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A German lawmaker has raised concerns with the European Commission over the effectiveness of its enforcement action against hawala banking practices, the informal method of cross-border transactions.
In a written parliamentary question, German member of the European parliament (MEP) Moritz Körner asked the commission to detail what steps it has taken since 2019 to strengthen enforcement against hawala, and whether these measures have led to a measurable reduction in its use within the EU.
Hawala is an informal value transfer system based on trust and personal networks, often operating outside the formal banking sector.
The practice, which originates from India, has sparked concern from international organisations such as the Financial Action Task Force (FATF), which has held workshops on the issue and carried out studies on its impact on financial crime practices.
Although not illegal in itself, it was identified in the commission’s 2019 supranational risk assessment as carrying heightened risks of misuse for illicit purposes.
“The problem is less of a legislative nature but more of proper enforcement,” Körner’s question paraphrases from the commission report.
Körner, who sits with the centrist Renew faction in the European Parliament, is now asking the commission to clarify whether it can provide data on any decline in the use of hawala since 2019.
Failing that, he wants to know if the commission plans to introduce new legislative proposals to restrict its use, and if not, why.
The question comes as the trading bloc implements its broader anti-money laundering (AML) reform package, which includes plans for a new AML Authority (AMLA) in Frankfurt and stricter controls on virtual assets and high-risk third countries.
