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Banking
officials struggle to dissuade people from using
traditional method of sending cash.
Many Iraqis say they still prefer using a
traditional money transfer system, despite
government efforts to encourage them to use banks.
Iraqi bank officials say the informal hawala system
can be exploited by insurgents and provides few
guarantees that the sender will not be ripped off.
Under hawala, which is based on a traditional code
of trust and personal connections, money exchangers
are used to transfer money through contacts in Iraq
or abroad.
According to this traditional system, a person who
wants to transfer money exchanges cash for a hawala
note, which is then transferred to the intended
recipient, who swaps it for the appropriate amount
of cash.
Modern technological advances such as the internet
now allow money to be moved much faster, with
transactions completed within hours. Banks, however,
can still take up to two weeks to conduct a
transfer.
Many Iraqis living abroad use the hawala system to
send money to relatives back home, like Riyadh al-Sharak,
who receives 200 US dollars a month from a brother
living in America to pay for his rent in Iraq.
And the system is often preferred for transfers
inside Iraq because it's more flexible than banks
and charges less commission.
"This matters very much for a tradesman like me,"
said Ala'a Abdul-Wahid, an auto parts trader. "I can
transfer money without having an account balance and
in any currency I want."
But Abdul Razq al-Khafajee, director of Baghdad
Bank, is warning that the traditional system is
prone to exploitation by insurgents and other
criminals, because security procedures are not as
rigorous as those adopted by banks.
Faysal Abdul-Hussein, a manager at the al-Rafidain
Bank, agreed and noted that his bank carefully
monitors all transactions on a daily basis.
However, Falal al-Rawee, the owner of a hawala money
exchange office, insisted that insurgents were not
among his - or his colleagues' - customers, as they
have their own network of private companies and
banks which they use for transferring funds. "They
do this so no one can know about their cash
operations," he said.
He maintained that if someone involved in a hawala
transaction suspected that a customer was an
insurgent, the exchange would be stopped "even if it
costs us our life".
Al-Khfajee has also warned that people wishing to
make money transfers risk losing out when putting
their faith in some hawala operators, who might not
handle the transaction properly or steal the money
being exchanged.
"The bank guarantees the rights of the client, even
when something goes wrong," he said.
Nevertheless, there are many people who prefer to
stick to the traditional system.
Um Thair al-Rubai'e, a real estate agent, said she
won't use banks because she's lost several deals in
the past through money-transfer delays.
"Now I don't accept any transfers through banks,"
said al-Rubai'e, who buys and sells properties for
Iraqis living abroad.
Ahmed al-Ka'abi, a merchant in Baghdad's al-Shorja
market, says he opts for traditional exchanges
because the operators sometimes lend him money when
he is short.
"This strengthens the relationship with the money
transfer office and deepens our resistance to
banks," he said.
Nameer Hussein al-Rubai'e is an IWPR trainee in
Baghdad..
www.iwpr.net
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