The Deal

Hawala is nothing if not ironic. The notoriously informal, trust-based system for facilitating the movement of money has become synonymous with black money, tax evasion, money laundering, and other shady financial dealings. Hawala, an Arabic word meaning change or transform, has come to represent anything from a bill of exchange to a simple payment or a debt transfer. Most commonly used by migrant workers as an inexpensive and efficient way of remitting funds to their home countries, hawala operates in the diaspora networks these workers have established in Europe, North America and many parts of the Middle East.

Most hawala deals build on a basic form involving four people: two people located in different countries wishing to send and receive money and two intermediaries or hawaladars who facilitate the transaction, one in each of those countries. A typical transfer takes less than 24 hours to complete and can happen in as quickly as one hour. Once payments are issued, documentation is often destroyed, leaving no evidence. The structure is extremely simple, though today many hawala transactions effectively utilize modern technological advances such as email, fax and phone to increase efficiency and speed.

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Clipart illustration of a hawala trade utilizing modern technological advances. | Image courtesy US Department of the Treasury.

Short circuit

Hawala is not an insignificant phenomenon; it is arguably the most efficient, inexpensive means of transferring money worldwide. Though many in the West remain largely unfamiliar with it, the volume of hawala transactions significantly exceeds that of the formal banking sector. Hawala’s status as alternative or informal refers more to the lack of regulation surrounding the system than the amount of funds transferred. For migrant workers wishing to send remittances to their families, hawala’s ease and practicality make it more attractive than traditional banking. Through hawala, substantial amounts of foreign currency move across national borders, making it difficult for those funds to be measured, gauged or analyzed by traditional instruments of monetary policy. Frequently positioned as dangerous and highly threatening, economists have been working towards a more thorough understanding of the system, hoping to contain and minimize its threat by integrating hawala into formal banking systems through careful regulation.

Like many informal systems hawala is neither entirely malignant nor benign; it operates along a moral and legal spectrum, vulnerable to manipulation.

Regardless, hawala continues to operate at a pace and scale of its own, disregarding carefully maintained national borders, evading the confines of financial policy. Hawala, however, did not develop in opposition to government sanctions. In fact, it operated long before the establishment of monetary policy. Despite the prevalence of today’s regulations, it continues to flourish, particularly in areas where the formal sector is ineffective or does not reach all.

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Alexandre Singh, excerpt of Assembly Instructions (Concerning the Apparent Asymmetry of Time: Painting), 2010. | Image courtesy Sprueth Magers.

In a Commons Economy

In The Age of Access, Jeremy Rifkin discusses the transformation in our understandings of access, participation, distribution and consumption in the current cultural moment, one characterized by the predominance of the Internet.1 This new environment, founded on a culture of distribution and circulation, enacts a shift from older notions of markets to those of networks.2 The new networked economy, which favors equal over privileged access, renders out-of-date and arbitrarily restrictive forms of regulation that may have been effective in the past. According to Rifkin, in this new era, access is crucial; though property still remains important, connectedness through shared platforms carries more weight. Being included in a network trumps operating autonomously, independently or in competition with others. This transforms how we think about participation, particularly within a community. The focus is connectedness based on shared interest, values and identity, as opposed to limited rights to property. There is movement, in hawala and other new economic systems, away from exclusivity and towards fewer restrictions to access.

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Zarina Hashmi, Cities I Called Home, 2010. | Image courtesy Luhring Augustine.

Transgressing & Transcending

Both romanticized and maligned through history, hawala was first used by traders hoping to avoid pirates during long sea journeys. Today it is frequently tied to a cast of outlaws: the gangster, the drug dealer, the terrorist. It is as if the ease, efficiency and anonymity of hawala attracts only such ill-intentioned marginal figures, marring the reputation of an otherwise innocuous, alternative banking method. While its ease and anonymity may, indeed, attract unsavory characters, hawala is also widely used by migrant workers making an honest living abroad.

The point of interest is not the merit of the money’s activity after it moves through the system, but rather, its method of movement and the resulting implications this has for the dominant ideology. The modern era privileged and even deified the role of the nation-state, so it is not surprising that a banking system that existed before most nations were formed might appear rogue or highly transgressive. Hawala flourished before banking was formalized, and it is the subsequent act of systemization that retroactively characterizes an informal system as subversive. Like many informal systems hawala is neither entirely malignant nor benign; it operates along a moral and legal spectrum, vulnerable to manipulation.

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Alexandre Singh, excerpt of Assembly Instructions (Concerning the Apparent Asymmetry of Time: Painting), 2010. | Image courtesy Sprueth Magers.

Hawala does not claim resistance. It accumulates adaptations over time and today stands as a paragon of financial efficacy operating alongside formal banking. Transnationalism emerges as mere byproduct and not from each user’s conscious desire to overthrow or subvert existing practices. As such, hawala’s logic might parallel what the Raqs Media Collective term “an ethic of radical alterity,” a practice that challenges the status quo but effectively dodges the “rhetorical overload [of]…a term like ‘resistance.’” Without declaring its opposition, hawala indicates a mode of operation beyond the alienating flow of global capitalism and towards an intimate, grassroots globalization.


Cover image: Nasreen Mohamedi, “Untitled,” ca 1970s. | Image courtesy Modern Art

  1. Rifkin, Jeremy. Age of Access: The New Culture of Hypercapitalism Where All of Life is a Paid-For Experience. New York: Penguin Putnam Inc., 2001.

  2. Liang, Lawrence. “Cinema, Citizenship, and the Illegal City.” In *Cinema, Law, and the State in Asia, edited by Corey K.Creekmur, 11-28. New York: Palgrave Macmillan, 2007.