Informal value transfer system

Any arrangement that transfers value between parties without moving funds through the regulated banking system, settling obligations by netting or in kind.

also known as: IVTS
reviewed: 2026-08-20

The category covers hawala and its regional equivalents, as well as netting arrangements inside trading groups and settlement through commodity flows. What they share is that the transfer and the settlement are separated in time and often in form.

That separation is what makes them hard to follow: the payment leg leaves no cross-border record, and the settlement leg looks like ordinary commerce.

Where this term is used

How are gold and commodities used to settle sanctioned trade? — Settling cross-border obligations by moving physical gold or fungible commodities instead of currency, so that value transfers without any payment entering the banking system.
What is hawala and how does informal value transfer work? — Settling obligations between brokers in different countries by netting them against each other, so a customer's payment reaches a recipient abroad without any funds crossing a border.
What is trade misinvoicing? — Trade misinvoicing is misstating the price, quantity or description of goods on trade documents, so that value moves across a border in a direction and an amount the paperwork does not admit.

Related terms

Hawala — A value transfer arrangement in which brokers in different countries pay out to each other's customers and settle the resulting obligations between themselves later.
Trade-based money laundering — Moving value by misrepresenting the price, quantity or quality of goods in international trade, so that the transfer appears as ordinary commerce.

Sources

The Role of Hawala and Other Similar Service Providers in Money Laundering and Terrorist Financing. Financial Action Task Force, 2013.
Trade-Based Money Laundering: Trends and Developments. Financial Action Task Force and Egmont Group, 2020.

All glossary terms