Hawala (or hundi) is a system of trust-based financial transactions which exist outside the dominant financial system, circumventing both banks and government regulation. Wikipedia calls it an informal value transfer system.

CBC has an excellent introductory article on how the centuries-old system works:

What is a hawala?
Hawalas are unregulated international financing networks. Hawalas are not limited to specific geographic regions, and are found throughout the world. The word hawala means �in trust� in Hindi. The money-transfer system is used primarily by individuals to transfer cash, locally or overseas, to people who do not have access to a bank. Hawalas are commonly used by immigrants in Canada. Transfers are usually from one blood relative to another. They leave no paper trail and offer anonymity to both the originator and the recipient.

How do they work?
The operator of a hawala is a thakedar. A fee, traditionally five per cent of the amount to be transferred, is charged for the service. When a person wishes to transfer money, the thakedar of one hawala contacts his counterpart in the other location. This is now usually done via e-mail. Within minutes, the originating thakedar gets a response from the recipient thakedar, confirming that there is enough cash on hand to complete the transfer. To verify the transaction, a password is shared among the donor, the recipient and the two thakedars. The recipient must provide his thakedar with the password to receive the money. The system is based on trust between the two thakedars, in a relationship that develops over the years. The cash debt is settled later between the two thakedars.

{See also the Ripple monetary system, which is a modern open source attempt at doing basically the same exact thing.}

Interestingly, Interpol also has an article about this, which is very leading in its titling and URL:

https://www.interpol.int/Public/FinancialCrime/MoneyLaundering/EthnicMoney/

“Financial Crime - Money Laundering - Ethnic Money” sounds so dirty, doesn’t it? The actual article title is “Alternative remittance systems distinguishing sub-systems of ethnic money laundering in INTERPOL member countries on the Asian continent”. “Alternative Remittance Systems” does not sound quite so dastardly though, huh?

Why on earth would a governmental organization not like a system of alternative remittance though? Sure, they can be used for laundering money - but so can gambling and the illegal drug trade (which is how the US government is said to do it). I was even told when I lived in one of the weed-growing capitals of the US (Humboldt County) that restaurants are typically used to launder drug money since they deal in such large quantities of cash. And yet, we don’t see governments trying to crack down on restaurants, but we do see thrusts against hawala systems of finance.

Try out a “hawala al qaeda” search on Google and see what comes up. See also this section of the Hawala Wikipedia article:

After the September 11 terrorist attacks, the American government suspected that some hawala brokers may have helped terrorist organizations to transfer money to fund their activities. The 9/11 Commission Report has since confirmed that the bulk of the funds used to finance the assault were not sent through the hawala system, but rather by inter-bank wire transfer to a SunTrust Bank in Florida, where two of the conspirators had opened a personal account. However as a result of intense pressure from the US authorities, widespread efforts are currently being made to introduce systematic anti-money laundering initiatives on a global scale, the better to curb the activities of the financiers of terrorism and those engaged in laundering the profits of drug smuggling. Whether these initiatives will have the desired effect of curbing such activities has yet to be seen; although a number of hawala networks have been closed down and a number of hawaladars have been successfully prosecuted for money laundering, there is little sign that these actions have brought the authorities any closer to identifying and arresting a significant number of terrorists or drug smugglers.

In November, 2001, the Bush administration froze the assets of Al Barakat, a Somali remittance hawala company used primarily by the large Somali Diaspora. Many of its agents in several countries were initially arrested, though later freed after no concrete evidence against them was found. In August 2006 the last Al Barakat representatives were taken off the U.S. terror list, though some assets remain frozen.

Hawala has been made illegal in some states of the US and other countries as it is seen to be a form of money laundering and terrorist funding.

Compare to The Power of Nightmares and Al-Qaeda on Wikipedia, which have interesting entries related to this subject:

In the BBC documentary The Power of Nightmares writer and journalist Jason Burke states that “beyond his small group, bin Laden had no formal organization, until the Americans invented one for him.” Burke contends the name “al-Qaeda” was first brought to the attention of the public in the 2001 trial of Osama bin Laden and the four men accused of the 1998 United States embassy bombings in East Africa. As a matter of law, the U.S. Department of Justice needed to show that Osama bin Laden was the leader of a criminal organization in order to charge him in absentia under the Racketeer Influenced and Corrupt Organizations Act, also known as the RICO statutes.

See also the RICO Act and Racketeering on Wikipedia.

Time for some rampant speculation: is the *real threat* of a “group” like Al-Qaeda simply that they are using a Hawala-like system which refuses to give a slice to governments and banking institutions? How would one go about proving or disproving a hypothesis such as this?