Informal Money Research Articles

Money laundering - Harmonization of Albanian legislation in the framework of EU membership

Abstract The 2022 strategic report on international narcotics control of the United States Department of State, estimates that Albania remains a country susceptible to money laundering, due to corruption, the presence of organized crime networks, as well as deficiencies in legislation and supervision.1 Whereas, according to the Basel Index for the risks of money laundering and terrorist financing, Albania ranks 93rd out of 152 jurisdictions, with 4.75 out of 10 points.2 The main sources of money laundering are related to drug trafficking and other organized crime activities, while the most widespread methods of money laundering are construction, real estate and business development projects.3 Despite the reform of justice and efforts to improve the fight against money laundering, the country faces challenges in terms of capacities, insufficient supervision of some sectors, as well as the lack of cooperation between law enforcement and supervisory bodies. Albania is in the conditions of insufficient control mechanisms, in relation to the size of informal money. Referring to the report of the European Commission for Albania of 2023, the problems related to money laundering in the country remains an area that requires attention and further results.4 Also, the report shows that Albania has made progress in terms of implementing the recommendations of the Committee of Experts for the Evaluation of Measures against Money Laundering and the Financing of Terrorism (hereinafter: Moneyval),5 as well as the action plan of the Special Financial Action Task Force (hereinafter: FATF),6 with the aim of improving effectiveness in the field of money laundering. Also, since February 2020, Albania is part of a political commitment to engage with the FATF and Moneyval, in the framework of the fight against money laundering and the financing of terrorism.

A Study on the Status of Present Financial Inclusion Policy in the Districts of the State of West Bengal, India

Introduction: The convergence of financially excluded population towards mainstream formal financial institutions through proper accessibility, affordability and usage of services is crucial, to eradicate the dependence on informal money lenders, and to help the vulnerable and poor people to come out of the vicious debt cycle. As India aims to achieve inclusive growth, it has worked upon removing barriers from the path of gaining complete ‘Financial Inclusion (FI)’ through the policy called, Pradhan Mantri Jan Dhan Yojana (PMJDY). This has helped in translating Jan Dhan (wealth of people) to Jan Suraksha (security of people) through insurance and pension schemes, with the objective of building a global social security mechanism for every citizen. Objective: To analyse the status of the FI scheme (PMJDY) in the 23 districts of the state of West Bengal. Research Methodology: This research work will evaluate the effects of the current FI schemes, on the lives of the citizens of the state of West Bengal, which has 23 districts in total. To investigate about the inclusiveness in the financial system of those 23 districts, District FI Index (FII) has been developed, by considering some indicators for sub-indices as well as for composite index, that are clubbed under three dimensions, namely, accessibility, availability and usage of bank offerings. Earlier literature focused on savings and deposit accounts as a variable to compute FI whereas this study bridges the gap and considers only PMJDY scheme-based accounts to evaluate the present status of the scheme in the state. Findings and Conclusion: It is observed that Kolkata has secured the highest place in FII whereas other districts have shown relatively low FI. The state still has a long distance to travel in terms of achieving a complete FI but it has the capability of travelling at a faster rate due to well-developed banking infrastructure. Thus, to make the FI scheme effective, a developed and accessible banking structure is a pre-requisite. The success of this scheme in bringing the deprived and vulnerable section into the fold will not only increase savings and investment but also contribute to strengthening the human capital of the country.

The financial character of policing in Tunisia: collusions, extraversion and the criminalization of informality

