The word is quite common in India. Here's a summary: Hawala transfers are mostly done by the underworld people (read gangsters, mafia, mob etc.) The most common application of hawala is in betting. In India, betting on sports is illegal but there is a huge underground network that takes bets on sporting fixtures(cricket being the fav.). To place a bet you have to know someone who knows a bookie, you speak to the bookie, ask him what the going rates are and place your bets without paying any initial money. If you lose you will be told where to deliver the money, usually it'll be to an agent in your city. After this agent has collected money from all losing parties, he is informed of all the people who won their bets in that city, he then transfers the same money to them, the difference between the two is the profit. This is just one application. Here hawala is mostly organized money laundering, reading the above comments I am surprised to see legal systems of practicing hawala.
At least in India, most forms of Hawala are illegal, as the money easily escapes the tax net and can be quite helpful in transferring black money. But that doesn't stop the practice from being quite rampant, and from what I know from a friend, a surprisingly dependable way of transfer, in fact.
I'm arabic and I can read this word!<p>In Tunisia, they offer this service in the Mailling System. You deposit money to the nearest office and a fee of 1.5 DT (around $1) and you mention the person to get it (with a code).<p>The other person also should go to the nearest office and can get the money using his identity card and the code.<p>It made things easier, as here people can't easily get Credit Cards.
I don't know a lot about macroeconomics and this is a little off topic but isn't the honour system principle what nations work with and how trade deficits etc. emerge?
Hawala flourishes in India because 85% of Indians do NOT have bank accounts.
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