Within opposition territories, the collapse of the formal money transfer system has pushed residents and humanitarian organizations to navigate informal financial channels for moving funds in Syria.

At the beginning of the Syrian conflict, money transfer companies, including Western Union affiliates, swiftly exited from rebel-held territories, widely believed to be a strategy for preventing terrorism funding.

In their absence, Syrians outside of regime control now place their trust in unlicensed money transfer companies, known as hawala operators, to receive payment from abroad whether it be remittances from family members or a paycheck from the relief organization that employs them.

The risks of hawala transactions are apparent: there are no regulations and no paperwork.

“Transfers to regime territories have financial oversight which protects both parties in the transaction,” a relief organization director in opposition-controlled Idlib, requesting anonymity, told the Syrian Voice. “Meanwhile in opposition territories, we don’t have receipts.”

With this lack of documentation and oversight, Syrians dependent on these unlicensed transfer operations are left vulnerable to high commission rates and exploitation.

‘Part of the wider spectrum of sieges and starvation’

Hawala, Arabic for ‘transfer’, is not a new phenomenon in Syria. Money transfers within Syria were often conducted without an official license until the passage of Law No. 24 by the People’s Assembly of Syria in March 2006.

Prior to 2011, the hawala system was an alternative to the formal banking sector in Syria. Its lack of regulations made it a hassle-free process, compared to a bank wire transfer, and offices operated in local communities.

For Syrians currently living in rebel-held territories, hawala is the only option.

The six money transfer companies licensed to operate in Syria, down from over a dozen before 2011, maintain branches exclusively in areas under the control of the Syrian regime.

The largest company Al-Haram Exchange, a Western Union operator, previously maintained three branches in Idlib province. However, once the region fell under opposition control, they quickly shut their doors.

“It wasn’t a security issue,” Rashad al-Kattan, a political and security analyst at the Centre for Syrian Studies, said in an interview with Al Jazeera.

“It was more part of the Syrian regime’s policy to punish those communities and exclude them from the financial banking sector – part of the wider spectrum of sieges and starvation.”

Moreover, Syrians in rebel-held territories saw a major financial lifeline cut in March 2015 when Turkey closed the last two official crossings on the border.

“I have children working in Turkey. They were sending me money through people that were coming to Syria,” Abu Ahmed, a civilian in the southern countryside of Idlib, told a Syrian Voice correspondent.

“With the tightening of the Turkish border, hawala offices have become the solution, despite the high percentages deducted from the transferred sum,” he explained.

Transfers ‘based on trust’

In southern Idlib province, currently under opposition control, Abu Basel has set up his operation.

Owner of an unlicensed hawala office, he accepts an average of 15 to 20 transfers per day, ranging between $4000 and $5000 in total.

Abu Basel, like most hawala operators, works in US dollars to avoid using the depreciated and constantly fluctuating Syrian pound.

“We work with representatives in most countries,” Abu Basel told the Syrian Voice. “In Turkey, we have representatives in all regions, plus a main office in the city of Rihaniya.”

“The sender meets with one of our representative who then transfers the amount to the main office [in Turkey],” he explained.

The same amount is delivered to the beneficiary inside opposition-territories after the sender’s deposit is confirmed through a “specific communication mechanism,” as Abu Basel referred to it, though he did not provide further details.

Though a handful of hawala offices require ID to claim money within opposition territories, encrypted messaging through applications like WhatsApp and Telegram have become a common method for carrying out the operation, according to an assessment of hawala transfers by UK- based research firm Beachwood International.

For instance, a Syrian living in Turkey visits one of Abu Basel’s representatives, often conducting business out of a mobile shop, travel agency, or licensed transfer office.

At the office, he delivers $500 and sends a code to his family member within a rebel-held Syria through WhatsApp. The family member can then use this code to claim the amount from one of Abu Basel’s representatives within Syria.

Abu Basel’s office in Turkey and the representative in Syria must then settle their debt.