This article attempts to shed light on the development of a financial/security assemblages in Tunisia, from an international political sociology perspective that looks at the development of practices of security and policing from a transnational and postcolonial vantage point. Financial policing in the Global South nowadays takes largely shape through the combination of anti-money laundering (AML) and counter financing of terrorism (CFT) agendas, which are systematically and racially coupled to target Asian or African contexts and, as such, largely exclude money and profits benefitting high capital concentration contexts and actors that is usually laundered for tax evasion. To advance the argument, the article first aligns with theoretical sociological accounts that deconstruct and overcome methodological nationalism and exceptionalism of analyses of coercive power in Tunisia and the region. It contributes to these perspectives by mobilizing together concepts of entanglement, assembled and collusion for understanding the practices and effects of the AML/CFT agenda. These concepts serve to illuminate the co-constitutive (entangled) character of these practices, while bearing their negotiated dependent extraverted configurations, but also their complex and networked (assembled) character. Finally, they serve to identify relations of legitimation (collusions) that follow horizontal lines while enabling, in particular critical junctures, discursive and material manipulations used to recentralize power vertically, ultimately repositioning the ‘security custodians’ around central presidential power: an effect rendered particularly sharp by the self-coup of 2021 and its unfolding consequences. The article then attempts to give empirical salience to the theoretical argument by tracing the processual developments of financial and pre-emptive intelligence from transnational forms of blacklisting (which affected Tunisia in 2018) to profiling, tracking, fund freezing practices that unfold contextually. This process generates three visible effects in the Tunisian context. Firstly, it generates a legal expansion of the financial policing assemblage, including in its repressive outcomes, and the making of exception that has to be understood in its performative, experimental and relational character, and not as ontologically absolute. Secondly, the related creation of new institutions that, although having little power on their own and being substantially controlled by the presidential power and that of the Ministry of Interior, are embedded in transnational networks and serve to channel extraverted strategies vis à vis donors and external partners. The Commission National de Lutte Contre le Terrorisme (CNLCT) and especially the Commission Tunisienne d’Analyse Financière (CTFA), this latter receiving the bulk of attention here, with all their different functional and political significances, are a case in point. Experiments with new technologies, such as blockchain, come into play here (and in line with a broader trend visible in the whole African continent) not only as extraversion practices to reassure investors in European countries and international economic institutions, and consequently exit sanctioning lists, but as they strengthen the contemporary experimental and infrastructural character of 'security' which maintains and reproduces its regimes. Finally, the third effect considered is the disqualification and criminalisation of the informal economy, considered here through the observation of how hawala channels and exchange networks for money, good and people circulation acquire centrality to legitimize these attempts at control, whose effectiveness must be relativized, but which nevertheless have violent and disqualifying consequences for vulnerable economies at the Tunisian border and beyond. This process is accelerated by the progressive conflation of informal money circulation channels with mobility and migrant transit, and of money couriers (passeurs de fonds) with smugglers.

COUNTERACTION TO FINANCING TERRORISM AND SEPARATISM MANIFESTATIONS AS BASES FOR GUARANTEE OF ECONOMIC SECURITY OF THE STATE

It is justified that the activation of terrorism and separatism in Ukraine that has been occurring in recent years highlights the need to combat financing. The activity aimed at identifying channels of financial support for terrorist and separatist activities, as well as effectively blocking them, becomes one of the key directions in ensuring the economic security of the state. The object of this research is to deepen the theoretical and methodological foundations of various aspects of financing terrorist activities and separatist actions as threats to the economic security of the state, and to determine directions for opposing terrorism and separatism.
 Factors influencing the development of trends in terrorism financing and separatist activities have been identified. On the one hand, the continued growth of international capital, business, and human flows in the context of globalization occurs alongside persistent disparities in the development of financial-economic systems in different countries and regions and the shadow component of the global economy. This maintains opportunities for the accumulation and laundering of funds and for conducting terrorist and separatist activities at various levels. On the other hand, counterterrorism financing has become one of the few directions of international cooperation in the fight against terrorism, with real successes observed not in reducing terrorism financing, but in increasing the overall transparency of financial systems and flows, and intensifying international pressure on offshore entities etc.
 It proves that the key role in the financing of terrorism and separatism systems and channels may ultimately shift towards the area of the most active interaction between formal and informal money accumulation systems. National and international measures for long-term counteraction to terrorism financing should take into account the control of channels within both the formal financial and banking system, other legal financial agents, commodity flows and services, traditional money transfer systems, as well as other informal mechanisms.

