The Hawala

I tried to go the legal route first.

I just needed to send $3000 to Afghanistan, a contribution to the news agency that Tom and I started. They have a bank account, I have a bank account, neither bank account is in the US, both deal with multiple currencies.

However, when I tried to use the online wire transfer, my bank in Dubai sent me a message which I did not get for many days, saying that they needed the info for the intermediary bank. By the time I got and sent this info, my bank had already started the process to credit the money back to my account. The upshot: I paid $18 in bank fees plus $28 in loss via exchange rate differences, two weeks had passed, and the money still wasn’t in Afghanistan.

My bank said try again. I said Hawala.

Centuries ago, before there were banks, before “america” was “discovered” and before “Europe” was doing much of anything serious, there was trade in the Middle East and Asia. And those traders had to have a way of getting money from one place to another. That was the hawala.


You went to the hawala in Medina and you gave him 100 currency-units and a fee, and you said to send 100 currency-units to your family in Fez, and they got the 100-currency units through a sophisticated system of communications and trust that did not rely on phones, the Internet, or any such nonsense.

The hawala system gives a different meaning to the term “personal banker.” It grew up on family ties, that became trading ties, that became somebody who knows somebody and whose reputation will be ruined if they violate this trust.

Unfortunately, the US government learned about hawalas after 9/11, because some of the money used to set up the attack went via hawala. Well, duh.

But because of this bad use of a good system, the US went crazy on hawalas and for awhile tried to get them all shut down. One of many examples of sheer arrogant ignorance. Hawalas are used by poor workers everywhere in the region to send money home to their family in the villages, because it’s cheaper and frankly more reliable and comprehensible than banks.

So tonight I walked to the water-taxi dock on the south shore of Dubai Creek, and I took an abra (an open, motorized longboat), along with a bunch of very tired guys finishing their work day at 8 p.m., to the Deira side. And I wandered through the gussied-up gold souk and the sanitized spice souk and the hundreds of shops selling everything in between gold and spices, all of it much older than banks or cheques or people who fly planes into 103-story skyscrapers.

I found the place that was recommended by an Afghan friend because they send money to Afghanistan. Not everyone does this, by the way, even in Dubai, the financial and trade hub of the region.

The place is surrounded by various shops named Wall Street Exchange and UAE Exchange and etc. It is plastered with many black-and-yellow Western Union signs, which I imagine the owners think gives it an air of credibility.

The exchange rates are posted on a reader board just like anywhere in the world. I tell the guy behind the teller window what I want. He tells me the amount in dirhams, and I hand it over (cash that I have withdrawn from my corner ATM). The fee for the transaction is 15 dirhams plus the exchange rate difference, all in all less than what my bank charges.

He asks for my ID, photocopies it, gets my motakes the information of the person I’m sending to in Afghanistan, writes out a very official form and stamps it, and sends me upstairs. The guy in the grimy dingy office upstairs checks something on a list, fills it in, and writes a code number on my receipt, along with the name of the location for the Kabul hawala.

Done. Later, I’ll email my colleague in Kabul to tell him where and when to pick up the money. It will be there for him by tomorrow morning, no fee.
Is it legal? Yes. The UAE, under tremendous pressure from the US, has developed procedures for licensing and checking on hawalas, of which there are many hundreds in Dubai alone. I suspect that the photocopy of my ID is one of the requirements; if someone someday needs to find out why I sent $3000 to a country full of terrorists, they can track me down and ask me.

I suppose I should have checked to see whether this hawala was registered and licensed. But I didn’t care. The recommendation of my Afghan friend was what mattered.

2 thoughts on “The Hawala

Comments are closed.