The term “hawala” refers to a system of transferring wealth which originated in Asia and is particularly well-established within the Islamic world, China and the Indian subcontinent.

Hawala is the predecessor of modern banking, in which transactions are made by rearranging debt rather than by transferring physical money. Hawala relies on networks built on personal trust and relationships between individuals, businesses and communities.

In today’s terms, “hawala” is often used to refer to independent networks of financial services providers which operate outside of established banking systems.

Hawala networks operate in much the same way as money transfer services like Western Union and Moneygram, with no account required and worldwide transactions occurring within minutes. The difference is that transactions are normally cheaper and hawala networks are typically much broader than those of money transfer companies – allowing financial transactions to be made between regions and entities which would otherwise not have access to financial services.

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