CRY FROM WITHIN: THE LIVED EXPERIENCES OF SME OWNERS DURING THE COVID-19 PANDEMIC

The COVID-19 pandemic has widely diverse effects on businesses worldwide, particularly Small and Medium Enterprises (SMEs) that began with debt and continue to operate with debt. Before the outbreak, SMEs have already difficulties managing their existing debts. Hence, this study was designed to identify the debt management strategies of SMEs during the COVID-19 pandemic. Qualitative-narratology research design was employed. In order to gather data, the researchers utilized semi-structured, in-depth interview to a sample of 10 SMEs owners from Santiago City selected through purposive sampling. The gathered data were analyzed though NVIvo. It was found out that due to indebtedness, SMEs experienced business shutdown, resorted to informal money lenders, insolvency, unsettled loans and repetitive borrowing while their coping mechanisms towards indebtedness were personal saving scheme, debt-settlement budget allocation, putting eggs in other baskets and responsibility and accountability. It was also found out that frugality, financial planning, working capital management and business liquidity management were their debt management strategies. While the factors attributing to these strategies were effective cash reserve handling, conservative credit management and discipline. The study recommends SMEs to restructure their budget, control their cash flow, maintain cash reserves and opt for debt consolidation loan.

Implications of Informal Money Transfer Systems on Kenya’s Financial Sector

Purpose: In Kenya, the informal money transfer system is widely used by its citizens, allowing them to make quick and easy payments across long distances. This system has bridged the gap between those with limited access to formal banking services, allowing them to make transactions without relying on a formal banking institution. While there are numerous benefits to using this type of system, it can also present potential risks to the economy and financial sector in general. This paper examines the implications of the informal money transfer system in Kenya, focusing primarily on its effects on financial sector development, financial inclusion, and risk management practices.
 Methodology: A qualitative research approach was adopted for this study to understand the complexities and nuances involved in this type of financial transaction. Secondary data was obtained from surveys conducted by government agencies such as the Central Bank of Kenya (CBK). Other sources included reports on informal money transfers such as web-based searches on informal money transfer services, and databases used by banks and other government departments related to finances. Legal and regulatory frameworks that influence the use and activities of informal money transfer systems in Kenya were also be included.
 Findings: The findings showed that informal money transfer systems provided much-needed access to finance for many individuals excluded from formal banking services, leading to increased economic development opportunities. The findings further uncovered that the drivers of informal money transfers include low-income levels, traditional banks limited geographic reach, limited capital, and a lack of trust in formal banking institutions. As such, informal money transfers aided the velocity of efficient and cheaper cross-borders and cross-regions remittances. It was however demonstrated that although informal money transfers bring benefits to their users, it also carries considerable risks.
 Recommendations: It is recommended that the current regulatory framework governing informal money transfers needs to be updated to protect consumers from fraud and theft while still allowing them to access the necessary financial resources for their economic endeavours.

Remittance flows and informal economies in post‐Soviet transition countries

AbstractThis paper studies the impact of remittance flows on the size of informal economies in post‐Soviet countries. We compile a unique data set from a cluster of transition economies and use panel data econometric models to estimate effect sizes. Identification comes from varying macroeconomic conditions in Russia, which are plausibly exogenous to currency demand in remittance–recipient countries. Our estimates indicate that, across our models, it seems plausible that around 25% of all remittances flow into the informal economies of the region. Since shadow economies facilitate numerous illegal activities (such as organised crime, informal money lenders and money laundering), stronger regulatory and institutional frameworks accompanied with provision of incentives for informal firms to be integrated in the formal economy are likely to curb undesirable economic behaviour.

Informal Saving Groups and Its Effect on Monetary Activities Of Nepal

The informal sector activities account for a significant proportion of production, consumption, and employment in the country. However, informal firms tend to be small and are unable to provide basic goods and services to the entire population. Additionally, informal workers are more likely to be poor and earn lower wages compared to their formal sector counterparts. The government of Nepal is actively working to address these issues, including the enforcement of anti-money laundering (AML) regulations in the banking, finance, and cooperative sectors. However, the enforcement of AML regulations should be approached cautiously to prevent the potential transfer of informal money to other sectors and to avoid security problems. The study aims to explore the relationship between various economic indicators and informal monetary activities in Nepal, with a focus on finding ways to regulate and formalize these activities. Large samples of 385 were surveyed through structured questionnaire. The informal economy in Nepal has important macroeconomic consequences, and the government is working to address the challenges it poses. However, the enforcement of AML regulations should be approached cautiously to prevent the potential transfer of informal money to other sectors and to avoid security problems. The study aims to explore the relationship between various economic indicators and informal monetary activities in Nepal, with a focus on finding ways to regulate and formalize these activities. Keywords: Informal monetary activities, Hidden economy, AML regulations, Small saving groups, Remittance

Research on farmers' households credit behavior and social capital acquisition.

