Features

Invisible financial empire – I

Published

4 months ago

2026/07/1

How Hawala and Undiyal created parallel banking system

Sunil works as a driver in Dubai. Every month, on payday, he sets aside a portion of his salary to send to his mother in Galle. For years he used his bank’s remittance service. Then, one evening, a friend at the labour camp told him something that changed his habits.

“Don’t use the bank. I know someone. Your mother will get more rupees, and she’ll get it today.”

Sunil hesitated, but the offer was hard to refuse. The bank’s exchange rate was lower than what his friend’s contact was offering. The transfer fee was smaller. And instead of waiting two or three working days, the money would be in his mother’s hands by evening.

He agreed. He handed his friend’s contact a sum in UAE dirhams. He sent a one-line message to his mother with a code word. Within hours, a man on a motorcycle visited his mother’s home in Galle and handed her an envelope of rupees, more rupees than the bank would have given her, for the same dirhams.

No bank was involved. No wire transfer crossed the Indian Ocean. No dollar, dirham, or rupee physically travelled from Dubai to Galle. And yet the money moved, instantly, reliably, and outside the view of any regulator.

This is the world of Undiyal, known elsewhere as Hawala, a financial system that predates modern banking by centuries, operates today across six continents, and quietly moves an estimated USD 100 billion to USD 300 billion every year, almost entirely beyond the reach of central banks, tax authorities, and financial intelligence units.

Most Sri Lankans have heard the words Undiyal and Hawala. Fewer understand how the system actually works, why it has survived for centuries, despite the rise of modern banking, or why it matters to every citizen, whether or not they have ever sent or received a single rupee through it.

About this Four Part Series

The Invisible Financial Empire, will take readers from the basic mechanics of underground value transfer to the sophisticated criminal networks, digital platforms, and policy battles that define this shadow economy today. We begin, in Part I, with the system’s history and mechanics. Parts II, III and IV will examine how dirty money is laundered through this and related channels, how technology has transformed illicit finance, and what all of this means for Sri Lanka’s economy and its people.

Every important claim in this series is backed by evidence, from the International Monetary Fund, the Financial Action Task Force (FATF), the United Nations Office on Drugs and Crime (UNODC), Interpol, the Central Bank of Sri Lanka, and other research. Where something is allegation rather than established fact.

From the Silk Road to the Smartphone

Hawala , from the Arabic word for “transfer” or “trust”, emerged on the trade routes of South Asia and the Middle East more than a thousand years ago. Merchants travelling the Silk Road faced an obvious problem: carrying gold and silver across vast distances, through bandit-infested deserts and pirate-infested seas, was dangerous and impractical. The solution they devised was elegant. Only the broker’s word, we used to say “Word is the Deed” in our treasury dealing room and a running ledger of mutual debts between brokers, made the system work.

This same basic structure exists today across the world, under different regional names. In Sri Lanka and among Tamil communities globally, it is called Undiyal. In Pakistan and India, the underlying instrument is called Hundi. In China, it is known as Fei-Chien (“flying money”). In Hong Kong, Hui Kuan. In Thailand, Pei Kwan. In Somalia, Xawilaad. In the Philippines, Padala. In Colombia and parts of Latin America, the Black Market Peso Exchange. The US Financial Crimes Enforcement Network (FinCEN) groups all of these under a single technical term: Informal Value Transfer Systems (IVTS). (See Table 01)

The system survived the rise of telegraphs, SWIFT transfers, and online banking for a simple reason: it consistently does several things that formal banking, in many developing economies, has struggled to do as well, offer better effective exchange rates, charge lower fees, settle faster, and ask no questions.

How an Undiyal Transaction Actually Works: The Settlement Mechanism (See Figure 1)

No SWIFT message. No correspondent bank. No regulator sees a thing, unless one of the brokers later moves the settlement funds through a formal account, where Sri Lanka’s Financial Transactions Reporting Act requires banks to flag and report suspicious activity to the Financial Intelligence Unit (FIU) of the Central Bank.

The Digital Revolution: Hawala Goes High-Tech

For most of its history, Hawala depended on physical trust networks, extended families, ethnic and trading communities, and word-of-mouth reputation built over generations. That has changed dramatically in the past fifteen years.

Today’s underground value transfer ecosystem increasingly relies on:

* Encrypted messaging apps (WhatsApp, Telegram, Signal) to coordinate transactions and code words instantly across continents, replacing the slower telephone-and-courier model of earlier decades.

* Online payment platforms and digital wallets which can be used to move settlement funds in small, harder-to-detect increments.

