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What is the "invisible" Hawala system that criminals use for untraceable money transfers?

2025-07-20 15:31:04Aktualitet SHKRUAR NGA REDAKSIA VOX

What is the "invisible" Hawala system that criminals use for

In an increasingly connected world, where technology and digital banks dominate the financial market, there is still a traditional and powerful system that operates beyond banks and without the need for any official documentation: Hawala.

This system, used for centuries in countries in the Middle East, South Asia, North Africa and beyond, is an informal form of money transfer that relies on personal trust, not financial institutions.

What is Hawala?

Hawala is an alternative money transfer system where there is no physical movement of money and no official record of the transaction. Instead, the money passes through a network of agents known as “hawaladars,” who handle the sending and receiving of funds discreetly.

For example, a person in Canada wants to send money to Pakistan. He gives the amount to a hawaladar in his city. That hawaladar tells another one in Pakistan to give the amount to the recipient. The recipient withdraws the money immediately, while the hawaladars settle the debts between them later, often through trade or other financial exchanges.

Why is it used?

Hawala has several advantages that make it attractive to many people:

Speed – Transactions are made in almost real time.

Low fees – Often cheaper than traditional banks or services like Western Union.

Discretion – No ID or official documents required.

Access for all – Suitable for communities that do not have access to modern banking systems.

For these reasons, hawala is quite popular in rural areas, among immigrants, and in cases where people do not trust banks.

Legal risks and disputes

Although the concept of hawala itself is not criminal, it often lies in a murky legal area. In some countries, hawala is completely illegal; in others, it is permitted only if agents register and report transactions.

Due to the lack of documentation and transparency, hawala has also been used for money laundering, terrorist financing, and illegal international activities. This has led many financial authorities and international agencies to closely monitor hawala networks and link them to organized crime.

cONcluSiON

Hawala remains a unique phenomenon in the modern financial world – a system that relies not on technology, but on trust between people. It is a testament to how traditional structures manage to survive alongside global developments. However, the main challenge is balancing its practical benefits with the risk it poses to international financial security. Therefore, the discussion about hawala remains current and complex.

 


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