Posts Tagged ‘remittance tax’

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Hawala tax presentation

October 13, 2011

Not fond of reading a 2,000 word essay?  Not to worry.  Here’s the abridged rationale behind our proposed tax on hawala boiled down to just 11 slides:

If you like the idea, please help spread the word!

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The case for taxing hawala

October 3, 2011

Problem/Issue:

1)  Hawala, the traditional Islamic method of transferring money, plays a key role in financing major terrorist activity.  A)  The 9/11 Commission found that Al Qaeda relied on a trusted network of a dozen hawala dealers leading up to the terrorist attacks of Sept. 11, 2001.  B)  Hawala finances terror in South Asia.  The lethal Lashkar-e-Taiba terrorist organization uses hawala and Italian hawaladars may have helped fund the 26/11 attacks against Mumbai, India.  C) The late ambassador Richard Holbrooke disclosed that hawala funds the Taliban.

2)  Hawala’s lack of transparency or an audit trail imposes risks to customers and markets.  Since hawaladars (hawala dealers) often operate outside formal financial rules, their records are subject to less scrutiny, and they do not practice know-your-customer requirements.

3)  Even when practiced legally with the best of intentions by immigrants to send the money home to family in their country of origin, hawala enables a massive transfer of wealth to locations with hostilities toward the United States such as Osama bin Laden’s long-time host, Pakistan.  When Mexican immigrants use Western Union, at least they are using an American company with American employees exercising industry standard controls on wire transfers to a country that is not our sworn enemy.

When a Muslim immigrant seeks the services of a black market hawaladar who doesn’t demand proper customer identification, allows the money to be transferred to a high-risk country, and may only keep a paper log of the transaction, it’s a far different scenario.

Options

Regulatory

Many experts and lawmakers have attempted to regulate hawala by forcing hawaladars to register their business with or become licensed by the government.

Effectiveness

In the U.S., hawaladars are required to register as money services businesses (MSBs) with FinCEN.  A publication from George Mason University indicates that only 17 percent of U.S. hawaladars have actually registered.  From a compliance standpoint, the current system is not working.

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