Farmer's credit is significant to growing the farmer's revenue and the progression of the rural economy. Several scholars have focused on the impact of social capital on the farmers' credit availability, but the research deduction is still not combined. In addition, credit behavior is an important element that researchers pay attention to. However, the study mainly focuses on the effects of social capital on the credit behavior of farmer households and its large positive effect, a scientific approach for measuring farmer households' social capital was presented. The strategy attempted to develop an empirical model of farmer households' loan behavior based on business performance and the role of social capital. Through regression analysis of the influence of social capital on the channels of farmer households' access to credit, it was determined that the error correlation coefficients of the credit by the formal channel and the informal channel were 0.153, 0.158, and 0.152, respectively, for the three models. The significance levels of the correlation coefficients were all greater than 1 percent, showing that the regression results were relatively accurate and passed the significance test. However, these results indicated that financial channels pay attention to farmers' credit and social capital acquisition to reduce the risk of advancing. Moreover, informal money lenders such as friends and relatives focused on the social capital of the farmer. The study is helpful for policymakers to make the strategies for the farmer to get credit behavior from financial institutions. Moreover, this study is beneficial in highlighting some limitations and giving future directions to researchers.

Theoretical and methodological aspects of migration processes in the context of economic security of the Russian Federation

Due to the fact that the increase in migration flows increases their impact on various directions in the world economy, the issues of regulating these flows through migration policy, as well as ensuring economic security and the general national security of the State, are becoming increasingly relevant. Therefore, in modern realities, migration issues are increasingly being considered in the context of state security. This is largely due to the illegal component of migration, which carries direct risks, not only related to financial and economic security, but also with political stability. In the Russian Federation, the issue of illegal immigration and illegal labor activity of legal immigrants remains relevant, which in turn affects the growth of the shadow economy and its financial infrastructure (informal money transfer systems). Strengthening the informal financial infrastructure entails an increase in the risks of money laundering and financing terrorism. In this regard, the above aspects in this article are considered comprehensively and investigated from both economic and socio-political points of view.

Understanding the multifaceted impact of COVID-19 on migrants in Kerala, India.

SummaryMotivationCOVID‐19 has disrupted the lives of millions of people worldwide. Migrants in developing economies have been among the most affected. This vulnerable population faces a threat to their livelihood and way of life. Hence, there is an urgent need to understand the impact of pandemic on their lives to be able to tackle subsequent waves of the pandemic or similar exogenous shocks in future.PurposeWe delve into the economic and social disruptions caused by the COVID‐19 pandemic on employment, sources of income, and lives of different categories of migrant labourers in the Indian state of Kerala.Methods and approachUsing the livelihood portfolio theory, we dissect this impact in relation to a wide range of issues. This was corroborated by the in‐depth semi‐structured interviews with three categories of respondents. The interview data was analysed by using the directed qualitative content analysis method. We created themes from the data and juxtaposed them with the livelihood portfolio theory in addressing the research objectives.FindingsResults highlight the impact on livelihood, lifestyles, migration prospects and gender aspects. First, the households dependent on international migrants were more severely affected than those with family members who were internal migrants. Second, a considerable lifestyle change (more reliance on a plant‐based diet) and borrowing patterns (more reliance on informal money lending) was reported. Third, opinions on future migration prospects were pessimistic, and a trend in favour of reverse migration was noted. We also captured the resilience measures for each of the themes.Policy implicationsWe find that blanket responses to mitigate migrants' hardships could be counterproductive. Policy‐makers ought to implement tailor‐made policies keeping in mind the migrants’ classification and socio‐economic demographics. Further, we recommend specific measures to address challenges that women face, to ease their workload and mitigate the loss of income. Specific measures aimed at initiating attitudinal change such as creating mental health awareness, curbing misinformation and providing counselling services could also add immense value in tackling the pandemic.

