Private money sending—the ancient, trust-based systems like **hawala** (in the Middle East/UAE) and **fei qian** (”flying money” in China) that move billions reliably outside traditional banks

Welcome back, team! In this episode of Dave Talks Politics, hi, I’m Dave, and I’ll be talking politics. Today, team, let’s talk about private money sending—the ancient, trust-based systems like **hawala** (in the Middle East/UAE) and **fei qian** (”flying money” in China) that move billions reliably outside traditional banks, how they operate in places like Dubai and Abu Dhabi, and why they remain so resilient even today.If you’re new to the channel, hey, take a moment, subscribe to the channel, then hit the bell to be alerted about new episodes when they drop.**1. WHAT ARE HAWALA AND FEI QIAN?** 1. Hawala (Arabic for “transfer”) is an informal value-transfer system dating back over 1,000 years—used across the Islamic world, South Asia, and increasingly the Middle East. 2. Fei qian (”flying money”) is its ancient Chinese equivalent—emerged during the Tang/Song dynasties (7th–13th centuries) to move money across vast distances without physically carrying coins or bullion. 3. Both are trust-based: No physical money moves. A sender gives cash to a broker in one city; the broker contacts a counterpart in another city (via family ties, reputation, or code); the counterpart pays out the equivalent locally. 4. Settlement happens later—through trade, goods, reverse transfers, or netting—often with minimal or no paper trail. 5. Core strength: Speed, low cost (fees 0.5–2%), reliability through personal/family networks, and privacy—no banks, no KYC, no sanctions.**2. HOW IT WORKS IN THE UAE (DUBAI & ABU DHABI)** 1. Dubai and Abu Dhabi remain major global hubs for hawala—historically tied to gold souks, diamond trade, and migrant worker remittances. 2. Post-9/11 reforms forced registration of hawala operators (UAE was one of the first countries to do so)—but informal, trust-based networks still thrive alongside registered ones. 3. Family/trust-based operations: Many brokers are part of long-standing family networks across the Gulf, South Asia, and Africa—money moves “flawlessly” because reputation is everything; defaulting destroys generations of trust. 4. Scale: Billions annually—used for remittances, trade finance, sanctions evasion, and large private transfers (e.g., wealthy individuals moving money discreetly). 5. Regulation: UAE Central Bank oversees registered hawala; unlicensed activity is illegal—but enforcement is selective; informal networks operate in gray zone with tacit acceptance for economic flow.**3. ESTIMATES OF FLOWS OVER THE PAST DECADE** 1. Hawala global flows: Hard to measure precisely due to informality, but estimates peg annual volumes at $200–500 billion—driven by remittances (50%+ informal in many regions). 2. Over the past decade (2014–2023), official remittances to developing countries grew from ~$500B to $831B annually—informal flows (hawala dominant) estimated at 50% of that, or $2.5–4T total for the decade. 3. Fei qian/Chinese underground banking: U.S. Treasury estimates $154B in illicit proceeds through China annually; Chainalysis reports $16.1B in illicit crypto funds via Chinese-language networks in 2025 alone. 4. Decade total for Chinese networks: Average $150B/year illicit flows (including fei qian), totaling ~$1.5T—plus legitimate informal transfers pushing it higher. 5. Combined: These networks likely handled $4–6T+ in total value over the decade—rivaling formal banking in key regions, with hawala strong in MENA/South Asia and fei qian in East Asia.**4. PREFERENCE OVER CRYPTO LIKE USDT, USDC, BTC, MONERO, CARDANO** 1. Traders often favor hawala/fei qian for trust-based, cash-in/cash-out reliability in cash-heavy economies—no tech barriers, no volatility, centuries of proven networks. 2. Crypto complements: USDT (stable, pseudonymous) is increasingly integrated into hawala for settlement—e.g., hawala operators use Tether to move value digitally, then cash out locally. 3. Preference factors: Hawala for large, private transfers in regions with poor banking (low fees, no records); crypto (BTC volatile, Monero/Cardano privacy-focused) for speed/cross-border without physical brokers, but traceability risks higher. 4. Hybrids emerging: Crypto-enabled hawala (USDT/USDC for stability) combines best of both—anonymous, fast, but hawala still preferred where trust networks trump tech (e.g., avoiding blockchain traces). 5. Overall: Informal networks endure for cultural/trust reasons; crypto gains among tech-savvy traders, but hawala/fei qian “flawless” in reliability for billions without digital footprints.**5. GEOPOLITICAL AND ECONOMIC IMPLICATIONS** 1. Sanctions evasion: Hawala enables flows around US/EU restrictions—used in Iran, Russia, and others—makes it a quiet challenge to Western financial dominance. 2. Remittances lifeline: For millions in developing countries—hawala often faster/cheaper than formal channels—supports families, small businesses. 3. Shadow economy role: Finances trade, real estate, and investments outside banking—Dubai’s property boom partly fueled by hawala inflows. 4. Risk side: Linked to illicit finance (terrorism, drugs, tax evasion)—but most use is legitimate; blanket crackdowns hurt ordinary people. 5. Future: As digital payments and CBDCs grow, hawala may integrate (crypto + trust networks) or persist in niches—remains a parallel financial system.**BOTTOM LINE** - Hawala and fei qian are ancient, trust-based systems that move billions flawlessly—especially in hubs like Dubai/Abu Dhabi - Decade flows: Hawala ~$2.5–4T total; fei qian/Chinese networks ~$1.5T+ illicit—rival formal banking in scale - Preference over crypto: Favored for cash reliability/low fees in trust-based regions; USDT/USDC complement for digital settlement, but hawala endures where privacy/trust trump tech - Geopolitically: Key sanctions-evasion tool, remittances lifeline, shadow trade engine - Risks: Illicit use—but most legitimate and resilient; West could learn from trust models for efficient financeI hope you enjoyed this show today team. The main show, and snack sized supercuts are available on yt, plus apple and Spotify as a podcast and show notes on substack; come join the team it’s free and gets you instantly connected to what’s happening. Help me grow with a like and subscribe and wherever you are team in this wonderful world of ours, I hope, you have, a wonderful day.Talk soon!**Sources & Links** - New York Times (2001 on hawala/fei qian): https://www.nytimes.com/2001/10/03/world/a-nation-challenged-the-financing-ancient-secret-system-moves-money-globally.html - Financial Times (various historical mentions, e.g., UAE as hawala hub): Search “hawala UAE” on ft.com - Washington Post (2001 on hawala networks): https://www.washingtonpost.com/archive/politics/2001/09/21/bin-ladens-money-takes-hidden-paths-to-agents-of-terror/d731f54e-fba4-4b8f-b5d0-8331050c1506 - UAE Central Bank regulations: https://www.centralbank.ae/en/our-operations/anti-money-laundering/hawala - General background: IMF/World Bank papers on informal value transfer systems (search “hawala IMF”) This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wgowbrics.substack.com