Why doesn’t the hawala system collapse, and why do participants generally not cheat?

The traditional concept of Hawala was based on trust, and still is. Today, Hawala comes in many different forms, but the main stay is still the same - which is an undocumented transfer.

It can fail primarily in two ways:

1. The spread between the official money transfer and Hawala transfers is reduced to a minimum whilst at the same time giving incentives (read: tax benefits) on official money transfers

2. The time to process an official money transfer vs a Hawala transfer is reduced. Time to process also includes the documentation/verification aspect of it.