Hawala is not subject to any official regulations or controls. Funds flow around the globe among the different hawala dealers (payers) based on trust. This informal method of funds transfer dates back to the days of gold trading and smuggling in the Indian subcontinent region.

This article is a decent description of how hawala works. It should be emphasized, however, that most hawala transactions are motivated only by efficiency considerations, not to transact nafarious business outside the scrutiny of government.