Hawala Networks: The Paperless Trail of Terrorist Transactions

An integral component of U.S. counterterrorism strategy has centered on disrupting terrorist finances. Terrorist groups have exploited resources and industries in various countries – poppy cultivation in Afghanistan, charcoal mining in Somalia, and oil extraction in Iraq to name a few – to sell on the black market and subsequently use proceeds to arm and pay militants.

Perhaps one of the most mystifying aspects of terrorist financing is the ability for terrorist organizations to direct capital from one location to another without the use of institutionalized banking systems. To accomplish this objective, terrorist groups turn to hawala networks as a means of moving funds undetected.

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