Situating an Informal Funds Transfer System in Islamic Legal Theory: The Origin of Hawala Revisited

Research interest regarding hawala, an informal funds transfer system, has been growing since the outset of the twentyfirst century. As for its origin, a number of authors claims that it has an Islamic origin and likens it to either ḥawāla or suftaja, which are two legal instruments elaborated in Islamic legal texts. This paper challenges that claim, comparing the hawala with ḥawāla and suftaja. The comparison reveals that the hawala does not have a specific counterpart in Islamic legal theory. On the contrary, its validity, nature, and quality are sensitive to and dependent on some minor details, and it may take the shape of diverging legal instruments from the perspective of Islamic law. Therefore, assuming that the hawala hails from and operates according to Islamic law is erroneous, and new-fashioned studies adopting historical and sociological perspectives are necessary to shed light on unanswered questions about the issue.

Keywords:

Hawala, informal funds transfer system, Islamic law, debt assignment suftaja,

PDF

___

ʾAbū al-Faraj ʾIbn Qudāma, Shams al-Dīn ʾAbd al-Rahmān b. Muhammad b. ʾAḥmad. al-Sharḥ al-Kabīr. Edited by Muhammad Rashīd Riḍā. Vol. 4. 12 vols. Dār al-Kutub al-ʿArabī, n.d.
A Haber. “FETÖ’nün para trafiğine ağır darbe! Hawala sistemi deşifre oldu,” November 19, 2019. https://www.ahaber.com.tr/gundem/2019/11/19/fetonun-para-transferine-agir-darbe-hawala-sistemi-desifre-oldu.
Al-Hamiz, Saeed. “Hawala: A U.A.E. Perspective.” In Regulatory Frameworks for Hawala and Other Remittance Systems, 30–34. Washington, D.C: International Monetary Fund, 2005.
Ali Haydar Efendi, Hocaeminefendizade. Dürerü’l-Hükkâm Şerhü Mecelleti’l-Ahkâm. Vol. 3–4. İstanbul: Şirket-i Mürettebiye Matbaası, 1321.
Apaydın, H. Yunus. İslam Hukuk Usulü. 3rd ed. Kayseri: Kimlik Yayınları, 2017.
Ashtor, Eliahu. “Banking Instruments between the Muslim East and the Christian West.” Journal of European Economic History 1, no. 3 (1972): 553–73.
Ayengin, Tevhit. “Rükün.” In Türkiye Diyanet Vakfı İslam Ansiklopedisi, 35:286–87. İstanbul, 2008.
Aykın, Hasan. Aklama ve Terörün Finansmanı Ile Mücadelenin Küresel Boyutu. Ankara: Maliye Bakanlığı Strateji Geliştirme Başkanlığı Yayınları, 2010.
Bābartī, ʾAkmal al-Dīn Muhammad b. Muhammad al-. al-ʿInāya Sharḥ al-Hidāyā. Vol. 7. 10 vols. Dār al-Fikr, n.d.
———. al-ʿInāya Sharḥ al-Hidāyā. Vol. 8. 10 vols. Dār al-Fikr, n.d.
Bayındır, Abdülaziz. Ticaret ve Faiz. İstanbul: Süleymaniye Vakfı Yayınları, 2007.
Berki, Ali Himmet. Açıklamalı Mecelle (Mecelle-i Ahkâm-ı Adliyye). İstanbul: Hikmet Yayınları, 1982.
Bilmen, Ömer Nasuhi. Hukukı İslâmiyye ve Istılahatı Fıkhiyye Kamusu. Vol. 6. 8 vols. İstanbul: Bilmen Yayınevi, n.d.
Bonucci, Lorenzo. Le Vulnerabilità Del Sistema Finanziario Come Minacce Alla Sicurezza Nazionale: Studio Sulle Tipologie Di Finanziamento al Terrorismo e Analisi Del Sistema Money Transfer. CSSII, 2017.
Bowers, Charles B. “Hawala, Money Laundering, and Terrorism Finance: Mirco-Lending as an End to Illicit Remittance.” Denver Journal of International Law and Policy 37, no. 3 (2008): 379–419.