Microfinance and debt trap –an ethnographic evidence from a village in Bangladesh

This paper studies microfinance and debt trap nexus. We have used an ethnographic approach, unstructured observation and interviews, to develop scenarios with the help of which we try to explain the phenomenon. Our research was carried out in DipKalaMoral, a small village located in Shikalbaha union under Karnaphuli Upazila of Chittagong in Bangladesh. We have found that excessive leverage through multiple borrowing lead to debt trap when households face unexpected income shocks due to economic cycle, unexpected weather (like heavy monsoon), wedding expenditure or paying dowry, and unexpected healthcare expenditure. In addition to that, we have found that informal money lenders tend to exploit households when households are heavily leveraged. Interestingly, we have identified a new phenomenon, ‘borrowing for others’ when households borrow from Micro Finance Institutions (MFIs) to lend money to others. A number of policy measures have been recommended which could be beneficial for policy makers and MFIs.

Microfinance and Debt Trap

This paper studies microfinance and debt trap nexus. We have used an ethnographic approach, unstructured observation and interviews, to develop scenarios with the help of which we try to explain the phenomenon. Our research was carried out in DipKalaMoral, a small village located in Shikalbaha union under Karnaphuli Upazila of Chittagong in Bangladesh. We have found that excessive leverage through multiple borrowing lead to debt trap when households face unexpected income shocks due to economic cycle, unexpected weather (like heavy monsoon), wedding expenditure or paying dowry, and unexpected healthcare expenditure. In addition to that, we have found that informal money lenders tend to exploit households when households are heavily leveraged. Interestingly, we have identified a new phenomenon, ‘borrowing for others’ when households borrow from Micro Finance Institutions (MFIs) to lend money to others. A number of policy measures have been recommended which could be beneficial for policy makers and MFIs.

Legal Aspects of Combating Terrorism Financing and Money Laundering using Informal Money Transfer Systems in the European Union

Currently, in the European Union, in addition to traditional money transfer systems (bank transfers, Western Union, etc.), informal (alternative) systems have spread. The most famous and widespread is hawala, which originated in South Asia many centuries ago, long before the banking system, and is still the most familiar and convenient mechanism for transferring funds in several regions of North Africa and the Middle East. Hawala operates outside the regulated banking and financial sector primarily through a complex settlement system: there is no actual transfer of funds within this system. In most countries, hawala is not regulated by law and is not subject to government supervision. All these factors contribute to the increased risk of money laundering and terrorist financing (ML/TF risk). The paper examines the key characteristics of hawala, its types, circumstances that caused its spread, the features of the system’s functioning, and overviews the main measures of the European Union aimed at reducing the risk of ML / TF, which are a characteristic of hawala.

Manifest changes through self help groups among women entrepreneurs in Andhra Pradesh

The present investigation was carried out in three districts of Andhra Pradesh viz., Chittoor (from Rayalaseema region), East Godavari (from Coastal region) and Srikakulam (from North Coastal region) during 2016-18. Manifest changes through SHGs among the women entrepreneurs help to discover changes occurred among respondents after joining in SHGs. It will indicates the significant changes occurred among women entrepreneurs in the selected components viz., annual income, productive working days, monthly saving, monthly expenditure, debt status, employment generation, prevalence of bonded labour, dependency on local informal money lenders, social status, type of house, domestic assets, mode of transport, skills in paraprofessional work, awareness about institutional financial transactions, composition of diet, priority for children education, social recognition, communication network, access to credit and livestock assets after joining in SHG.

Similarities and differences of motivations of giving time and money: Giving to individuals versus humanitarian organizations in an emerging market

This paper provides the first empirically based study of the formal and informal money and time giving motivations together in an emerging market (Turkey) context. Drawing on empathy–altruism hypothesis and social exchange theory, this study aims to examine relationships between internal charitable motivations and the donation of money and time giving to individuals and humanitarian organizations in the context of a Turkish sample. Empathy and altruism, religious values, social impact, materialism, and conspicuous giving motivations are examined in this study. The results indicate that giving motivations change by giving type. Empathy and altruism motivations effect on all types of giving. Persons tend to be more motivated to give money and time interpersonally than through organizations. Furthermore, money and time given to individuals explained by more motivation in the context of a Turkish sample. Theoretical and practical implications of the results are considered, and future research opportunities are discussed.

