Professional Documents
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Whilst the deals which underpin these transactions may take place
anywhere in the world (London is one of the most important centres
for doing so), it is worth noting that the actual movement of funds
between computers (for paper money plays no role whatsoever in
transactions conducted at this level) is normally routed through New
York. Hence the funds in virtually all Hawala transactions touch base
in New York (at least in an electronic sense) at some point in their
career.
Dubai has for many years been a convenient entrept for traders
operating in and from Saudi Arabia, the UAE, Iran, Afghanistan,
Pakistan and India, who would undoubtedly have utilised Hawala as a
means of financing their activities in pre-modern times. However,
Dubais ever-increasing importance as a regional trading hub a role
which its government very actively fosters has yet further reinforced
the scale and importance of these transactions. Just as the ever-growing
use of migrant labour throughout the region has been the foundation of
the commercial success of Dubai-based Emirates Airlines the core of
whose business rests in ferrying such workers back and forth on a
global scale so the exponential growth in the scale of migrant
remittances has similarly enabled Dubai to emerge as a major banking
hub through which these funds are transmitted onwards to relevant
destinations in South and Southeast Asia. Largely staffed by expatriate
Indians and Pakistanis, Dubais financial institutions now play a similar
role in the entire Indian Ocean region as do those of London in Europe,
New York in the Americas, and Hong Kong in East Asia.
Whilst Dubai is now a major banking centre in its own right, since
over forty international banks have now established branches there,
but also a hub for the settlement of large-scale Hawala transactions.
The crucial institution through which these transactions are organised
is the UAE Exchange Centre, which forms the heart of Dubais
money-exchange suq. Established in 1980 by an Dubai-based Indian
businessman who has made a fortune from building a chain of private
hospitals, the UAE exchange began life as a means of facilitating the
repatriation of Malayali and Tamil migrants (of whom a large number
work in the Gulf region) savings to their families in South India
doubtless on the basis of Hawala transactions. Over the years the
business grew steadily in size, taking a major step forward in 1994
when the UAE Exchange Centre became a member of SWIFT. This
is an extremely secure electronic communications system through
which major international banks conduct transactions with one
another. The availability of SWIFT facilities spurred yet further
growth, especially when the UAE Exchange Centre set up a secure
Local Area Network linking up all the other lower-level Exchanges
doing business in the money suq. The existence of this LAN not only
gives all its participants direct access to the UAE Exchanges SWIFT
facilities, but also facilitates the resolution and settlement of Hawala
accounts on a global basis.
The Role of Dubai and New York
Whilst the deals which underpin these transactions may take place
anywhere in the world (London is one of the most important centres
for doing so), it is worth noting that the actual movement of funds
between computers (for paper money plays no role whatsoever in
transactions conducted at this level) is normally routed through New
York. Hence the funds in virtually all Hawala transactions touch base
in New York (at least in an electronic sense) at some point in their
career.
Dubai has for many years been a convenient entrept for traders
operating in and from Saudi Arabia, the UAE, Iran, Afghanistan,
Pakistan and India, who would undoubtedly have utilised Hawala as a
means of financing their activities in pre-modern times. However,
Dubais ever-increasing importance as a regional trading hub a role
which its government very actively fosters has yet further reinforced
the scale and importance of these transactions. Just as the ever-growing
use of migrant labour throughout the region has been the foundation of
the commercial success of Dubai-based Emirates Airlines the core of
whose business rests in ferrying such workers back and forth on a
global scale so the exponential growth in the scale of migrant
remittances has similarly enabled Dubai to emerge as a major banking
hub through which these funds are transmitted onwards to relevant
destinations in South and Southeast Asia. Largely staffed by expatriate
Indians and Pakistanis, Dubais financial institutions now play a similar
role in the entire Indian Ocean region as do those of London in Europe,
New York in the Americas, and Hong Kong in East Asia.
Whilst Dubai is now a major banking centre in its own right, since
over forty international banks have now established branches there,
but also a hub for the settlement of large-scale Hawala transactions.
The crucial institution through which these transactions are organised
is the UAE Exchange Centre, which forms the heart of Dubais
money-exchange suq. Established in 1980 by an Dubai-based Indian
businessman who has made a fortune from building a chain of private
hospitals, the UAE exchange began life as a means of facilitating the
repatriation of Malayali and Tamil migrants (of whom a large number
work in the Gulf region) savings to their families in South India
doubtless on the basis of Hawala transactions. Over the years the
business grew steadily in size, taking a major step forward in 1994
when the UAE Exchange Centre became a member of SWIFT. This
is an extremely secure electronic communications system through
which major international banks conduct transactions with one
another. The availability of SWIFT facilities spurred yet further
growth, especially when the UAE Exchange Centre set up a secure
Local Area Network linking up all the other lower-level Exchanges
doing business in the money suq. The existence of this LAN not only
gives all its participants direct access to the UAE Exchanges SWIFT
facilities, but also facilitates the resolution and settlement of Hawala
accounts on a global basis.
Although there is good reason to suppose that the greater part of the
funds used to match and hence settle remittance outflows is
Corporate in character, and derives from business of various kinds
operating in the countries where the remittance payments are
ultimately made, it would be quite wrong to conclude that Corporate
Hawala is solely restricted to third-world arenas: there are also sound
financial reasons why businessmen operating in metropolitan arenas
in Europe and North America may also find themselves participating
in the system.