According to the Securities and Exchange Commission of Pakistan website, hawala (used interchangeably with hundi) is an alternative system that operates parallel to traditional banking channels.
It is distinguished from other remittance systems via trust and extensive use of connections such as family relationships or regional affiliations. Transfers of money take place based on communications between members of a network of hawaladars.
It works by transferring money without actually moving it, requires no bank accounts and is consummated without leaving a paper trail. This form of money transferring is associated with ethnic groups from Africa and Asia.
Published in The Express Tribune, October 24th, 2012.