Ramen Politics: Informal Money and Logics of Resistance in the Contemporary American Prison

This article explores an unexpected yet pervasive arena in which changes to security may alter lived experiences of and responses to punishment. Namely, amidst changes in the quality of care behind U.S. prison walls and resultant prisoner insecurities in the face of neoliberal penology, the nation’s prisoners have adapted informal prison markets to address unmet needs and pursue autonomy. Where cigarettes once reigned as the de facto token of exchange in the underground economy, the contemporary American prison is now home to a new form of informal money: cheap, reliable food items like ramen noodles. Drawing on 18 months of ethnographic fieldwork within a U.S. men’s state prison and 82 in-depth interviews with prisoners and institutional staff, this paper explores this change in the form of informal prison money and what it reveals about the nation’s prisons and prisoners. It contends that prison money reflects changing logics of prisoner resistance in particular political-economic and penal contexts. As prison administrative practices, institutional conditions, and legal environments change with time, prisoners adapt expressions of autonomy accordingly. While cigarettes symbolized withdrawal from the rigors of prison life and individualized treatment—the dominant logic of resistance of the prior era—the new ramen currency reflects a growing emphasis on prison “foodways” in opposition to cost-shifting and deteriorating services behind bars.

Finclusion to Fintech: Fintech Product Development for Low-Income Markets

This paper is designed to help fintech innovators understand the unique money management strategies used by low-income people in the developing world. The paper is aimed to serve as a tool to help fintech providers design appropriate financial products that underserved individuals will want to use on a regular basis. In order to understand the needs and desires of low-income people, the paper presents detailed insights from 15 years of financial inclusion research, along with the latest industry data. In addition, through illustrative examples, informal money management techniques are compared to formal techniques used by high-income people. This comparison demonstrates why many informal financial tools are still the first choice for people in developing markets even where formal finance is available. The paper concludes by looking at some cutting-edge technological innovation in the fintech industry, and highlighting those that could better serve developing world markets.

Cross-border remittance between emerging economies: an institutional perspective

PurposeThe purpose of this paper is to investigate how institutional mechanisms operate within both formal and informal channels of cross-border remittance.Design/methodology/approachFace-to-face interviews were conducted with Myanmar migrants mostly working in Thailand. Thematic coding was used to analyze field notes and identify themes in channel member perceptions and institutional environmental process.FindingsInformal money transfer channels have achieved higher levels of legitimacy when compared to formal channels. Channel legitimacy is a more important attribute than efficiency. Lack of financial infrastructure, such as bank branches and ATM machines particularly in rural or outlying areas of Myanmar, the requirements for formal documentation and language and communication are the major institutional constraints that encourage the development and use of multiple channels in Myanmar. Formal money transfer channels develop with stronger regulative institutional processes, whereas informal money transfer channels develop with stronger cultural-cognitive and normative institutional processes.Research limitations/implicationsUsing convenience sample of remitters mainly from one area of Thailand and other channel members from Yangon, the financial capital of Myanmar, may limit the applicability of the findings, which calls for future research.Practical implicationsBanks and money transfer offices need to improve legitimacy perception within migrant communities by building stronger networks with local banks and international banks. They could provide Myanmar speaking front-line service personnel and include brochures in the Myanmar language to improve the communication process. The findings and recommendations from this study are also applicable to informal channels and formal financial institutions in other ASEAN countries that are preparing to make investments in Myanmar. Moreover, Myanmar banks should also consider opening branches to cater for Myanmar workers in ASEAN, especially in Thailand, Singapore and Malaysia.Originality valueThis paper applies institutional theory within channels, investigates the context of a financial channel rather than a product channel, addresses the importance of institutional environmental mechanisms and constraints in influencing channel behavior and is embedded in the situational context of Myanmar, a newly opened South-East Asian economy where little prior research has been conducted.

Evolving informal remittance methods among Myanmar migrant workers in Thailand

ABSTRACTIn the Thailand–Myanmar remittance corridor, while the bulk of Myanmar migrant workers rely on informal money transfer operators, the informal operators themselves utilise a bank branch network to deliver funds to families of the migrant workers. Paradoxically, the expanding bank branch network has fostered informal money transfers. Against this backdrop, we examine determinants in migrant workers’ choice of informal operators based on a questionnaire survey of Myanmar migrant workers in Thailand. The empirical results indicate that migrant workers who sent remittances to town were, while having alternative choices of remittance operators, more likely to choose the informal operators that utilised bank branches for delivery of funds to recipients. It implies that expanding the branch network of Myanmar banks is conducive to competition among informal money transfer operators.