In India, Hawala is a variation of the centuries-old Hundi system, which may be the oldest term for credit or bill of exchange. The Indian indigenous banking system evolved centuries before the European and Western banking systems. Absent any formal banking means, indigenous bankers assisted Indian merchants and travelers through Hundis, a term used to describe a written order that a person makes on another for the specified amount and duration. A wide range of Hundis were developed according to the nature of the transaction. Hawala (Arabic for "transfer") evolved from Hundi as a type of informal value transfer system (IVTS). It enables people to transfer money from one country to another without using formal financial institutions, including banks. Hawala dealers constitute an informal banking system that charges smaller fees, gives a better exchange rate, and provides faster service than regular banks. Many Hawala dealers have couriers who deliver money to the doorsteps of customers. Although most people who use Hawala are in legitimate professions and send money for legal transactions, the Hawala system attracts criminal activities because of the lack of a paper trail, convenience, and the speed of the transactions. It was suspected that terrorists used Hawala to funnel part of the money used to fund the September 11 attacks. Usually, there is no way of knowing whether a transaction is legal or illegal, primarily because the criminal money chains are far more complicated when even the Hawala dealers do not know the actual sender and eventual receiver. By recognizing legitimate uses of IVTS, law enforcement agencies can gain cooperation from immigrant and refugee populations in the United States who use such systems for money exchanges without alienating them and by developing effective identification mechanisms for regulating these systems. 1 table, 18 notes, and 50 references