No money crosses a border in a hawala transfer. A customer pays a broker in one country, a broker in another country pays the recipient, and the two brokers hold a running balance that they settle periodically — by a reverse transfer, by a commercial payment, or by moving goods or gold.
Hawala is lawful and regulated in many jurisdictions and serves populations the banking system does not reach. FATF’s study emphasises that the risk is not the mechanism but the absence of records where operators do not identify their customers, and the settlement leg, where trade invoices are used to balance unrelated obligations.