* Internet-based forex trading platforms some entirely legitimate, others used as fronts to mix illicit settlement flows with apparently ordinary trading activity.

* Cryptocurrencies and stablecoins which allow brokers to settle balances between themselves across borders without touching the formal banking system at all.

* AI-assisted coordination increasingly used by larger networks to manage ledgers, detect law enforcement patterns, and optimise routing of funds across multiple jurisdictions.

This digital layer has not replaced the old trust-based Hawala network, it has supercharged it, allowing brokers to settle obligations faster, across more jurisdictions, and with a thinner paper trail than ever before.

Why People Use It: The Economics Beneath the Headlines

It would be easy, and too simple, to assume that everyone using Undiyal or Hawala is engaged in something illicit. Not really always. The system serves both legitimate remittance needs and, separately, can be exploited for criminal purposes.

Sri Lanka’s own experience between 2021 and 2022 is the clearest illustration of this dynamic anywhere in the world. When the Central Bank maintained an artificially fixed exchange rate while informal market rates ran far higher, formal worker remittances collapsed. Officially recorded remittances fell sharply through 2021 and into 2022, even though Sri Lankans working abroad had not stopped sending money home, they had simply stopped using the formal banking system to do it. The money was still flowing; it had simply gone underground, where the official statistics could no longer see it.

The lesson is one we will return to throughout this series: informal systems do not grow primarily because people want to break the law. They grow because the formal system has made them inconvenient less competitive if not completely impossible.

The Scale of the Shadow Economy

The numbers, where they can be estimated, are staggering, and it is worth pausing on exactly how they are estimated, since by definition these are flows that evade official measurement. (See Table 02)

What this table also reveals is encouraging. Since the Central Bank of Sri Lanka abandoned its parallel, artificially fixed exchange rate regime after the 2022 crisis, official remittances have recovered sharply and repeatedly hit record highs. This is not a coincidence. It is the clearest available evidence for the central argument of this series: when the formal exchange rate is allowed to reflect market reality, much of the incentive to use Undiyal disappears.

Why Governments Struggle to Stop It

In Sri Lanka, transferring funds overseas through Undiyal is explicitly prohibited under Section 4(3) of the Foreign Exchange Act, and engaging in such transactions is a punishable offence under the Prevention of Money Laundering Act. Banks are required under the Financial Transactions Reporting Act to report suspicious transactions to the FIU, regardless of amount. Yet the system persists, not because the law is unclear, but because, as this section has shown, the underlying economics often still favour the informal channel.

What Comes Next

In Part II, “Dirty Money: How Criminal Networks Launder Billions Across the World”, we will examine the three-stage laundering process that converts criminal proceeds into apparently legitimate wealth, the shell companies and trade manipulation schemes that make it possible, and what this machinery costs Sri Lanka and the world.

OUT OF THE BOX QUESTION

If informal systems like Hawala and Undiyal have survived for centuries despite the rise of modern banking, is the real problem the existence of these networks, or the incentives that keep ordinary people, like Sunil, choosing them over the formal financial system their own country has built?

(The writer is a senior Chartered Accountant, professional banker, and prominent academic researcher, holding a PhD from Auckland University of Technology (AUT), New Zealand. He has an extensive publication record in peer-reviewed journals and is the author of “Doing Social Research” (Springer) and “Samaja Gaveshakaya.” The views and opinions expressed in this article are personal.)

(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT, Malabe.Views expressed in this article are personal.)

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Features

New US sanctions on ICC, a fillip to worldwide political repression

Published

18 hours ago

2026/10/15

Thilina Walpola

The International Criminal Court in session. UN Photo/Eskinder Debebe

US Secretary of State Marco Rubio’s warning to the International Criminal Court (ICC) was stark: ‘Either the ICC will end its threats, or we will end the ICC.’ It followed US central administration accusations that the court was unfairly targeting Americans on the basis of trumped-up war crimes charges.

However, a new plethora of sanctions has been clamped on the ICC by the US, which in turn has spurred accusations by sections of the world that the latter has unleashed an ‘assault’ on the international legal order.

What some of the sanctions would mean for the ICC was outlined by Rubio: ‘We will ban transactions with this rogue court, cutting off their resources and crippling their ability to operate against us.’

The ICC has shown consistency of purpose over the years. Despite some operational constraints it has indicted a large number of political strongmen from around the world, accused of war crimes and other governance excesses that come under its purview. Two such recent figures are: Russian President Vladimir Putin and Israeli Prime Minister Benjamin Netanyahu.

