Financial Crime World

Safe Delivery of Humanitarian Cash Assistance: A Critical Analysis

As humanitarian organizations continue to provide life-saving assistance to vulnerable populations around the world, ensuring the safe delivery of cash assistance has become a pressing concern. This is particularly important in areas with high levels of conflict or instability, where the risk of diversion or misuse of funds is elevated.

Availability of Financial Services Providers

In Iraq, for instance, the availability of financial services at the governorate level is critical to the effective delivery of humanitarian aid. A recent study assessed the availability of financial services providers (FSPs) in Iraq and found that:

  • 40% of interviewed FSPs reported maintaining a presence across all governorates.
  • The importance of setting thresholds to detect suspicious activity, particularly for cash deposits and wire transfers was highlighted.

Payment Approval Process and Cash Flow Analysis

The payment approval process and cash flow analysis are crucial components of safe delivery of humanitarian cash assistance. Key findings include:

  • The Central Bank of Iraq (CBI) has the overall responsibility for payment transaction approval, as well as setting withdrawal limits in Iraq.
  • Locally initiated transactions typically occur within three days from the day a payment request is placed.
  • Transfers into Iraq may take up to three business days through intermediary banks, but delays can occur due to various reasons.

Transaction Limits, Transfer and Associated Fees

The study found that:

  • Banks in Iraq are charging a transfer fee rate of 0.7%.
  • Hawala dealers charge between $2-4 per transaction for money transfers within Iraq.
  • Mobile money services typically charge between 1.5% to 2% depending on the location.

Available Delivery Mechanisms and Required Documentations

The study highlighted the importance of having multiple delivery mechanisms in place, including:

  • Banks
  • Hawala agents
  • Mobile money services

Each mechanism has its own set of requirements for documentation and regulations.

Conclusion

Ensuring the safe delivery of humanitarian cash assistance is a critical component of effective aid delivery. By understanding the payment approval process, cash flow analysis, transaction limits, transfer fees, and available delivery mechanisms, humanitarian organizations can better mitigate the risks associated with cash-based assistance programs.