Money transfer broadly refers to a cashless method of payment and can be used to denote specific payment systems such as –
• Electronic money or funds transfer, a broad term to denote bank based cash payments
• Giro, a direct deposit
• Money order, which is sending money through postal checks
• Wire transfer, an international mode of bank to bank money transfer
Transferring money can be done in many ways these days. Since the Internet money transfer to another individual’s account can be done online as easily as it can be done to one of your own bank accounts. Money transfer may be needed for any reason from payment of bills to purchase of goods or to meet any emergency requirement. Wiring money or wire transfer to another account has been greatly facilitated by online transactions using secure systems offered by many companies such as MoneyGram, PayPal, and XOOM etc. In these cases, money transfer can be done directly online from one account to a recipient at one of the company’s physical locations at which place the recipient has to collect the funds in person by establishing identity.
While there is no denying that online transfer of funds has been greatly responsible in removing many barriers to help people and businesses transact money deals easily and effortlessly, in recent years, the misuse of these systems for unethical dealings is causing great concern in banking and financial circles.
A recent report by financial regulatory bodies in the international press reported that money transfer agencies in Somalia are being used to fund extremists groups that have been operational in the Middle East and nearby regions. Somalia has featured in international events for the last couple of decades due to a spate of ransom kidnapping and hijacking of ocean liners and container ships of several countries. The funds paid as release money have apparently been used by religious extremists to fund illegal money rackets and purchase of arms and weapons. Now it appears that specific money transfer agencies have been warned by premier banking institutions that business ties will be severed if evidence is gained that the agencies’ clients have indeed been involved in monetary dealings with such activities, whether directly or indirectly. The recent turmoil as a result of warring factions trying to gain dominance in certain areas of the Middle East and Africa is causing great consternation internationally.
This is a case in point to show the downside of online money transactions without the supervision and tracking of regulatory bodies.