Rather than enjoy a mere nominal presence in the world community, the ICC has proved its effectiveness by detaining and bringing to justice scores of VIP politicians and others of their ilk who have been found guilty of human rights abuses and kindred excesses that come within the terms of reference of the ICC.

Accordingly, the international justice system would be stymied considerably as a result of the ICC being dis-empowered, particularly financially. Needless to say, potential and real perpetrators of the species of crime coming under the jurisdiction of the ICC would stand to gain most from such anarchic tendencies. That is, political repression globally would be enabled to enjoy a new lease of life.

A detailing of the types of crime coming under the purview of the ICC provides an idea of what it would cost the international community if the ICC’s operations are gravely hampered. They are mainly: genocide, war crimes, crimes against humanity and the crime of aggression.

That is, the part of the world to be worst affected would be the global South, since the latter is awash with the mentioned crimes. Needless to say, a chronically-disaffected South will sooner rather than later undermine the well being of the world dangerously. The world is already being put through these paces.

At the time of writing, ‘illegal migrants’ from the South, for example, are aggravating many a Western economy’s woes, besides creating for them acute law and order issues. The fact that these migrants’ presence goes on to become a virtual test of the migrant receiving states’ ability to forge domestic social inclusion in the face of jingoistic protests by mainly white supremacist groups is evidence of the latter. As is known, the US, to take just one example, has been up against this crisis for quite a while.

Accordingly, it will be in the best interests of the West if ‘illegal’ migrant arrivals on their shores are stemmed. If the socio-political and economic problems assailing the South are effectively managed through North-South collaborative, ‘trouble-shooting’ efforts the causes leading to ‘illegal’ migration and connected issues could be resolved at source as it were. For, it is the aggravation of the South’s material questions that lays the basis for the emergence of repressive and anti-democratic regimes in the hemisphere.

Until such time that the aforementioned issues in North-South relations are visited afresh and addressed urgently, a vibrantly functioning ICC would be needed. For, the latter would prove a deterrent to Southern political and military strongmen, highly prone to power abuse and like excesses, from coming into being in the wake of the South’s chronic material woes and the wars and conflicts that result from them.

It stands to reason then that the US would be acting in its own interests by enabling the ICC to perpetuate its mandate without hindrance. For a crop of issues that impinges negatively on internal law and order would be defused.

Meanwhile, there needs to be a meeting of minds among the rest of the West to put back in place a North-South dialogue process aimed at reducing some of the economic pressures that are weighing on the South.

Since economics usually drives politics it will be in the interests of the world community to scrutinizingly re-visit North-South issues of the past and put in place economic relief packages for Southern publics that would enable them to tide over their material hardships rather than permit the latter to aggravate into social disaffection and eventually armed militancy. It is the latter juncture that paves the way for the emergence of authoritarian rulers in the South who then go on to be a blight on their publics.

Accordingly, the Southern-based global development thinking of the past that envisaged a more equitable world economic order needs to be seen as an urgent need. That is, NAM’s international development paradigms need to be resuscitated to the extent possible.

It is unlikely that rightist governments of the West, such as the current Republican administration in the US, would find these projects feasible, but democratic states of Europe, led by perhaps the UK, are likely to think otherwise. For it would not be beneficial for the democratic world to be having on their hands repressive governments in the South who would be gravitating towards the major military and economic actors of the South, such as Iran and North Korea, who tend to be in constant power struggles with the West.

However, until such time that the mentioned, pro-people initiatives are given serious thought the ICC would need to be enabled by the international community to be in place comfortably and carry on with its mandate of bringing repressive rulers to book. Besides the ICC should pave the way for the peoples of the developing world to enjoy some substantial respite from the political repression and even terror which tend to be their lot.

Meanwhile, the wars of West Asia are relentlessly aggravating the economic hardships of people everywhere, driving the point home to enlightened sections that there is no alternative to peacemaking. A challenge is to convert the US under President Trump to this line of thinking.

Features

Clear, soft and shine-free skin

Published

18 hours ago

2026/10/15

Thilina Walpola

This week, I give you five simple, time-tested homemade remedies that help reduce the appearance of blemishes, control excess shine and leave your skin feeling softer and smoother.

The Honey and Lemon Brightening Dab:

For stubborn blemish marks, this is a classic. Mix one teaspoon of pure bee honey with three to four drops of fresh lemon juice. Apply gently, only on the affected spots, and leave for 10 minutes before rinsing with lukewarm water. While honey soothes and softens, lemon helps to brighten naturally. Use twice a week in the evening.

