Allegations of crooked politicians taking money from questionable sources seem like everyday news now. For example, in recent days developments have arisen in regards to whether or not the Clinton Foundation took money via a complex scheme involving Russia’s Rosatom and Vadim Mikerin. Terrorist and criminal organizations move money around in huge amounts, and they have come up with all sorts of creative systems to keep it from the watchful eyes of the authorities, just like the allegations we’ve heard toward politicians. But how is all of that possible? How can you move money in such large quantities without getting caught? There are almost an infinite amount of ways to do it.

Money laundering at its finest – AP Photo/Tsvangirayi Mukwazhi

A lot of times, groups like the cartels have to come up with new and innovative ways to move their cash around.  The authorities will figure out how their system works, shut it down and they are back at square one. However, there are systems that, by definition, cannot be shut down so easily. While governments can arrest certain players and confiscate certain funds, the system is integrated into a culture and therefore cannot be fully terminated.

“Hawala” is one such system. Depending on where you are in the world, it is also known as hewalla, hundi, xawala, or xawilaad. Ingrained into the fabric of many Muslim societies, this is a way of managing finances that is based on an adherence to a strict honor code. It’s so common that it’s not even necessarily exclusive to criminal or terrorist organizations–an aid worker from northern Pakistan recently told me about a local movie-store owner that would use this to buy movies for his store from the larger vendors down south. In fact, hawala originated on the ancient Silk Road, which passes through that area of the world. It is most popular in Dubai, India, the horn of Africa and West Africa. If a financial system breaks down due to a country’s internal conflict, you can expect the hawala system to arise in its place.

How does hawala transfer money from one pocket to the next? Well, it doesn’t–not in the way you think, anyway. The recipient of the cash never sees the original cash, but he does get paid.  Here’s how it works: