MODERN ROOTS
While the hawala system may have ancient roots, much of the present hawala network grew out of gold smuggling operations in South Asia in the 1960s and 1970s.
To get around gold import restrictions, smugglers used boats to ship gold from Dubai and Abu Dhabi to South Asia.
After selling the gold, they then needed to get the cash back home.
The smugglers discovered a solution in the growing population of Indians and Pakistanis working in the Gulf States.
These workers often sent money back home to their families, but if they went through official banking channels it cost more than the hawala system set up by the smugglers.
They could offer better rates because of the profits they were making on smuggled gold.
They developed an efficient system for moving money from expatriates in the Middle East, South-East Asia, the UK and even in North America to families in Pakistan and India,
"The use of hawala networks by terrorist organisations is easy and could pass unnoticed in the large bulk of 'lawful' transactions undertaken by expatriate South Asians.
While the hawala system may have ancient roots, much of the present hawala network grew out of gold smuggling operations in South Asia in the 1960s and 1970s.
To get around gold import restrictions, smugglers used boats to ship gold from Dubai and Abu Dhabi to South Asia.
After selling the gold, they then needed to get the cash back home.
The smugglers discovered a solution in the growing population of Indians and Pakistanis working in the Gulf States.
These workers often sent money back home to their families, but if they went through official banking channels it cost more than the hawala system set up by the smugglers.
They could offer better rates because of the profits they were making on smuggled gold.
They developed an efficient system for moving money from expatriates in the Middle East, South-East Asia, the UK and even in North America to families in Pakistan and India,
"The use of hawala networks by terrorist organisations is easy and could pass unnoticed in the large bulk of 'lawful' transactions undertaken by expatriate South Asians.