20131205 If you don’t know what you are talking about, shut up

Good grief. When will people learn?

Within the past couple of days, a report from the Financial Action Task Force, who one would think knows about money laundering risk management and related topics, talks about “hawalas.

There is no such thing as “a hawala” therefore there cannot be “hawalas.” The term is nonsense. In terms of grammar (not a translation), the nearest English equivalent to “hawala” is “banking.” There is no such thing as “a banking” therefore there is no “bankings” – at least not in the context we are speaking of.

The use of the term “hawalas” demonstrates that the user is citing terms he does not understand and therefore his credibility is open to question. Yes, that means the FATF has demonstrated that it does not know what it is talking about.

“Hawalas” was first used by ignorant American politicians who were busy talking tosh after 11 September 2001. They didn’t know what they were talking about, didn’t know who they were talking about and didn’t even know what hawala is.

After all, their own Treasury Department had spiked a report by one of their analysts who had identified hawala as a means of trading in arms, terrorist financing and money laundering. They didn’t want to know.

But what a difference a day makes: within a week of 11 September 2001 there was a rush to say that the moneys used by the terrorists had not been transmitted through the US banking system (it had) or through US headquartered global money transfer services (ditto).

And so, they blamed a system they knew nothing about: sometimes called parallel banking, it’s a system known by many names. The name most commonly used in the Middle East – and therefore of direct concern at that time – is hawala.

A hawala dealer is a hawaladar.

So, hawala is the name of the concept (it is, in truth, not a system per se). A hawaladar is the person who acts at one or other end of the transaction

Clearly, the term “hawalas” is linguistically flawed as well as inaccurate as to the principles is is designed to cover.

It has been perpetuated by people who don’t know what they are talking about and accept without question what they hear other people who don’t know what they are talking about saying.

The FATF should know better. It’s disturbing that it doesn’t, or that it doesn’t have anyone with the knowledge or the courage to edit its report to remove this error.

To find out more about hawala – and why the Financial Action Task Force did not consider it worth attention even as late as 1999, see http://www.worldmoneylaunderingreport.com/