Here is what LORD JUSTICE TOULSON has to say,
"There is nothing unlawful or irregular in itself about a Hawala banking system. The judge and jury were assisted by admissions made by both parties about the nature of such a system. We quote from the admissions:
"Hawala is a method by which funds can be transferred between people or companies, often across international boundaries. A particular Hawala system will generally be built upon links based upon family, tribe or ethnicity. Transfers of Hawala funds are facilitated through an informal system operated by active Hawalader Brokers, who execute swaps of value or transfers between themselves to settle debts, thus reducing the amount of administrative records and avoiding local controls. The system is built both upon trust and on a history of success.
In 2005 the Court of Appeal in Hussain and Ali  EWCA Crim 87 21 & 22 paragraphs described the detail of the process as follows:
'21. Hawala banking is an arrangement by which individuals (or intermediaries who have collected money from individuals) deposit money, usually in the form of modest amounts of cash, with a Hawalader in, for example, the UK to be remitted to beneficiaries abroad, commonly in the country from which the remitters' family originate, for example Pakistan. The UK Hawalader will have a Hawala contact in Pakistan who will pay a sum in rupees, at a rate of exchange which may have been agreed with the remitter in advance. The payment will commonly be made more quickly, more cheaply and with less formality than any corresponding service that might be available through the medium of the commercial banks. There is commonly a family relationship between the UK Hawalader and his contact in Pakistan which enables the transaction to be completed with a greater reliance on trust than is necessary in other commercial financial dealings.
22. For ordinary Hawala there must be records to show the identities of the individuals from whom the money had originally been collected in the UK and of those to whom it was ultimately to be paid in Pakistan.'
It is not inconsistent with the Hawala process that a Hawaladar or his agent in the UK should collect a stock of cash from different customers and use it to compete entirely separate transactions on behalf of a Pakistani Hawaladar.
Hawala banking represents (for the customer) an alternative to the use of the conventional banking system, but a Hawala banker in the UK is subject to exactly the same legal obligations as a conventional banker.""
So, for the avoidance of doubt,
Here is a link to J Orlin Grabbe's "In Praise of Hawala."