How to pay local staff and contractors in countries under sanctions.
Short answer
Paying local staff and contractors in countries under sanctions or with collapsed banking infrastructure is one of the operational problems that humanitarian organizations and journalists face every month. The wire-transfer rails do not work, the cash logistics are dangerous, and the cryptocurrency answer creates separate problems. What works in practice is a layered setup: a primary channel, a backup channel, and per-payment documentation built for the eventual audit rather than for the next disbursement.
The structural picture in 2026
The countries where this problem appears are a moving list. Afghanistan, Syria, parts of Yemen, Myanmar, Venezuela, North Korea, Iran, Russia for some categories of payment, Sudan, Somalia. The specific list and the specific restrictions change with every quarter’s geopolitical development. The pattern is consistent enough to plan for: an NGO operating in any of these countries needs to pay local staff, local contractors, local landlords, local suppliers. The conventional banking rails have varying degrees of impairment.
The legal frame is layered. Sanctions regimes administered by OFAC (US), HM Treasury (UK), and the EU sanctions framework. Counter-terrorism financing laws that sit alongside sanctions. Anti-money-laundering rules that apply to any financial institution that touches the payment. Local laws in the operating country that may criminalize the use of foreign currency, criminalize unauthorized cross-border transfers, or require routing through the central bank. Each layer is its own compliance surface.
The legitimate humanitarian work in these countries is generally permitted under the sanctions regimes, often through specific licenses or general humanitarian carve-outs. The administrative burden of operating within those carve-outs is what shapes the day-to-day operational picture. The framework around what becomes producible in regulatory or legal proceedings is the same one we cover in cross-border data requests.
The four channels that actually work
1. Hawala and equivalent informal value transfer systems
Hawala is the centuries-old informal money transfer system used across much of the Middle East, South Asia, and Africa. The mechanism: an organization deposits cash with a hawaladar in one country; the hawaladar instructs a counterpart in the operating country to disburse equivalent local currency to the recipient. No physical money crosses the border. The transaction is settled between the hawaladars over longer periods through balancing flows.
For humanitarian operations, hawala is the dominant channel in many of the affected countries because it is the only channel that reaches the recipients. The compliance posture: in the US and UK, working with licensed and registered hawaladars is permitted. Working with unregistered hawaladars in countries where they operate informally is a more nuanced legal question. Major humanitarian organizations work with vetted hawaladar networks and document each transaction with the same rigor as a bank transfer.
The operational risks are real. Hawaladars can disappear with funds. Hawaladar networks can be designated as sanctions targets if they have been used by sanctioned parties. The vetting process is intensive and ongoing. The decision to use a specific hawaladar network is made at the policy level of the organization, not by individual field staff.
2. Mobile money
M-Pesa in East Africa and similar local mobile-money systems in many other regions provide a digital payment channel that operates over cellular and bypasses much of the banking infrastructure. The receiving party needs a phone with the local SIM and an account; the sending party uses a paymaster service or a local agent network.
For payments to recipients in countries with functioning mobile-money infrastructure, this is the cleanest channel: regulated, traceable, and minimally exposed to the most acute physical risks of cash logistics. The operating country’s central bank generally has visibility into mobile-money flows, which is the trade-off: the recipient is identified, the payment is documented, and the regulatory layer is functional.
3. Pre-paid cards and gift cards
For specific use cases (emergency stipends to displaced people, bulk purchases of essentials), pre-paid Visa or Mastercard products and major-retailer gift cards work in regions where the underlying infrastructure functions. The cards are loaded externally and distributed locally. The recipient uses the card directly with merchants who accept it.
The compliance picture is moderate. The card issuers run their own AML programs. Bulk loading of cards in the volumes humanitarian programs require generally needs to be coordinated with the issuer. The reach is limited to regions where merchants accept the cards, which excludes many of the most acute humanitarian theaters.
4. Stablecoin transfers, narrowly
USDC, USDT, and similar dollar-backed stablecoins on networks like Tron, Stellar, and Solana have emerged as a partial solution for some payment use cases. The transfer is fast, the rails are functional in regions where banking is not, and the recipient can off-ramp through local OTC desks or peer-to-peer markets.
