What is Hawala Banking? – Source:davinciforensics.co.za

Hawala is an informal way of sending money without actually moving any physical money.
It’s based on trust between people and not on banks or government systems.

Here’s how it works:

• Person A in Country 1 gives money to a local Hawala broker (“hawaladar”).
• That hawaladar contacts another hawaladar in Country 2.
• The second hawaladar gives the money (in cash) to Person B in Country 2.
• No money actually crosses borders — it’s like a handshake deal based on trust and honour.

Important:
There is no paperwork, no wire transfers, and no official banking channels used.
It’s often used because it’s fast, cheap, and very private — but this also means it’s sometimes used for illegal activities like money laundering or funding crime.

Countries Where Hawala Is Common

You’ll find Hawala used heavily in:

• Middle East: UAE, Saudi Arabia, Yemen
• South Asia: India, Pakistan, Bangladesh, Afghanistan
• Africa: Somalia, Ethiopia, Sudan
• Southeast Asia: Indonesia, Malaysia
• Western countries with migrant communities: UK, Canada, Australia, USA

How Would an OSINT Investigator Investigate Hawala Banking?

Since Hawala leaves little to no paper trail, OSINT (Open Source Intelligence) investigators have to be smart and creative.

Here are methods, tips, and tricks:

A. Social Media and Community Monitoring

• Look for ads in ethnic communities offering “fast money transfers” or “no ID needed.”
  
  • Common phrases: “Reliable money transfer to home country”, “Immediate cash pickup”
• Platforms to monitor:
  
  • Facebook groups (especially migrant groups)
  • WhatsApp community posts
  • Telegram groups
  • Instagram small business pages

Tip: Search using local languages (like Urdu, Somali, Arabic) and not just English.

B. Business Fronts

• Many hawaladars operate under the cover of:
  
  • Travel agencies
  • Gold/jewelry shops
  • Phone and electronics stores
  • Import/export businesses
• Cross-check: Look up businesses that don’t seem to match the amount of money they handle.

Tip: Investigate businesses with very little online presence but lots of physical activity (seen in reviews, photos, etc.)

C. Online Reviews and Forums

• Some people accidentally leave clues on Google Reviews or community forums like Reddit or expat websites.
• Look for keywords like:
  
  • “Best way to send money home”
  • “Trustworthy money sender in [city]”

Tip: Use Google Advanced Search:
site:reddit.com "hawala" AND "city name" or
site:facebook.com "send money" AND "city name"

D. Following the Lifestyle Clues

• Hawaladars often live very comfortably despite declaring low incomes.
• Investigate:
  
  • Unexplained wealth (luxury cars, properties)
  • Business owners that don’t match their reported earnings
  • Frequent international travel with no clear business reason

Tip: Search for their public property records, company directorships, and import/export licenses.

E. Community Knowledge

• Hawala networks often operate through tight ethnic communities.
• An OSINT investigator might:
  
  • Monitor diaspora community websites
  • Watch ethnic newspapers or radio stations
  • Attend open community events or festivals (publicly) to spot local “money handlers.”

Tip: Sometimes you’ll find names or nicknames dropped casually at public gatherings or on local radio shout-outs.

F. Bank Account Anomalies (if you get access legally)

• Although Hawala avoids banks, hawaladars sometimes use personal accounts to settle balances.
• Look for:
  
  • Frequent small deposits from many different people
  • Round-number deposits (e.g., R10,000 every week from different names)
  • Multiple account holders from different nationalities with no apparent reason

G. Tracking Shipments and Parcels

• Physical money is sometimes shipped hidden in goods.
• Monitor customs seizures, shipping company leaks, or suspicious parcel services.

Tip: Look at small courier services with no major online booking systems, these are sometimes used for smuggling.

H. Networking with Authorities

• In many countries, Financial Intelligence Units (FIUs) and customs monitor hawala activities.
• OSINT investigators can sometimes get leads from:
  
  • News articles about raids
  • Court cases mentioning “underground banking”
  • Public regulatory warnings

Quick Checklist for OSINT Investigating Hawala

Bonus OSINT Tools List (for Hawala Cases)

Why Investigate Hawala Banking in South Africa?

Although Hawala is not inherently illegal, it poses serious risks in South Africa due to its unregulated, anonymous nature. Investigating Hawala is important in the following contexts:

1. Money Laundering and Illicit Finance

South Africa has strict laws against money laundering under:

• FIC Act (Financial Intelligence Centre Act)
• POCA (Prevention of Organised Crime Act)

Hawala can be used to:

• Launder proceeds from fraud, drug trafficking, cybercrime, illegal mining, or tax evasion
• Move money offshore or into SA without detection
• Evade SARB exchange control regulations

2. Terrorism Financing Risks

South Africa has been flagged in past FATF (Financial Action Task Force) evaluations for weaknesses in tracking terrorism financing. Hawala systems are:

• Hard to trace
• Unregulated
• Frequently used in East Africa and the Middle East, regions with known terrorism finance risks

Hawala networks can be exploited by groups to finance terrorism-related activity under the radar.

3. Cross-Border Criminal Networks

South Africa has:

• A large migrant population from Somalia, Pakistan, Bangladesh, India, and Ethiopia
• Trade hubs in Cape Town, Durban, and Johannesburg

Criminal groups often:

• Use local hawaladars to send illegal profits abroad
• Avoid formal banking due to lack of IDs or to hide transactions

4. Crypto and Hawala Convergence

A growing trend in South Africa is the use of cryptocurrency to facilitate Hawala-like transactions:

• Crypto is bought locally and the value is settled informally overseas via hawaladars.
• This avoids both bank scrutiny and crypto exchange compliance.

5. Weak Enforcement and Detection

• Most hawaladars in SA operate informally under business covers (corner stores, phone shops, spaza shops).
• Law enforcement often lacks technical skills and cultural awareness to detect these networks.
• OSINT investigators help bridge this gap with digital and human intelligence gathering.

6. Regulatory Non-Compliance

Hawala operators usually:

• Do not register as Accountable Institutions with the FIC
• Do not submit suspicious transaction reports (STRs)
• Do not perform KYC (Know Your Customer)

This undermines the AML/CFT (Anti-Money Laundering / Counter-Financing of Terrorism) system in South Africa.

7. Court Cases and Precedent

Investigating hawala can:

• Provide critical evidence in organised crime prosecutions
• Link suspects to money movement without needing bank records
• Support asset forfeiture through POCA by showing illicit financial flows