Hawala is an ancient informal money transfer system that operates entirely on trust and personal networks — no banks, no wire transfers, no paper trail. It has been used for centuries across the Middle East, South Asia, and Africa.
Here is how it works: Person A gives money to a hawala broker (hawaladar) in City X. The broker calls a counterpart in City Y, who pays the equivalent amount to Person B. The two brokers settle their debts later. The money never actually crosses borders.
Hawala is fast, cheap, and reaches areas without banking infrastructure. However, its anonymity also makes it vulnerable to misuse for money laundering and terrorism financing, which is why regulators monitor it closely.