Most in the free world have not heard the term ‘hawala’, or at minimum, they do not truly understand what a hawala is, or how it operates. With the ‘Global War on Terror’ entering its fifteenth year and the bulk of our enemies residing in Muslim countries, where hawalas are most prevalent, we thought it prudent to educate you on how they function.
A hawala, in its simplest terms, is an informal banking system utilized in order for individuals to transfer money without using the formal banking sector, whether because it is unavailable in that particular city or not in the best interest of the parties involved in the transfer. Hawalas cooperate with other such designated companies and pay the recipient out the receiving organization’s funds. Hawala owners settle their accounts with each other on a pre-determined schedule, which varies from company to company.
Example: Muhammad wishes to transfer money from Baghdad to his son Naji who lives in Dubai. Muhammad will take physical cash to a hawala within Baghdad, who will in turn call a partner hawala in Dubai. Once the Dubai-based hawala has Naji’s name and the amount that will be received, Naji is able to pick up the funds from the company. No electronic transactions occur and thus the exchange is largely untraceable.
While the vast majority of the Muslim world utilizes the hawala system in a traditional and law abiding fashion, ISIS and other terror groups have exploited this method in order to move money in and out of ISIS territory without repercussion, leaving their pursuers largely blind on their financial transactions.
Look for more ‘OpsLens Terms to Know’ on a frequent basis.
By OpsLens Staff