A more thorough explanation:

Definition: Hundi is a system for transferring money, usually across national borders, based on trust and operating through networks based on family relationships or on regional or ethnic affiliations rather than through banks and financial institutions. This system originated in India before the introduction of western banking practices and is commonly used in immigrant communities. In Indian and Pakistani usage, “white halawa” refers to legitimate transactions and “black halawa” refers to money-laundering. Hundi is also known as halawa.

• An Indian worker in the UAE wants to send money to his family in India. He gives the money to a trusted friend or relative who is traveling to India. The friend or relative then gives the money to someone they trust in India who delivers the money to the worker's family. This is an example of hundi.
• A Pakistani businessman wants to invest money in a business in the US. He gives the money to a trusted friend or relative in Pakistan who has connections in the US. The friend or relative then gives the money to someone they trust in the US who invests the money in the business. This is another example of hundi.

These examples illustrate how hundi works. Instead of using banks or financial institutions, people rely on trusted networks of family or friends to transfer money. This system is based on trust and relationships rather than formal contracts or legal agreements.