The system was in place long before Western banking. The ancient Chinese used a similar method called "flying money," or fei qian. Arab traders used it as a means of avoiding robbery along the Silk Road.
Millions of southern Asia working in foreign countries use the system to send money home to relatives.
"They don't feel comfortable walking into a bank," Aziz said in an interview.
"It's very dangerous to talk about this, because it is illegal," Khan, who arrived in Quetta from Afghanistan many years ago, said Tuesday afternoon as a colleague shook his head and told him to keep quiet. "I can't tell you much."
Trust, he said, is the essential quality of a hawala trader. Most of his customers are from the same part of Afghanistan. So there is an innate sense of trust.
He said transfers were usually sent among family members and involved a few hundred dollars. Sometimes transactions are for as little as US$50. He provides a five-digit code word, a letter and four numbers, that the recipient takes to one of Khan's associates as far away as the US, Germany or Russia. The same associates accept money for transfer to relatives in Quetta.
"They tell the code word, and we hand over the money," he said. "Then we tear up the records on both ends."
Most hawala merchants charge a small commission, usually US$5 for transfers up to US$500 and US$10 for up to US$1,000. Their main profit comes from currency fluctuations and extra fees for moving money for big clients.
The system is used for far larger sums, often by drug traffickers, corrupt politicians and black market traders, according to local experts and law enforcement.
"The drug dealers, the politicians who get kickbacks and others with black money use this system," said Kamran Mumtaz, editor of The Daily Mashriq, a newspaper in Quetta.
Authorities have found evidence that hawala has been used for payments by smuggling rings and militant groups in the disputed territory of Kashmir and the Tamil Tigers in Sri Lanka, Passas said. "This is the most convenient, common and cheapest system of moving money," he said. "It is also one of the most difficult to track."
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