Washington targets hawala networks used to move cash off the grid

The US government is ramping up enforcement against hawala, an informal banking system that moves cash across borders without wires, bank accounts, or digital services. On August 20, 2026, the Treasury designated 10 individuals tied to a Hizballah cash-smuggling network that funneled money through Lebanon, Türkiye, the UAE, and Iran, using hawala channels as the financial plumbing.

Rather than slapping a blanket ban on the entire system, Washington is going surgical. The focus is on specific operators and intermediaries, including previously sanctioned entities like Haji Basir and Zarjmil Company Hawala, both flagged for connections to terrorism and illicit financial networks.

How hawala actually works

Think of hawala as a system built entirely on trust and human relationships, minus any app, any server, or any paper trail worth mentioning. A customer in one country gives cash to a local broker, called a hawaladar. That broker contacts a counterpart in the destination country, who pays out the equivalent amount to the recipient. No money physically crosses a border. The two brokers settle up later through trade, reciprocal transfers, or other arrangements.

The system predates modern banking by centuries, originating in South Asia and the Middle East. For millions of people in regions with limited banking infrastructure, it remains the cheapest and fastest way to send money home. But the same features that make it useful for migrant workers also make it attractive to people who would rather their transactions stay invisible. No central ledger. No reporting requirements. No compliance officer asking uncomfortable questions.

The enforcement picture

The Treasury’s latest round of designations targeted a logistics network that moved cash physically across four countries to support Hizballah operations through Lebanon, Türkiye, the UAE, and Iran, with hawala operators serving as critical nodes in the chain.

Enforcement actions have also reached US persons directly, with penalties levied against individuals who used unlicensed hawala networks to circumvent sanctions on transactions with Iran.

The government has also recognized hawala’s role as a vehicle for sanctions evasion linked to al-Shabaab, the Somalia-based militant group. The Financial Action Task Force is preparing a report on hawala vulnerabilities expected in September 2026. The FATF, which sets global anti-money laundering standards, has long flagged informal value transfer systems as a weak point in the international financial architecture.

The collateral damage question

When the US designated al-Barakaat, a Somali remittance company, after September 11, 2001, the action cut off a major financial channel for the Somali diaspora. Washington’s current approach, targeting specific operators rather than the system itself, suggests policymakers are aware of this tension.

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