Informal Value Transfer Systems and Criminal Organizations; A Study into So-Called Underground Banking Networks

Abstract

This is the first systematic study into so-called underground banking networks. The research was funded by the Ministry of Justice of The Netherlands. It is the study that coined the term Informal value transfer systems. The main goals of the study were to provide a policy-useful analysis of the way in which such systems operate, the extent to which criminals may resort to their services, and the policies adopted by different governments. The paper reviews hawala, black market peso exchange, fei chien and related IVTS used by various ethnic communities for remittances and trade. The study finds that both legitimate and illegitimate interests are served by IVTS. Regulators need to be cautious and avoid ethnocentric approaches that may bring about counter-productive effects with respect to economic development and crime control.