Buhūtī, Manṣūr b. Yūnus b. Ṣalāh al-Dīn al-. Kashshāf al-Qināʿ an Matn al-ʾIqnāʿ. Vol. 3. 6 vols. Dār al-Kutub al-ʿIlmiyya, n.d.
Bukhārī, Burhān al-Dīn Maḥmūd al-. Al-Muḥīṭ al-Burhānī Fī al-Fiqh al-Nuʿmānī. Edited by ʿAbd al-Karīm Sāmī al-Jundī. Vol. 7. 9 vols. Beirut: Dār al-Kutub al-ʿIlmiyya, 1424.
Bulur, Sertaç. “Hawala Sistemini Kırabilmek Için Çok Iyi Takip Gerekir.” Anadolu Ajansı, November 21, 2019. https://www.aa.com.tr/tr/turkiye/hawala-sistemini-kirabilmek-icin-cok-iyi-takip-gerekir/1652262.
Bunt, Henk van de. “A Case Study on the Misuse of Hawala Banking.” International Journal of Social Economics 35, no. 9 (August 2008): 691–702. https://doi.org/10.1108/03068290810896316.
Cascini, Francesco. “Il Fenomeno Del Proselitismo in Carcere Con Riferimento Ai Detenuti Stranieri Di Culto Islamico.” In La Radicalizzazione Del Terrorismo Islamico. Ministero della Giustizia Istituto Superiore di Studi Penitenziari, 2012.
Cekici, Ibrahim-Zeyyad. “Douter de La Finance Islamique : Le Cas Du Financement Du Terrorisme.” In Les Cahiers de La Finance Islamique Numéro 2, 21–25. Strasbourg, 2010.
Daudi, Adil Anwar. “The Invisible Bank: Regulating the Hawala System in India, Pakistan and the United Arab Emirates.” Indiana International & Comparative Law Review 15 (2004): 619–54.
Dietrich, Albert. “Hawala.” In The Encyclopaedia of Islam: Second Edition, edited by Bernard Lewis, Victor Louis Ménage, Charles Pellat, and Joseph Schacht, 3:283. Leiden: Brill, 1986.
El-Gamal, Mahmoud A. Islamic Finance: Law, Economics, and Practice. New York: Cambridge University Press, 2006.
Elmi, Mohamed A., and Ojelanki Ngwenyama. “Examining the Use of Electronic Money and Technology by the Diaspora in International Remittance System: A Case of Somali Remittances from Canada.” The Electronic Journal of Information Systems in Developing Countries 86, no. 5 (September 2020): 1–17. https://doi.org/10.1002/isd2.12138.
Ercanbrack, Jonathan G. “The Law of Islamic Finance in the United Kingdom: Legal Pluralism and Financial Competition.” PhD dissertation, SOAS University of London, 2011.
Faith, David C. “The Hawala System.” Global Security Studies 2, no. 1 (2011): 23–33.
Farooq, Syed Umar, Ghayur Ahmad, and Syed Hassan Jamil. “A Profile Analysis of the Customers of Islamic Banking in Peshawar, Pukhtunkhwa.” International Journal of Business and Management 5, no. 11 (2010): 106–17.
Finans Gündem. “FETÖ’nün para transfer sistemi Hawala nasıl çalışıyor?,” November 21, 2019. https://www.finansgundem.com/haber/fetonun-para-transfer-sistemi-hawala-nasil-calisiyor/1451888.
Fischel, Walter. “The Origin of Banking in Mediaeval Islam: A Contribution to the Economic History of the Jews of Baghdad in the Tenth Century.” The Journal of the Royal Asiatic Society of Great Britain and Ireland, no. 3 (1933): 569–603.
Ganguly, Meenakshi. “A Banking System Built for Terrorism.” Time, October 5, 2001. http://content.time.com/time/world/article/0,8599,178227,00.html.
Ghazālī, ʾAbū Ḥamīd Muhammad b. Muhammad al-. al-Wasiṭ fi al-Madhhab. Edited by ʾAḥmad Muhammad ʾIbrāhīm and Muhammad Muhammad Tāmir. Vol. 3. 7 vols. Cairo: Dār al-Salām, 1417.
