Banking

Around the World, Traditional Bankers Transfer Money and Evade Governments

They've been way ahead of regulators for centuries

|

Hawala, hundi, chiti, chop, and dozens of other names describe a system that moves billions of dollars across grey and black markets, faster and cheaper than your local bank. Dealings in the dark alleyways of Kandahar, the bombed streets of Mogadishu, and everywhere in between; it could also be happening in the backroom of a corner store on a US city street, right now.

References to hawala date back to the eighth century, when it emerged as a way to protect tradesmen from the pirates and bandits that plagued the long-distance trade routes of the Indian Ocean or Mesopotamia. Before insurance and high-speed travel, moving large amounts of bullion by sea or camel-led caravan was not only slow but also incredibly risky.

The answer? Never move the money. With the ingenious method of hawala, a rial stayed in Iran and a pound stayed in Sudan. Money instead moved time zones and continents via a single communication between two hawaladars or thadekars (hawala agents): a promise that the cash had been deposited on one end, and thus could be withdrawn from the other.