The Shi'a "Islamic Laws according to the Fatawa of Ayatullah al
Uzama Syed Ali al-Husaini Seestani" has this to say about Hawala
banking:
"2298. If a debtor directs his creditor to collect his debt from the
third person, and the creditor accepts the arrangement, the third
person will, on completion of all the conditions to be explained
later, become the debtor. Thereafter, the creditor cannot demand his
debt from the first debtor."
The prophet Muhammad (a cross border trader of goods and commodities
by profession) encouraged the free movement of goods and the
development of markets. Numerous Moslem scholars railed against
hoarding and harmful speculation (market cornering and manipulation
known as "Gharar"). Moslems were the first to use promissory notes
and assignment, or transfer of debts via bills of exchange
("Hawala"). Among modern banking instruments, only floating and,
therefore, uncertain, interest payments ("Riba" and "Jahala"),
futures contracts, and forfeiting are frowned upon. But agile Moslem
traders easily and often circumvent these religious restrictions by
creating "synthetic Murabaha (contracts)" identical to Western
forward and futures contracts. Actually, the only allowed transfer
or trading of debts (as distinct from the underlying commodities or
goods) is under the Hawala.
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