FATF Finds Underground Banking and Hawala Key Channels for Professional Money Laundering
The Financial Action Task Force (FATF) published a new report on 3 September 2026 examining how underground banking, hawala and other similar service providers are being used in professional money laundering.
Drawing on evidence from more than 50 jurisdictions across the FATF Global Network and partners, FATF said more than 80% of reporting jurisdictions identified underground banking and similar informal value-transfer systems among the principal channels or techniques used by professional money launderers. Some case studies involved more than EUR 500 million laundered through underground banking or hawala-based schemes within only a few months.
Money laundering as a service
FATF said these networks are becoming increasingly professionalised, scalable and commercially operated. Criminal groups can outsource laundering functions to specialist networks that move large volumes of value rapidly across borders, sometimes at comparatively low commission rates.
The report also highlights the involvement or misuse of lawyers, accountants, auditors, notaries, corporate formation agents, financial consultants, real estate agents, casinos and junket operators. Professional money launderers are increasingly connecting informal networks with the regulated financial sector through bank accounts, fintech platforms, payment service providers, virtual IBANs, prepaid cards and virtual asset wallets.
Rise of digital hawala
Nearly 70% of respondents identified growing integration of technology into these systems. FATF described a shift toward “digital hawala”, including the use of encrypted messaging applications such as WhatsApp, Telegram and Signal; bank transfers, mobile wallets, fintech applications and instant-payment systems; virtual assets including stablecoins; AI-based tools; and purpose-built hawala applications.
The criminal use of these networks now extends beyond traditional cash-intensive offences. FATF cited links to drug trafficking, smuggling, fraud, cyber-enabled crime, illegal gaming and gambling, terrorist financing and wider transnational organised crime.
FATF stressed that hawala and similar systems can serve legitimate remittance and value-transfer needs, but noted that unregistered underground banking or similar services are generally unlawful in many jurisdictions and conflict with FATF standards requiring relevant providers to be licensed or registered.
The report calls for stronger legal clarity, detection capabilities, public-private feedback loops, domestic coordination and international cooperation to identify and disrupt professional money-laundering infrastructure while maintaining proportionate financial-inclusion measures.
