AML/CFT Regulations and Informal Remittance Services

Abstract

Informal remittance channels operate in various jurisdictions to promote illegal activities which are detrimental to the global efforts of combating money laundering. Here, in this chapter, Hawala is considered the main informal remittance channel. The economic and social implications of Hawala are very significant when it comes to a weak regime of AML/CFT. Therefore, the focus of this chapter is on weak AML/CFT regimes even though the discussed practices take place across the globe. A global initiative to limit or control informal remittance channels may support the global initiatives of anti-money laundering. However, it has also to bear in mind that informal remittance services are used globally as a very efficient and low-cost remittance channel despite the allegations of using them by criminals. Therefore, it is very important to implement proper systems and controls to regulate informal remittance channels while making them available for all segments of society.