Goede, Marieke de. “Hawala Discourses and the War on Terrorist Finance.” Environment and Planning D: Society and Space 21, no. 5 (October 2003): 513–32. https://doi.org/10.1068/d310t.
Güran, Gözde. “Brokers of Order: How Money Moves in Wartime Syria.” PhD dissertation, Princeton University, 2020.
Hacak, Hasan. “İslam Hukukunun Klasik Kaynaklarında Hak Kavramının Analizi.” PhD dissertation, Marmara University Social Sciences Institute, 2000.
Ḥalabī, ʾIbrāhīm b. Muhammad al-. Multaka al-ʾAbḥur. Edited by Khalīl ʿImrān al-Manṣūr. Beirut: Dār al-Kutub al-ʿIlmiyya, 1419.
Ḥaṭṭāb, Shams al-Dīn ʾAbū ʿAbd Allah Muhammad b. Muhammad al-Ruʿaynī al-. Mawāhib Al-Jalīl Fī Sharḥi Mukhtaṣari Khalīl. 3rd ed. Vol. 4. 6 vols. Dār al-Fikr, 1412.
———. Mawāhib al-Jalīl fī Sharḥi Mukhtaṣari Khalīl. 3rd ed. Vol. 5. 6 vols. Dār al-Fikr, 1412.
ʾIbn ʿĀbidīn, Muhammad ʾAmīn b. ʿUmar b. ʿAbd al-ʿAziz. Radd al-Muḥtār ʿalā al-Durr al-Mukhtār. 2nd ed. Vol. 5. 6 vols. Beirut: Dār al-Fikr, 1412.
ʾIbn al-Humām, Kamāl al-Dīn Muhammad. Fatḥ al-Qadīr. Vol. 7. 10 vols. Dār al-Fikr, n.d.
ʾIbn al-Rifʿa, ʿAḥmad b. Muhammad b. ʿAlī. Kifāyat al-Nabīh fī Sharḥ al-Tanbīh. Edited by Majdī Muhammad Surūr. Vol. 10. 21 vols. Dār al-Kutub al-ʿIlmiyya, 2009.
ʾIbn Rushd al-Ḥafīd, ʾAbū al-Walīd Muhammad b. ʿAḥmad. Bidāyat al-Mujtahid wa-Nihāyat al-Muqtaṣid. Vol. 4. 4 vols. Cairo: Dār al-Ḥadīth, 1425.
ʾIbn Rushd, ʾAbū al-Walīd Muhammad b. ʿAḥmad. al-Bayān wa-l-Taḥṣīl wa-l-Sharḥ wa-l-Tawjīh wa-l-Taʿlīl fī Masāʾil al-Mustakhraja. Edited by Muhammad Ḥajjī. 2nd ed. Vol. 7. 20 vols. Beirut: Dār al-Gharb al-ʾIslāmī, 1408.
ʾIbn Taymiyya, Taqī al-Dīn ʾAbū al-ʿAbbās ʾAḥmad b. ʿAbd al-Ḥalīm. Majmūʿ al-Fatāwā. Edited by ʿAbd al-Raḥman b. Muhammad ʾIbn Qāsim. Vol. 29. 35 vols. Medina: Majmaʿ al-Malik Fahd li-Ṭibāʿat al-Muṣḥaf al-Sharīf, 1416.
ʿImrānī, ʾAbū al-Ḥusayn Yaḥyā b. ʾAbī al-Khayr al-. al-Bayān fī Madhhab al-ʾImām al-Shāfiʿī. Edited by Qāsim Muhammad al-Nūrī. Vol. 5. 13 vols. Jidda: Dār al-Minhāj, 1421.
Ismail, Abdirashid A. “Lawlessness and Economic Governance: The Case of Hawala System in Somalia.” International Journal of Development Issues 6, no. 2 (May 2007): 168–85. https://doi.org/10.1108/14468950710843415.
Jabbar, Siti Faridah Abdul. “Islamic Financial Institutions: Conduits for Money Laundering?” Journal of Money Laundering Control 23, no. 2 (March 25, 2020): 285–95. https://doi.org/10.1108/JMLC-09-2019-0074.
Jamwal, N.S. “Hawala‐the Invisible Financing System of Terrorism.” Strategic Analysis 26, no. 2 (April 2002): 181–98. https://doi.org/10.1080/09700160208450038.
