Hawala

Hawala is a centuries-old informal funds transfer system in which a sender pays a broker (hawaladar) in one location, who contacts a corresponding broker in the destination country, who then pays out the equivalent amount to the recipient — often the same or next day — without money physically crossing borders. Settlement between brokers happens through future transactions, commodity trades, or occasional cash movements.

Legitimate hawala provides affordable, fast remittances in regions with limited banking access. However, its informality and lack of paper trail make it attractive for money laundering, terrorist financing, and sanctions evasion. Hawaladars are required to register with financial regulators in many countries but enforcement is inconsistent.

For consumers, the main risk is using an unlicensed informal transfer agent — if they disappear or are raided by authorities, your funds may be lost with no legal recourse.