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The informal economy and its links to organised crime - part 1
Edited by Paul Ponsaers, Joanna Shapland and Colin Williams
1 Introduction
The informal economy is one of the more elusive objects in social research ([14] Lippens and Ponsaers, 2006, p. 259). Not only is its subject matter subterranean or hidden, but one encounters severe problems when trying to define the concept of "informal economy". Attempts at definition have often tended to converge on the rather basic notion of informal economy as economic activity which is unregulated, uncontrolled and/or non-enforced by either the state or other (public) authorities ([14] Lippens and Ponsaers, 2006, p. 259).
The dealings of hawala bankers[1] are unmistakably part of the informal economy. Hawala bankers are financial service providers who carry out financial transactions without a license and therefore without government control. They accept cash, cheques or other valuable goods at one location and pay a corresponding sum in cash or other remuneration at another location. This service is comparable with services provided by official banks and by non-banking financial institutions such as Western Union and MoneyGram, but unlike these companies, hawala bankers disregard the legal obligations concerning the identification of clients, record keeping, and the disclosure of unusual transactions, to which these official financial institutions are subject. The essence of hawala banking is simply that financial transactions occur in the absence of, or parallel to, formal banking sector channels. Hawala banking is not certified and supervised by any government[2] .
The activities of these bankers can be described as "irregular informal economic activities". They are an example of the production and consumption of unregistered services outside regular employment ([9] Henry and Sills, 2006, p. 264). The term "informal" should be put into perspective. [2] Berkowitz et al. (2006) point out the fact that, sociologically speaking, the networks of hawala bankers are not "informal" but, on the contrary, highly formalized through means such as kinship, ethnicity and other means of institutionalizing trust: "they are only "informal" in the sense that they are not modern Western banking networks and organizations" (p. 1).
The irregular informal activity performed by hawala bankers represents a significant financial interest, particularly to migrants and their relatives in the country of origin. According to a recent...