Jundī, Khalīl b. ʾIsḥāq al-. Mukhtaṣar. Edited by ʿAḥmad Jād. Cairo: Dār al-Ḥadīth, 1426.
Jurjānī, ʿAlī b. Muhammad al-Sayyid al-Sharīf al-. Muʿjam al-Taʿrīfāt. Edited by Muhammad Ṣiddīq al-Minshāwī. Cairo: Dār al-Faḍīla, n.d.
Juwaynī, ʿAbd al-Malik b. ʿAbd Allah b. Yūsuf al-. Nihāyat al-Maṭlab Fī Dirāyat al-Madhhab. Edited by ʿAbd al-ʿAẓīm Maḥmūd al-Dīb. Vol. 5. 20 vols. Dār al-Minhāj, 1428.
Kahf, Monzer. Islamic Finance Contracts. 2nd ed. CreateSpace Independent Publishing Platform, 2015.
Kallek, Cengiz. “Süftece.” In DİA, 38:19–21. İstanbul, 2010.
Kāsānī, ʿAlāʾ al-Dīn ʾAbū Bakr al-. Badāʾiʿ al-Ṣanāʾiʿ fī Tartīb al-Sharāʾiʿ. 2nd ed. Vol. 6. 7 vols. Dār al-Kutub al-ʿIlmiyya, 1406.
———. Badāʾiʿ al-Ṣanāʾiʿ fī Tartīb al-Sharāʾiʿ. 2nd ed. Vol. 7. 7 vols. Dār al-Kutub al-ʿIlmiyya, 1406.
Keene, Shima. “Hawala and Related Informal Value Transfer Systems–an Assessment in the Context of Organized Crime and Terrorist Finance: Is There Cause for Concern?” Security Journal, no. 20 (2007): 185–96.
Kharashī, ʾAbū ʿAbd Allah Muhammad b. ʿAbd Allah al-. Sharḥu Mukhtaṣar Khalīl. Vol. 6. 8 vols. Beirut: Dār al-Fikr li-l-Ṭibāʿa, n.d.
———. Sharḥu Mukhtaṣar Khalīl. Vol. 5. 8 vols. Beirut: Dār al-Fikr li-l-Ṭibāʿa, n.d.
Kizilkaya, Necmettin. “Scholarship and Education in Islamic Law and Economics: The Challenges of Comparative Law (Fiqh al-Muqāran).” Turkish Journal of Islamic Economics 7, no. 2 (August 15, 2020): 32–49. https://doi.org/10.26414/A188.
Ladanyi, Eva, and István Kobolka. “The Hawala System.” Interdisciplinary Management Research 10 (2014): 413–20.
Lasserre-Capdeville, Jérome. “La Finance Islamique : Une Finance Douteuse?” In Les Cahiers de La Finance Islamique Numéro 2, 12–20. Strasbourg, 2010.
Le Scolan, Antoine. “La Juridicisation Des Systèmes Informels de Transfert de Fonds (Hawâla) En Égypte.” M.A. dissertation, Aix-Marseille Université, Faculté des arts, lettres, langues et sciences humaines, 2018.
Looney, Robert. “Hawala: The Terrorist’s Informal Financial Mechanism.” Middle East Policy 10, no. 1 (2003): 164–67.
Louarn, Anne-Diandra, Dana Alboz, and Charlotte Boitiaux. “La hawala, système parallèle et opaque de transfert d’argent utilisé par les migrants.” InfoMigrants, April 12, 2018, sec. Grand angle. https://www.infomigrants.net/fr/post/8616/la-hawala-systeme-parallele-et-opaque-de-transfert-d-argent-utilise-par-les-migrants.
Maimbo, Samuel Munzele. The Money Exchange Dealers of Kabul: A Study of the Hawala System in Afghanistan. Washington: The World Bank, 2003.
Malit Jr, Froilan Tuccat, Mouawiya Al Awad, and George Naufal. “More than a Criminal Tool: The Hawala System’s Role as a Critical Remittance Channel for Low-Income Pakistani Migrants in Dubai.” Remittances Review 2, no. 2 (2017): 63–88.
