'Hawala': The Financial System Used by Organized Crime in Alicante to Move Millions of Euros

Neither digital transactions nor cryptocurrencies. Just a sender with a code known to the receiver, at least two intermediaries, and trust. This is how criminal organizations around the world move millions of euros daily, like those dedicated to illegal immigration and drug trafficking dismantled last December in the province of Alicante. This currency exchange system is known as 'hawala', and it leaves no trace.

The silent procedure by which mafias established in Alicante and other parts of the world move large amounts of money represents an obstacle for authorities when tracking the origin and destination of currencies, making it usable for money laundering, drug trafficking, and even financing terrorist groups.

According to the government, this informal network for moving capital has existed for a long time as an alternative system to traditional banking due to its relative simplicity, speed, anonymity, and lack of bureaucracy and records. These peculiarities make it very attractive for use in the illicit market, allowing movements of large amounts of money from any criminal activity.

For example, this system allows an individual in Alicante to send money to Algeria without even needing to open a bank account. To do this, they just need to contact an intermediary known as 'hawaladers' and give them the money along with a password previously agreed upon between the sender and recipient, which the link must also know.

The local 'hawaladar' will contact a colleague in Algeria to communicate the amount of money and the code. The colleague will provide the recipient with the equivalent amount in the agreed currency. To ensure it's the correct person, they will ask for the password. The entire transaction is done within hours. The links receive a small commission for delivery, and the sender avoids possible bank transfer tracking by authorities.

Last December, the National Police dismantled an organization that sent boats loaded with ecstasy and amphetamines from Alicante to Algeria. Once there, they took advantage of the return trip to transport Algerian citizens to Spanish coasts. This way, the organization had dual funding: drugs and immigration.

During the operation, agents arrested seven members of the network who trafficked methamphetamines from Spain to Algeria, where they unloaded the drugs and picked up migrants. In the African country, they had a recruitment network that handled collecting agreed-upon money before starting the journey, doing so through 'hawala'.

The largest operation against hawala structures took place in September 2022 in Malaga when the Civil Guard dismantled a criminal organization considered Europe's largest financial entity for drug trafficking, representing the largest international hawala network detected, capable of laundering up to 350,000 euros per day. According to data provided by the Ministry of Interior, the criminal network could have laundered around 200 million euros over a year and a half.

The main members of the organization in Spain had created a luxurious vodka brand promoted at shows, parties, and events at nightclubs and restaurants in luxury areas of Costa del Sol, pretending to be a successful beverage brand. However, according to data from the Tax Agency, their company could not support their lifestyle.

The leader of the organization in Spain was a criminal of great interest to various international agencies including Britain's NCA, Ireland's Garda, USA's DEA, Netherlands' Politei, and Europol's European Financial and Economic Crime Center according to data provided by the government.