What is hawala? How the informal money transfer system works
By SendPay Business · · 2 min read
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Hawala is an informal way of transferring money that works through a network of brokers, known as hawaladars, who trust each other. It has been used for centuries across South Asia, the Middle East and East Africa.
How it works
- A sender gives cash to a hawaladar in one country, plus a small fee.
- That hawaladar contacts a partner in the receiving country.
- The partner pays the recipient from their own funds, often the same day.
- The two brokers settle up later, through goods, other transfers or occasional payments.
Why people use it
It can be fast and cheap, and it reaches places with few banks. Some people use it because it's familiar and trusted in their community.
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The risks and the rules
There's little protection if something goes wrong, and informal systems can be misused for money laundering. In the UK, anyone running a money transfer business must register with HMRC for anti-money laundering supervision and be authorised or registered by the FCA. Operating without this is a criminal offence.
Where SendPay fits
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Questions people ask
What does sending money abroad really cost?
Add up the fee and the rate markup.
Money transfer cost calculator →What is a money transfer operator?
A regulated business that sends money abroad.
Money transfer operators →Read next
Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.