In the past, the offices could transport money in person; however, the tightening of Turkish borders has forced hawala offices to use alternative methods, namely merchants.

An importer looking to bring goods into rebel-held Syria pays Abu Basel’s hawala office in opposition territory the amount he needs to purchase goods in Turkey.

After crossing the border, he would pick up the same amount from Abu Basel’s main office in Rihaniya.

This partnership allows the merchant to cross the border without carrying large sums of money while also allowing hawala operators to balance their books without having to actually ‘move’ any money.

For their efforts, hawala operators receive at least a two percent commission of the amount transferred.

However, rates can reach five to seven percent for besieged opposition territories, according to what Abu Abdo, owner of an unlicensed money transfer office in the Damascus countryside town of East Ghouta, told the Syrian Voice.

In extreme cases, such as the war-ravaged areas of rebel-held Aleppo, there have been instances of commission rates soaring to 30 percent, the Middle East Eye reported last month.

Despite these high rates, relief organizations have resorted to using hawala transfer to employ local residents and provide cash assistance in hard-to-reach and besieged areas of rebel-held Syria.

“In the large parts of Syria outside of government control, where major humanitarian needs persist, unregistered hawalas are being used to cover NGOs’ operational costs and pay their suppliers,” according to the Norwegian Refugee Council’s July 2015 report on remittances to Syria.

“[Hawala] represent the only potentially (and partially) scalable cash-out facility,” the report concludes.

“It’s a struggle to get a monthly salary,” Mohammed Ali, employed by a human rights organization based outside of Syria, told the Syrian Voice.

“Getting it in person is impossible with the closing of the Turkish border to civilians. With these unlicensed transfer offices, money transfers are delayed and come with high commission rates,” he explained.

However, the main concern among humanitarian workers and civilians is the lack of documentation in these transactions.

“These unlicensed offices are working on the black market, so there’s no oversight, no one to turn to if there’s an error in the transfer or a case of fraud,” says Ali.

In most cases, hawala operators do not issue receipts or proof of transfer, according to what the director of a Syrian relief organization, requesting anonymity, told the Syrian Voice.

“Our financial dealings within opposition-controlled territories are based on trust,” he explained. “Without financial guidelines, senders as well as beneficiaries are vulnerable to theft and exploitation.”

Despite the lack of a safety net, Syrians reliant on remittances and humanitarian organizations have no other options.

“You’re dealing with money brokers, but there aren’t any real alternatives,” Rami Othman, an administrator for an Idlib-based relief organization, told a Syrian Voice correspondent.

“Our work needs to continue.”

Exchanging money in the dark

With their backs against the wall, Syrians are flocking to unlicensed hawala offices for their money transfer needs. The financial sector in opposition-controlled territories, as a result, is pushed further into the dark.

Money exchange companies purportedly withdrew from opposition territories to cut off the flow of funds to radical militant groups in Syria.

The policy has largely backfired.

“The rapid growth of hawala in Syria presents a new risk management landscape which is still being assessed and understood,” according to a May 2016 UN report on the humanitarian impact of sanctions.

“Moreover, the risk of benefit to those evading sanctions, including UN-sanctioned terrorist groups can only be deemed greater via this method, versus the movement of funds via the formal banking channel,” writes Dr. Justin Walter, author of the report.

Tracking and investigating terrorism funding has become a veritable needle in a haystack as Syrians in need of funds from abroad are funneled into this unlicensed hawala system.

The Beachwood International assessment echoes the dangers of hawala transfer with regard to terrorism funding, emphasizing “the layers that the system provides – wittingly or not – to conceal the origin of the funds.”

These risks mean little to Syrians in opposition territories, as hawala transfers are the only way to get a paycheck or a remittance and stave off economic hardship.

As for the hawala offices, their services are still in high demand and with their unbridled expansion, the underground financial sector they have created in Syria continues to flourish.

Translated by Tariq Adely