#QuickBiteCompliance Day 136
Hawala: A Trust-Based System Exploited by Financial Criminals
Imagine you want to send money to a friend in another country, but instead of using a bank, you visit a trusted local shop owner (a hawaladar). You hand over the cash, and within hours, your friend collects the money from another hawaladar—no bank accounts, no records, just trust. That’s Hawala, an informal money transfer system used for centuries in the Middle East, North Africa, and South Asia.
While Hawala is often used for legitimate reasons—such as helping families in areas with weak banking systems—criminals also exploit it to move illicit funds undetected.
Here’s how the bad guys take advantage:
🔴 Money Laundering – Criminals turn dirty money clean by cycling it through multiple hawaladars, making it nearly impossible to trace the origin.
🔴 Terrorism Financing – Funds for illegal activities can be transferred across borders without touching the formal financial system.
🔴 Sanctions Evasion – Restricted entities bypass banking restrictions by leveraging Hawala networks.
Financial crime fighters must step up their game with Inclusive Regtech and Open Source AML solutions, using advanced analytics and cross-border collaboration to spot suspicious patterns.
Want to dive deeper into financial crime risks? Check out the AML Glossary of Terms: https://www.acams.org/en/resources/aml-glossary-of-terms
#AntiMoneyLaundering #FinancialCrime #Hawala #AMLCompliance #Regtech #InclusiveRegtech #OpenSourceAML #100HariNulis
