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Hawala Banking: Understanding the Informal Financial System

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Questions and Answers

What is a potential consequence of conducting hawala transactions?

Risk of financial loss due to fraudulent practices or errors (correct)
Guaranteed financial gain
Increased transparency in transaction records
Established dispute resolution mechanism

What is a motivation for hawalanders to maintain their network and serve customers well?

To increase their personal gain
To avoid legal consequences
To comply with government regulations
To attract more customers and maintain their reputation (correct)

What is a potential misuse of unregulated hawala systems?

Money transfer for legitimate business purposes
Investment in stock markets and real estate
Money laundering, terrorist financing, and other illegal practices (correct)
Charitable donations and humanitarian aid

What can affect the value of money transferred via hawala?

Fluctuations in exchange rates or other market conditions (D) Signup and view all the answers

What was the estimated amount of cash accepted by Dutch potato and onion traders between 2014 and 2019?

150 million euros (D) Signup and view all the answers

Why did the surveyed agricultural product traders in the Netherlands report accepting cash payments?

Because there is no functioning banking system with Mauritania, for example (B) Signup and view all the answers

What is the term for a payment through a person or entity not normally related to the deal?

Third-party payment (B) Signup and view all the answers

What is the primary motivation behind the use of hawala banking?

Cultural motives, speed, trust, and hiding from supervision of governments (A) Signup and view all the answers

What is the main characteristic of hawala banking?

Informal system of transactions based on trust (B) Signup and view all the answers

What is the purpose of the example case discussed in the course?

To provide a practical explanation of how hawala banking works (C) Signup and view all the answers

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