In essence, Abdul just made $1000 in Seattle he wants to send to his mom in Addis Ababa.  He could try to do this through bank of America, or he could go to a hawaladar.  With a hawala, he gives the hawaladar the $1000, and the hawaladar contacts another hawaladar in Addis Ababa who gives his mom $1000, less fees.  Here is the trick: no money is transferred. Hawala send and receive money transfer orders from all over the world.  The Seattle hawala puts the $1000 with all of the other money "transferred," and uses it to pay out incoming hawala transfers.  Should an inbalance of payments form, then money is moved en masse to effect a balance.  In any event, no records are kept of who moves what money to whom, only records of what each hawaladar owes the other.

This is another example of the free market in action: voluntary, no licenses, no reporting, trustworthy and dirt cheap.  If you use a bank, with all of its reporting overhead and fancy offices, you have to pay a huge fee to move money.  A hawala you meet for coffee in the front of one of those Somali bodegas that offer halal groceries, travel arrangements, fax service, tailoring, tax advice, goat milk and pizza.

I know what you are thinking: but terrorists will use that system to move money for terroristic activities.  Sorry, the money for 9-11 was transferred to Sun Trust Bank of Florida, where they duly paid it out.  A Hawala, being in a free market, relies solely on reputation.  They would never cooperate with criminals, since criminals say "crime does not pay," as in criminals refuse to pay.

Just think of a hawaladar, with some tens of thousands at hand, considering the prospect of a meeting with a terrorist or other criminal.  if not robbed, the hawaladar will never work again.  Since a livlihood depends on a hawaladar's reputation, a hawaladar cannot work with terrorists or criminals.

Nonetheless, in spite of the fact that Sun Trust was easier to use to transfer money for 9-11 than a hawaladar,  the government cracked down on hawala after 9-11.  In Seattle, as part of a nationwide assault, Maka Mini Mart and Halal Meats was raided, ruining their business.  There was no evidence of wrongdoing, but the US Government lashes out from fear, not warrant.  To his credit, US Attorney John McKay was displeased to find the FBI and other agencies had raided such clearly unlikely 9-11 participants.

Now, once where there was a legitimate, useful and law-abiding business, which was terrorist proof, there are people out of work (and on welfare) and others with no means to support their families back home.  Imagine escaping the government in Somalia only to be oppressed unjustly by the government here.  (Note to USA citizens planning to bug out overseas - what makes you think they will love you overseas?  What makes you think Uncle Sam will continue to send money to you?)

If we can carve out a New Hong Kong within the USA, the first "banks" should be hawaladar.

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