Pakistan faces a hidden danger. Terrorist groups use an old, informal money transfer system called “hawala.” This system helps them move money around the world without leaving a paper trail. This makes it very hard to track their finances and stop their attacks.
What is Hawala?
Hawala is an ancient way to send money. It started in South Asia. It works based on trust between people called “hawaladars” or brokers. Money never actually moves across borders physically.
Here’s how it works: Someone gives cash to a hawaladar in one country. That hawaladar calls another hawaladar in another country. The second hawaladar then gives the equivalent money to the receiver. They use a secret code or password.
There are no formal records or bank transfers. It’s all based on trust and a running tally of who owes whom. This makes it quick, cheap, and very hard for authorities to trace.
Why Terrorists Use Hawala
Terrorist groups prefer hawala because of its secrecy. They need to move money without being caught. Hawala allows them to fund their operations, buy weapons, and pay their fighters without alerting formal banking systems.
The lack of a paper trail is a huge advantage for them. It is difficult to prove where the money came from or where it is going. This makes it a perfect tool for money laundering and terror financing.
Even if a small amount of money is moved through hawala for terror, the damage it can cause is huge. It’s not about the quantity of money, but its purpose.
Hawala’s Impact on Pakistan
In Pakistan, hawala networks are widespread, and they operate as a shadow system of foreign exchange, although illegal. They are used for both legal and illegal purposes. Many overseas Pakistanis use hawala to send money home, often because it is faster and cheaper than banks. However, this makes it easier for terror groups to hide their funds within the system. The State Bank of Pakistan (SBP) knows that hawala is used for money laundering and terror financing.
Terrorists operating in border areas, especially near Afghanistan, often use hawala. This money helps them carry out attacks against Pakistani security forces. Hawala also hurts Pakistan’s economy. It diverts money away from formal banking channels. This leads to a drop in official remittances, which affects the country’s foreign exchange reserves.
Pakistan’s Efforts to Combat Hawala
Pakistan has taken steps to fight hawala. The Anti-Terrorism Act (ATA) and the Anti-Money Laundering Act (AMLA) are in place. The Financial Monitoring Unit (FMU) helps track suspicious transactions. Law enforcement agencies often target hawala operators. They have tried to break down these networks. However, the informal nature of hawala makes it very difficult to completely stop. Despite these efforts, unregistered hawala operators still work in many parts of the country, especially in major cities like Peshawar and Karachi.
The Ongoing Challenge
The fight against hawala is ongoing. It requires better intelligence, stronger laws, and more effective enforcement. Pakistan needs to make its formal banking system more attractive for remittances. This would reduce the need for informal channels.
International cooperation is also vital. Hawala networks cross borders easily. Countries must work together to share information and stop the flow of illicit funds. By cutting off this invisible pipeline, Pakistan can weaken terror groups and bring more stability to the nation.
