what is hawala 
hawala is an informal method of transferring money without any physical money actually moving it is described as a money transfer without money movement another definition is simply trust hawala is used today as an alternative remittance channel that exists outside of traditional banking systems transactions between hawala brokers are made without promissory notes because the system is heavily based on trust and the balancing of hawala brokers books understanding hawalahawala originated in south asia during the 8th century and is used throughout the world today particularly in the islamic community as an alternative means of conducting funds transfers 1 unlike the conventional method of transferring money across borders through bank wire transfers money transfer in hawala is arranged through a network of hawaladars or hawala dealers hawala dealers keep an informal journal to record all credit and debit transactions on their accounts debt between hawala dealers can be settled in cash property or services a hawaladar who doesn t keep their end of the deal in the implied contractual system of hawala will be tagged as one who has lost their honor and will be excommunicated from the network or region hawala is thought to come from the arabic word for assignment or bill of exchange or the hindi word for reference 2migrant workers who frequently send remittances to relatives and friends in their countries of origin find the hawala system advantageous hawala facilitates the flow of money between poor countries where formal banking is too expensive or difficult to access in addition to the convenience and speed of conducting hawala the fees are usually low compared with the high rates that banks charge to encourage foreign exchange transfers through hawala dealers sometimes exempt expatriates from paying fees the system is also easy to use as one only needs to find a trusted hawaladar to transfer money benefits of hawalahawala allows people to transfer money even if they don t have formal banking relationships or access to established financial networks for people without a government issued id or bank account hawala networks may be the only way to send remittances particularly if the destination is in another country in other circumstances it may be cheaper or faster than dealing with the paperwork of official channels for this reason hawala networks are frequently used in countries where there are strict capital controls or sanctions on the flow of money traders and expatriates from sanctioned countries like iran might use hawala networks to make payments to their counterparties in neighboring countries example of hawala