Hawala

Hawala (Arabic: حوالة, literally 'transfer' or 'change') is an informal debt-transfer mechanism that predates modern banking by centuries. In a Hawala transaction, a sender delivers funds to a broker (Hawaladar) in the origin country, who instructs a counterpart broker in the destination country to disburse an equivalent amount to the recipient — with brokers settling net balances periodically through goods, gold, or direct transfers. In Islamic jurisprudence, Hawala enables transfer of debt (Hawalat al-Dayn): the original creditor substitutes a new debtor, extinguishing the original obligation. In Islamic finance, the Hawala structure underpins cross-border payment rails and remittance products. Regulated Hawala-based remittance services operate under AML/CFT frameworks set by FATF and national regulators. IOF's payment rails implement Hawala principles within modern compliance frameworks, enabling Shariah-compliant international fund transfers at scale.