I’ve read up about it online, but it’s still confusing to me. Can anyone explain it to me in a simple manner?
In: 13
There are 4 people involved: Person A, who wants to send money to Person B, and hawala Broker A (located near person A) and Broker B (located near person B)
1. Person A gives the money they want to send to Broker A
2. Broker A communicates with Broker B, telling them “Person A wants to give X money to Person B”.
3. Broker B gives the money to Person B
4. Broker A now owes Broker B X amount of money. At some point in the future, Broker A pays that debt. However, if Broker A and Broker B frequently do business together, it’s possible that a transaction in the other direction will even things out.
How exactly do the brokers settle if they are in different countries and using normal money transfer channels attract government attention? Hawala is a shadow system, correct?
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