“…There are, in fact, entirely separate payment networks that operate outside the confines of state-regulated information assembly lines. The Chinese refer to them as feiqian (‘flying money’). Arabic speakers prefer the term hawala, whereas the Indian diaspora operates through a practice called hundi. In English, we have developed an ominous phrase to capture these various informal networks: underground banking.
Such a phrase may evoke images of drug dealers, money launderers and corrupted officials. And, indeed, states have long been concerned about the potential utilisation of these networks for crime and terrorist financing. But numerous scholars have pushed back against this securitised narrative. The political scientist Marieke de Goede, for instance, observes that focusing on criminality in underground banking ignores the tremendous volume of illicit finance passing through the aboveground system. What’s more, the fundamental elements of underground networks – trust, speed, global reach – are precisely what ‘modern’ financial institutions aspire to.
The truth is that there is nothing inherently suspect about underground banking. It is simply another method of transferring money. So why are they controversial? The real answer is not so much about financial crime. It is, instead, about power. Underground banks represent a challenge to states’ control of the global financial system, one that undermines their capacity to surveil our each and every transaction. As a result, those states seek to eliminate informal networks by subjecting them to regulation.
(…)
But despite their best efforts, states have not been able to eliminate the informal networks of underground banking. Hundreds of billions of dollars are floating through these channels as you read this article. It may, in fact, be just beneath your feet. The mini-mart where you get your falafel. The soap importer by your favourite brunch spot. Your cousin’s friend who works at the local currency exchange. To paraphrase Scott, it is a parallel universe that remains defiantly illegible to state control. And it is winning…”