Long before there was MoneyGram and Western Union, people in South Asian countries often used an informal network of brokers, called an "hawala," to transfer money over long distances when it was too inconvenient or dangerous to send cash by courier.
Today, the centuries-old system still exists and is used to move billions of dollars annually in and out of countries like Pakistan, Afghanistan and Somalia—often to the chagrin of U.S. law enforcement.
A federal law enforcement official told The Associated Press that terror suspect Faisal Shahzad is believed to have tapped into such a network to help fund a plot to detonate a car bomb in Times Square on May 1. The official spoke on condition of anonymity because the investigation is ongoing.
Authorities say three Pakistani men—two in the Boston area and one in Maine—supplied funds to Shahzad but may not have known how the money would be spent. The three have been arrested on immigration violations.
In Manhattan, authorities have accused Mahmoud Reza Banki, on trial in federal court for allegedly violating the U.S. trade embargo against Iran, of using an hawala to move more than $3 million illegally to Iran.
While most money transfers made through these hawaladars, or brokers, are benign, the system is also routinely used by drug smugglers, terrorists, and other criminals who want to move money without leaving a paper trail.
"Hawalas are not themselves nefarious," said Matthew Levitt, a former U.S. Treasury intelligence official, now a senior fellow at The Washington Institute for Near East Policy.