Minnesota investigation: The shadowy money system Somalis rely on

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MINNEAPOLIS, Minn. – The massive and sprawling $1 billion welfare-fraud schemes engulfing Minnesota are now casting fresh scrutiny on an old, opaque money-transfer network used by Somali Americans to send remittances back to their loved ones and friends — a system U.S. officials have warned can be siphoned or taxed by the terrorist group al-Shabaab.

Known as hawala, the centuries-old system moves money without banks, wiring infrastructure or standard documentation, yet it remains a lifeline for families in Somalia, where a national banking system barely exists. The system works by having a sender give money to an agent in the United States, who then instructs a partner in Somalia to pay the recipient directly, with no money ever physically cros