The international regulation of Informal Value Transfer Systems

Abstract

194 Since IVTS are global phenomena operating across borders, the international community has created recommendations and standards to address certain types of IVTS. What types of IVTS are these recommendation and standards aimed at, and are they adequate in addressing the problems IVTS raise? This article will argue that international and national efforts to address IVTS only focus on certain types of older and more established forms of IVTS, and as such ignore the more modern and potentially more dangerous incarnations. Furthermore, the IVTS that are addressed at the international and national level through recommendations, standards and legal regimes are hindered by a mindset of formal financial sector regulation without fully taking into account the unique complexities of IVTS. Part 2 will define what Informal Value Transfer Systems are, how the various methods of IVTS are carried out and whether or not IVTS constitute a threat to national governments and the global effort to combat organised crime and terrorism. These questions will be answered through a brief examination of the history, economics, mechanics and modern usage of IVTS. Part 3 will evaluate the major international recommendations and best practices on IVTS in light of the conclusions drawn from Part 2, in order to discern the adequacy of these measures in addressing the myriad of legal, regulatory, and law enforcement challenges IVTS present. The recommendations and best practices examined will include the Abu Dhabi Declaration on Hawala, as well as various documents of the Financial Action Task Force on Money Laundering and the Asia/Pacific Group on Money Laundering. It is the aim of this article to clarify the cacophonous global discussion surrounding IVTS by defining the issue in political, economic and historical terms, and then placing this discourse within existent national and international legal regimes. 2. A survey of IVTS