Introduction

Abstract

Underground banks have had a long history in Asia; they existed long before Western banking systems came into existence (Cassidy, 1990; Passas, 2003). The Indian and Chinese underground banking systems are the two major archetypes (Sharma, 2006; Passas, 2003). The former system is called Hawala or Hundi in the Middle East, Indian subcon-tinent, North Africa, and the Horn of Africa, while the counterpart indigenous to China is widely known as Qianzhuang (pronounced “ch’ien-chuang,” meaning “money shops”) among their Chinese clients both in the U.S. and in mainland China. They remain active in different parts of the world as informal financial systems, paralleling conventional banking institutions (Passas, 2003). Generally termed informal value transfer systems (IVTS), they are used to “transfer funds or value from place to place either without leaving a formal paper trail of the entire transaction or without going through regu-lated financial institutions at all,” and fund transfer happens without money movement (Passas, 2003, p. 8). Being part of an underground economy, with much of their activity going unnoticed, underground banks are primarily considered as a convenient and efficient instru-ment for expatriate workers to transfer remittances back to their country of origin (Jost & Sandhu, 2000).