Straight Arrow News, February 2026
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In the fallout of Minnesota’s massive welfare fraud schemes, several federal officials have opened investigations into one of the oldest money transfer systems in the world. The Treasury Department, Homeland Security and the House Oversight Committee are looking into what’s known as the hawala system.
What is hawala?
“It’s an informal network that is capable of making cross border and domestic transfers outside of the formal or regulated banking system,” Jonathan Ercanbrack, reader in transnational financial law at the University of London’s College of Law, told Straight Arrow News. It dates back centuries. “Essentially, the time of Christ and in the B.C. area,” Ercanbrack said. “[There’s] some evidence from the Chinese tea trade that, in fact, a kind of a predecessor of hawala was being operated to finance the tea trade.”
In modern times, hawala is typically used by immigrants to send money back to their relatives in their home countries. It’s especially common if their family members live in areas without a formal banking system. “It is a way of transferring value from place to place, from country to country, through the use of intermediaries, local agents,” Nikos Passas, professor of criminology and criminal justice at Northeastern University, told SAN.
