The very features which make hawala attractive to legitimate customers (mainly expatriates remitting money to relatives in their home country) ---efficiency, anonymity, and lack of a paper trail---also make the system attractive for the transfer of illicit funds. As noted in a recent report of the Asia Pacific Group (APG) on Money Laundering, the terrorist events of September 2001 have brought into focus the ease with which alternative remittance and underground banking systems may be utilized to conceal and transfer illicit funds. Not surprisingly, concerns in this area have led many nations to reexamine their regulatory policies and practices in regard to hawala and other alternative remittance systems.
This alternative economic system also offers the opportunity for large numbers of people to find work. No job-cutting or outsourcing is going on here. Rather, a street market boasts dozens of entrepreneurs selling similar products and scores of laborers doing essentially the same work. An economist would likely deride all this duplicated work as inefficient. But the level of competition on the street keeps huge numbers of people employed. It liberates their entrepreneurial energy. And it offers them the opportunity to move up in the world.