HAWALA Meaning and
Definition
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Hawala is a term that refers to an informal and traditional system of money transfer used mainly in Middle Eastern, North African, and South Asian countries. It is a method of moving funds from one location to another without physically transferring money across borders or using formal banking channels.
In the hawala system, a person, known as a hawaladar or hawalaman, acts as a mediator/facilitator between two parties who wish to transfer money. The sender gives the hawaladar the amount of money they want to send, along with a code or password. The hawaladar then informs another hawaladar located in the recipient's location about the transaction details.
The recipient can then visit the hawaladar in their area, provide the code or password, and receive the funds. Instead of physically moving money, the hawaladars settle their accounts through a network of interconnections, trust, and reputation, often using parallel informal banking systems.
Hawala is known for its speed, simplicity, and widespread use among communities with limited access to formal banking services. However, due to its informal nature, it is also susceptible to money laundering and financing of illicit activities.
Governments and financial institutions worldwide often regulate hawala to prevent its misuse. Despite this, it remains a significant means of remittance for many migrants and a crucial component of informal financial systems in certain regions.
Etymology of HAWALA
The word "hawala" originates from the Arabic language. It comes from the Arabic verb "hawala" (حَوَّلَ) which means "to transfer" or "to exchange". In the context of money transfer, the term refers to an informal system of money remittance and transfer used in various parts of the Middle East, South Asia, and North Africa. The word "hawala" is also sometimes spelled as "hawalah" or "hawalat".
Similar spelling words for HAWALA
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