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It's important to note that hawala is indeed informal. So informal, that if you get screwed by someone attempting to scam the system, you have no [legal] recourse. It's probably best if you're social network already includes an existing hawala broker.

As a person of middle eastern origin, I don't understand what the big deal is ..

Is there really no such thing in the west? Isn't "Western Union" essentially the same?

I am not sure it is a big deal, other than that it is relatively unknown here, and the mindset here tends to be that financial transactions need some kind of monolithic centralized authority to be involved.

It's the informality that I find interesting. WU is definitely not the same in that regard.

People of some religions (notably Islam) have trouble with traditional money and banking services because riba is forbidden.

(http://en.wikipedia.org/wiki/Islamic_banking)

That is definitely interesting, thanks for the link. Seems like a whole different sort of financial system than what we're used to in developed nations.

Hawala has been operating primarily for remittances to family back home for decades in the West.