---
title: "Hawala: Informal Value Transfer System | Model Diplomat"
description: "Hawala is an informal value transfer system used to move money across borders, often linked to regulatory concerns about transparency and security."
url: "https://modeldiplomat.com/learn/glossary/hawala-transaction"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- Hawala is an informal value transfer system that moves money across borders through a network of brokers who settle obligations outside formal banking channels.
- Is hawala illegal?
- How does hawala differ from money laundering?
- Why do regulators link hawala to terror financing?
- What is the de-risking problem in relation to hawala?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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In 1991, India's CBI seized the Jain diaries, exposing a hawala network that routed funds to senior politicians and triggered the Vineet Narain public-interest litigation decided by the Supreme Court in 1998.

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