Hawala transactions relate to payments

Hawala is an informal, trust-based remittance system that moves value parallel to formal banking. In a typical hawala transfer, a sender pays local currency (e.g., rupees) to a hawaladar who arranges for an equivalent payment abroad, effectively exchanging rupees for foreign currency—or vice versa—without routing funds through official banking or regulatory channels. Studies and official analyses describe hawala as an alternative remittance mechanism operating outside formal financial sector channels, which can affect foreign-exchange supply and demand and thus runs parallel to the official foreign-exchange market [1]. Because transactions are often based on trust with limited paperwork, hawala fits the description in option 1.

Sources

1. [1] https://documents1.worldbank.org/curated/en/410351468765856277/pdf/multi0page.pdf