The compliance picture is complex and evolving. Most major humanitarian organizations do not use stablecoins as a primary channel because the regulatory framework for charitable disbursements through this rail is still maturing. Smaller organizations and journalists’ freelance arrangements use them more frequently. The off-ramp on the recipient side often involves another OTC desk or trader, which is itself a compliance question. The framework around the broader picture of cryptocurrency in operations is the same one we cover in Monero, Wasabi, and what mixers actually do.
Documentation that protects everyone
Whatever channel the organization uses, the documentation pattern is what determines whether the program survives audit, regulatory inquiry, or legal proceeding.
Per-payment documentation: who paid, who received, how much, in which currency, on which date, through which intermediary. The documentation is contemporaneous; it is created when the payment is made, not reconstructed later. Photographs of receipts where appropriate. Hashes of any digital receipts where appropriate. Cross-references to the matter or program the payment supports.
Per-recipient documentation: identity verification proportionate to the amount and to the risk profile, screening against sanctions lists, due-diligence on the recipient’s affiliations, ongoing monitoring of any concerning developments. That verification is what later allows the organisation to demonstrate the payment was lawful and that reasonable steps were taken to confirm the recipient’s eligibility.
Per-channel documentation: the chain of intermediaries, the agreements with each, the periodic re-verification of each intermediary’s standing, the procedures for what happens if an intermediary is later discovered to be a sanctioned party. The documentation lives at the program level and is reviewed by counsel periodically.
The OPSEC overlay
Two patterns specific to the privacy of recipients in restricted zones.
The recipient’s identity is, in many cases, sensitive. A local journalist receiving a stipend from an international organization is a recipient whose identity matters operationally. A local activist receiving humanitarian support is similarly exposed. The payment channel that is most efficient may also be the most identifying. The operationally appropriate channel for a low-risk recipient is different from the operationally appropriate channel for a high-risk recipient. The decision is made per-recipient, not per-program.
The communication around the payment is a separate exposure. Confirming a payment over an unsecured channel can identify the recipient to surveillance the recipient is otherwise avoiding. The framework for the channel hierarchy of payment-related communication is the same one we cover in when law enforcement requests your client communications: end-to-end encrypted channels for sensitive substance, ordinary channels for routine logistics, and clarity in the team about which substance belongs in which channel.
Frequently asked questions
Are humanitarian organizations exempt from sanctions in operating in restricted countries?
Generally yes for humanitarian work, with the precise scope of the carve-out depending on the specific sanctions regime and the specific country. OFAC has issued general licenses for humanitarian activity in several sanctioned jurisdictions; the EU has parallel mechanisms. The exemption is for humanitarian work specifically; it does not extend to commercial activity that incidentally happens in the same country. Counsel review of the program against the specific licenses is part of the program design.
Should we use cryptocurrency for staff payments?
For staff payments specifically, generally no. The compliance complexity, the volatility of non-stablecoin assets, and the off-ramp friction make cryptocurrency a worse option than a properly run hawala or mobile-money channel for routine staff payments. Cryptocurrency is more useful for one-off urgent transfers and for payments to recipients in areas where every other channel is impaired. The decision is taken per use case, never as a blanket organisational policy.
What if my staff member’s identity becomes a target during an active payment relationship?
The contingency plan exists before the situation arises. Pause payments through the identifiable channel, switch to a less identifiable channel (often cash through a vetted intermediary), document the change with counsel, and assess whether continued employment is operationally feasible. The threshold for the assessment is the staff member’s safety, not the program’s continuity. The framework for thinking about staff safety in deteriorating environments is the broader pattern that humanitarian security teams have developed; the privacy layer is one part of the larger picture.
Do we need a money transmitter license to operate these channels?
Generally no for humanitarian operations conducted through licensed intermediaries; potentially yes for direct money transmission. The line between operating as a recipient of funds for distribution under a license and operating as a money transmitter is jurisdiction-specific and counsel-reviewed. Most established humanitarian organizations operate through partnerships with licensed financial institutions and intermediaries that handle the regulated transmission. Smaller organizations should get specific advice before designing their payment infrastructure.
There’s no perfect setup. Anyone selling you perfect is selling fear. The goal is simple: make yourself a harder target than the person next to you.
