Hawala: The system is not inherently illegal

Take it from someone who’s watched it done in London* — one of the world’s great capitals of the informal value-transfer system perfected over 13 centuries starting in the Abbasid Caliphate — receiving a hawala payment is an art form. The choreography must be exact, with the barest suggestion it is unscripted and carefree. The recipient must not appear surprised by anything and certainly never ever scared. Often, but not always, the sequence is as follows: The intended recipient receives a phone call from a man who may rejoice in the name of “Bubbli” or “Bittoo .”

He is told that “Bubbli” or “Bittoo” has something for him. A time and place to meet is determined. “Bubbli” or “Bittoo ” displays some flexibility and the recipient is expected to do the same. If the location is Southall or Belgrave Road, respectively known as London or Leicester’s ‘Little India’ , the recipient is advised to ask for “Bubbli” or “Bittoo” at a sari store or an electronics shop. “Bubbli” or “Bittoo” will already have cautioned the recipient to bring the “right” currency note When face-to-face contact is made, “Bubbli” or “Bittoo” asks for the serial number on the “right” currency note, which could be as little as £5 or as much as £20. This serial number has been conveyed across the seas as the recipient’s sole identifying “document.”

“Bubbli” or “Bittoo” tallies the currency note with the serial number on his records If it matches, he hands over a plastic bag full of small bank notes The recipient must not — cannot— count the money. The venue is too public, the currency in such small denominations it would take too long. That concludes the customer-facing end of this informal cross-country transaction, which is mentioned in Islamic jurisprudence texts as early as the 8th century.

The cloak-and-dagger routine of the average hawala transaction — fake or certainly untraceable names of the delivery agents; matching a currency note with its number — belies its basic principle: trust. Originally, hawala was Arabic for hwl or exchange , especially of debt. Later, it mutated into the Spanish aval and Italian avallo. Chinese migrants to the west, traditionally use a similar system called fei-chien or ‘flying money’ , an apt description of the wonders of a financial swap system that moves hundreds of thousands of dollars around the world every day on the basis of little more than a word, a nod, a serial number on a currency note.

Dr Roger Ballard, arguably one of the world’s greatest experts on the hawala trade, told TOI by email from the UK, that hawala “produces the best value-for-money solution for facilitating the exponentially expanding scale trans-jurisdictional value transfer precipitated by globalization.”

Ballard, who is director of the Centre for Applied South Asian Studies in Stalybridge just outside Manchester, stresses that this informal system, “guarantees delivery of money within 48 hours, no matter how remote the destination at a fraction of the cost charged by more formally constituted agencies such as Western Union, and to a far wider range of destinations” .

He points out that there is nothing inherently illegal about a hawala transaction. If there is any illegality, that is in intention — dodging tax; laundering money. For the most part, it is used by South Asian migrants as a cheap and convenient way to remit their small savings to their families back home. Ballard says, “Crooks and smugglers have always been with us, and in no way do they rely solely on hawala to achieve their ends. The billions of Indian-owned dollars stashed away in Switzerland, London and elsewhere are not lying around in hawaladars’ offices, they are safe and sound in copper-bottomed fully licensed banks. The police would be better employed catching the hawaladars’ crooked customers than chasing hawaladars.”

Perhaps. But, after the 9/11 Twin Towers attacks, the US nudged the world into making it perilous to do hawala upfront, forcing its hub to move from New York to Dubai. Even so, the UK — nukkad for South Asian immigrants worldwide — continues to play an enormous facilitating role. Ballard says “the outflow from the ex-industrial midlands and north of England would comfortably exceed that from London. If one is concerned with the inward counterflows, I would estimate that the great majority of recipients would be based (if only in the shape of a bank account) in London.”

Back then to “Bubbli” or “Bittoo” in the Southall sari store.

*The writer was formerly London correspondent of this paper