Besan and Rose Water Oil-Control Pack:

An ideal remedy to combat shine, especially on the T-zone. Take two teaspoons of besan (gram flour) and mix with sufficient rose water to form a smooth paste. Add a pinch of turmeric for its antiseptic goodness. Apply evenly, keep for 15 minutes and wash off. It absorbs excess oil without over-drying, leaving a beautiful matte finish.

Aloe Vera and Cucumber Ice Soother:

Blend fresh aloe vera gel with the juice of a grated cucumber and freeze the mixture in an ice tray. Each morning, wrap one cube in a soft muslin cloth and gently rub over a cleansed face for 30 seconds. It calms, tightens pores and imparts a baby-soft smoothness.

Oatmeal and Curd Gentle Polish:

Roughness and old blemish marks need gentle exfoliation. Combine one tablespoon of finely powdered oatmeal with one tablespoon of fresh curd (yoghurt). Massage very gently, in circular motions, for one minute, leave for five minutes and rinse. It removes dead cells and unveils softer, clearer skin.

Multani Mitti and Green Tea Magic Mask:

Brew some green tea and allow it to cool completely. Mix one and a half teaspoons of Multani Mitti (Fuller’s Earth) with the tea water to make a fine paste. Apply for 10 to 12 minutes – do not let it dry and crack completely – and wash off. It draws out impurities, fades blemishes and bestows a fresh, shine-free glow.

A Gentle Reminder:

As with any natural remedy, always do a patch test on your inner arm first. For those with oily or combination skin, avoid heavy coconut oil application and harsh scrubbing, as they tend to aggravate shine and blemishes.

Features

Compete, shine and be discovered at WCOPA 2027

Published

18 hours ago

2026/10/15

Thilina Walpola

Dream of performing on a world stage? Well, here is your unique, golden opportunity!

The World Championships of Performing Arts (WCOPA) — the one and only official “Talent Olympics” — is the world’s premier global platform for aspiring singers, dancers, actors, models, instrumentalists, etc., to compete, shine and be discovered!

And, yes, this world stage is open to YOU, Sri Lankans living in Sri Lanka and overseas!

Held annually in glittering Las Vegas, WCOPA brings together over 70 countries, all competing for Gold, Silver and Bronze Medals, just like the traditional Olympics.

Lakisha Bernard: Will represent Team Sri Lanka at WCOPA 2027

Outstanding performers vie for the coveted titles of Junior and Senior Grand Champion Performer of the World, with winners and standout participants awarded over $500,000 in scholarships, cash awards and prizes to catapult their education and careers!

Sri Lanka is already making waves! At WCOPA 2026, Natharie Wickramasinghe, representing Team Sri Lanka, made the nation proud by winning a Bronze Medal in the Ethnic/Folklore Dance category!

Lakisha: Accomplished freelance Model and Fashion Design graduate

Recruitment for this prestigious competition is handled through a system of scouts and licensed National Directors — and this is where our very own Chris Rajendra, now based in Las Vegas, and National Director for Team Sri Lanka, comes into the scene.

If you are a singer, dancer, actor, model, instrumentalist — if you have talent burning inside you — contact Chris Rajendra today for registration and, who knows, you may find yourself in Las Vegas, and proudly draped in the Sri Lankan flag, at WCOPA 2027!

The contact address is: Chris Rajendra, wcopa.nationaldirector.sl@gmail.com

or chris.rajendra@gmail.com

Meanwhile, a star is born for 2027, in the form of Lakisha Bernard who is all set to represent Team Sri Lanka at WCOPA 2027.

Originally hailing from the sun-drenched coastal city of Colombo and now carving out her creative career in Canada, 22-year-old Lakisha is stepping into the international spotlight.

This accomplished freelance Model and Fashion Design graduate has officially been appointed as the Team Sri Lanka Promoter for Canada as she prepares to represent Team Sri Lanka at WCOPA in Las Vegas.

Lakisha brings a unique blend of high-fashion sensibility, captivating camera presence and expert garment design to the Team.

Having built her career, from local college shoots to high-glamour concepts, Lakisha’s inspiring journey embodies the true spirit of cultural bridge-building and creative resilience, bringing immense pride and recognition to Sri Lanka on the global stage.

WCOPA 2027 will be held at the legendary Westgate Hotel & Casino, Las Vegas, from 12th to 20th July – the very same iconic arena where the late, great Elvis Presley himself performed!

Your moment is now. Your stage is Las Vegas, so hurry and contact Chris Rajendra.