Our little brother, Linux, is in need of a root canal. He can’t afford the out-of-pocket cost, and he won’t stop whining about how bad his face hurts, so to shut him up we agree to lend him the money he needs. But we’re a paranoid type, so we don’t trust banks to transfer the money for us. And we’re also a bit of a troglodyte, which means no electronic funds transferring and no wiring. Nope, we’re gonna do this the old-school way: we’re going to use the hawala system.
“Hawala” means “transfer,” and it’s a non-bank, non-electronic way of transferring money to someone who isn’t close enough to just hand the money to personally. Since we’re in, say, California and Linux is in North Carolina, we figure the hawala system will suit our needs perfectly, so we head on over to the home of our local hawaladar, Mitch. We give him the thousand bucks our brother needs, plus a small fee for his troubles, and tell him the password is “crustacean.” Mitch calls a hawaladar in North Carolina, a lady named Carol, and tells her to give Linux the thousand dollars…and that the password is “crustacean.” Then Linux cruises over to Carol’s place, gives her the password (it’s “crustacean,” btw) and gets the $1,000, minus Carol’s commission. Carol then calls Mitch and tells him that he owes her $1,000.
Hawala is an ancient system that dates back to the 8th century and is still widely used in places like North Africa and the Middle East as an informal alternative to banks. The problem, critics say, is that, since it’s a system based on trust and promises, and not financial records, it’s too easy for criminals and miscreants to abuse it and use it to, say, launder money. That’s why it’s illegal in a lot of places, including some (but not all) American states.
So while it might seem like a cool concept, we should probably check the laws where we are before we decide to go too far down the hawala road.