Finance, Fear, and Family: Issues of Trust and the Common Ground with Terrorist Funding

In the immediate aftermath of al-Qaeda’s September 11 attacks on the United States of America, examinations of terrorist funding focused on the Middle Eastern and South Asian use of Hawala and non-traceable financial transactions. However, whilst the cloaking of identity is certainly a part of criminal activity for funds transfer, there are other factors. South Asia’s community banking norms align far more closely with informal systems that follow centuries-old customs of familial trust rather than reportable record keeping. Tightened restrictions on money movement in the form of identity checks and statements of purpose have coerced more than two hundred million South Asians into choosing western banking systems that conform to international regulations that show a clear audit trail of identity. Poorer countries, where banking institutions have a history of corruption and mistrust, show a partiality for informal and localised systems of transfer referred to as Informal Value Transfer Systems (IVTS). In particular, the region of South Asia exhibits these informal traits more noticeably than other regions. This paper identifies patterns in large international funds transfers by examining the methods and rationale behind the financial transactions of international students studying at Australian universities. The research highlights issues of trust, fear, and familial dependency as key factors of influence. The results point to key local and domestic practices that override global adherence to financial governance, regulatory banking, and anti-money laundering. As the Arab Spring invokes democratic imaginings throughout many nations, one thing becomes clearer than before. Ordinary people, rather than simply terrorists, have lost trust in government regulations and in financial institutions. Instead they survive through a connection with familial, localised systems that indicate resilience to the financial trappings of western financial regulation. This paper examines the transfer habits and preferences of 395 international university students in Australia. It concludes that non-traceable international transactions are a cultural and regional norm that transcends Western banking legislation that has been constructed in reaction to terrorism. That ordinary people choose informal systems of funds transfer (alongside terrorists and money-launderers) is a phenomenon that deserves consideration. Informal Value Transfer Systems (IVTS) remain a significant and overlooked component of the global economy.