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Law Enforcement Challenges in Hawala-Related Investigations

NCJ Number
Journal of Financial Crime Volume: 12 Issue: 2 Dated: December 2004 Pages: 112-119
Date Published
December 2004
8 pages

This paper discusses the problems and challenges facing law enforcement in its efforts to obstruct criminals' and terrorists' use of hawala, an informal and largely hidden means of transferring funds.


"Hawala" in Arabic means "transfer." The focus in this paper is on informal hawala, a method of transferring funds that emerged in Asia and then spread throughout the world. Hawala is characterized by informality, higher reliance on trust, a frequent lack of records intelligible to outsiders, and the use of networks that are in part illegal in the United States and some foreign countries. Hawala is not a system of financial transfer used exclusively by criminals and terrorists, but it does suit the goal of such groups in efforts to hide and protect financial transfers essential to their operations. Law enforcement challenges in investigations that involve hawala are the lack of records and possible difficulties in deciphering any records that do exist. Given the diversity of hawala protocols under various types of systems, there is also the possibility that there will be too many records. In many hawala cases, investigators have found masses of records, ledgers, or notes kept by hawala operators. Another difficulty for investigators is the existence of hybrid systems that mix hawala mechanisms with the operations of various types of businesses, including traditional financial institutions. Other problems associated with the investigation of hawala operations are linguistic issues, cultural differences, the anonymity of some transactions, the need to have international coordination and cooperation that may be difficult to achieve, and difficulty in determining whether or not a hawala network has been terminated or just been switched to alternative mechanisms. 2 references

Date Published: December 1, 2004