Mardāwī, ʿAlāʾ al-Dīn ʾAbū al-Ḥasan ʿAlī b. Sulaymān al-. al-ʾInsāf fī Maʿrifat al-Rājiḥ min al-Khilāf. 2nd ed. Vol. 5. 12 vols. Dār ʾIḥyāʾ al-Turāth al-ʿArabī, n.d.
Marghīnānī, ʾAbū al-Ḥasan Burhān al-Dīn ʿAlī al-. al-Hidāya fī Sharḥi Bidāyat al-Mubtadī. Edited by Ṭalāl Yūsuf. Vol. 3. 4 vols. Beirut: Dār al-ʾIḥyāʾ al-Turāth al-ʿArabī, n.d.
Marghīnānī, ʾAbū al-Ḥasan Burḥan al-Dīn ʿAlī al-. Bidāyat al-Mubtadī. Cairo: Maktaba wa-Maṭbaʿat Mohammad ʿAlī Ṣubḥ, n.d.
Martin, Lindsay. “Ripple Effects: How In Re Ripple Labs Inc. Litigation Could Signal The Beginning of the End of the Payment Platform.” Duke Law & Technology Review 19, no. 1 (2021): 1–22.
Martin, Marina. “Hundi/Hawala: The Problem of Definition.” Modern Asian Studies 43, no. 4 (July 2009): 909–37. https://doi.org/10.1017/S0026749X07003459.
Martis, Genesis J. A Guidance to Understand Hawala and to Establish the Nexus with Terrorist Financing. Advancing Financial Crime Professionals Worldwide, 2018.
Martyr, Kate, and Ben Knight. “German Police Raid Suspected Hawala Banking Ring.” Deutsche Welle, November 19, 2019. https://www.dw.com/en/german-police-raid-suspected-hawala-banking-ring/a-51307901.
Māwardī, ʾAbū al-Ḥasan ʿAlī b. Muhammad b. Muhammad al-. Al-Ḥāwī al-Kabīr. Edited by ʿAlī Muhammad Muʿawwaḍ and ʿĀdil ʾAḥmad ʿAbd al-Mawjūd. Vol. 6. 19 vols. Beirut: Dār al-Kutub al-ʿIlmiyya, 1419.
Mawṣilī, Majd al-Dīn ʾAbū al-Faḍl ʿAbd Allah al-. al-ʾIkhtiyār li-Taʿlīl al-Mukhtār. Vol. 3. 5 vols. Cairo: Maṭbaʿat al-Ḥalabī, 1356.
———. al-ʾIkhtiyār li-Taʿlīl al-Mukhtār. Vol. 2. 5 vols. Cairo: Maṭbaʿat al-Ḥalabī, 1356.
Mawwāq, ʾAbū ʿAbd Allah Muhammad b. Yūsuf al-. al-Tāj wa-l-ʾIklīl li-Mukhtaṣari Khalīl. Vol. 6. 8 vols. Dār al-Kutub al-ʿIlmiyya, 1416.
Maydānī, ʿAbd al-Ghanī b. Ṭālib al-. al-Lubāb fī Sharḥ al-Kitāb. Edited by Muhammad Muḥy al-Dīn ʿAbd al-Ḥamid. Vol. 2. 4 vols. Beirut: al-Maktabat al-ʿIlmiyya, n.d.
Molla Khusraw, Muhammad b. Ferāmurz. Durar al-Ḥukkām Sharḥu Ghurar al-ʾAḥkām. Vol. 2. 2 vols. Dār ʾIḥyāʾ al-Kutub al-ʿArabīyya, n.d.
Muwaffaq al-Dīn ʾIbn Qudāma, ʾAbū Muhammad ʿAbd Allah b. ʾAḥmad b. Muhammad al-Maqdisī. al-Mughnī. Vol. 4. 10 vols. Maktabat al-Qāhira, 1388.
———. al-Qāfī fī Fiqh al-ʾImām ʾAḥmad. Vol. 2. 4 vols. Dār al-Kutub al-ʿIlmiyya, 1414.
Muzanī, ʾIsmāʿīl b. Yaḥyā b. ʾIsmāʿīl al-. Mukhtaṣar. Vol. 8. Beirut: Dār al-Maʿrifa, 1410.