Hawala
This is an informal, traditional method of money transfer which started in India and is common in Africa and the Middle East.
In its simplest form, a Hawala network operates as a set of promises: “Can your friend Bob give my friend Ted some money?”
There are four parties to a Hawala transaction:
- Person 1 (P1) visits Broker 1 (B2) wanting to send money to Person 2 (P2) who is in another physical location
- P1 gives B1 a sum of money and some way of identifying P2
- B1 contacts Broker 2 (B2), who is in physical proximity to P2, gives him the password or method of identification, and tells them the amount
- P2 visits B2, gives the password or otherwise identifies themselves, and B2 gives P2 the money, minus a commission
- B1 now owes B2 that amount of money
Reduced even more:
- P1 gives money to B1
- B1 tells B2 (the money transfer between these two is recorded and settled sometime later)
- B2 gives money to P2
It’s very simple – basically, it’s you calling your friend Bob and saying, give Ted $100, and I’ll pay you back later. How you “pay them back later” is up for debate and negotiation at a later time. Maybe in the future, Bob will have you give Alice $100, and then you’re even. So long as it all works out at some later date, everyone is happy.
It’s informal – there are no laws and no rules. It operates on trust and honor. Anyone violating the trust of the network would be expelled from their community which is a serious punishment in the cultures in which Hawala operates.
Due to its informal nature, Hawala money is very hard to track.
“Hawala” is Arabic for “transfer” or “trust.”
Why I Looked It Up
In Season 3 of Jack Ryan, Jack is trapped in Athens, on the run with no money. In a call with Jim Greer, Jim tells Jack to “Shelter in paradise” in Arabic. This is apparently a known code between them.
Jim then goes to an bakery in Rome. The woman behind the counter appears Indian or Arab. He gives her $5,000, saying, “A friend of mine in Athens has run into hard times.”
Sometime later, Jack finds a store in Athens called “Paradise Clothing.” The shopowner appears to be the same ethnicity as the woman in the bakery. Jack says, “I think you have something for me,” and the shopowner then gives him some money.
Later, someone confronts Jim, saying, “I know about the Hawala money.”