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Demystifying Hawala: A Look Into Its Social Organization and Mechanics

NCJ Number
Journal of Scandinavian Studies in Criminology and Crime Prevention Volume: 7 Issue: 1 Dated: 2006 Pages: 46-62
Nikos Passas
Date Published
17 pages
In an attempt to demystify hawala, an informal funds transfer system, this paper outlines the main mechanics and social organization of South Asian hawala networks, often described as paperless operations.
Hawala originated in South Asia many centuries ago. Hawala means “reference” in Hindu. Hawaladar is a hawala dealer or operator. Hawala and similar informal value transfer systems operate in many ethnic communities. Hawala is an informal funds transfer system. It has come under suspicion of being a tool in the hands of al Qaeda and other terrorists. It is necessary, therefore, that facts are established and separated from myths and exaggerations, which make for measures and policies with negative effects. A growing body of research is now finding that terrorist financing involves a mix of formal and informal methods and networks. Given the use of informal value transfer systems (IVTS) by legitimate and criminal actors, fully understanding its workings will require better comprehension of transnational crimes and legal financial systems. In addition, a better understanding of the networks of terrorism finance, including the wider nexus with other criminal groups and legitimate organizations is indispensable. The establishing of a method to enable the connection or association of financial and trade transactions would also be beneficial. In conclusion, a balanced and evidence-based approach to hawala is not only consistent with fundamental human rights and due process, but also instrumental to more effective crime control and the enhancement of national and international security. Figures, table, references


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