The Financial Action Task Force has warned that underground banking and hawala networks have become key channels for professional money laundering, in a report published in Paris on 3 September 2026, drawing on evidence from more than 50 jurisdictions across the FATF Global Network and its partners.
The report finds that criminal misuse of underground banking, hawala, and other similar service providers (HOSSPs) is a widespread global phenomenon: more than 80% of reporting jurisdictions identified these systems as principal channels or techniques used for professional money laundering. In some cases, more than EUR 500 million was moved through underground banking and hawala-based schemes within just a few months.
The FATF acknowledges that hawala and other similar service providers can serve legitimate purposes. But in most countries the provision of underground banking or unregistered HOSSP services is a criminal offense, and it runs counter to the FATF Standards, which call on countries to require these operators to be licensed or registered.
Money laundering as a service
FATF describes how underground banking and hawala networks have evolved into a highly organised "money laundering as a service" model, in which the work of cleaning illicit funds is outsourced to specialists and run as a commercial business.
These operations are increasingly structured like companies. FATF points to sophisticated, scalable and commercially run cross-border networks that offer lower commission rates and can move large volumes of value across borders quickly for organised crime groups. It also flags growing involvement by professional enablers, including lawyers, accountants, auditors, notaries, corporate formation agents, financial consultants and real estate agents, as well as casinos and junket operators.
The report warns that these networks are increasingly woven into the formal financial system. Professional launderers use bank accounts, fintech platforms, payment service providers, virtual IBANs, prepaid cards and virtual asset wallets as entry and exit points across the laundering cycle, exploiting gaps between regulators and sectors.
The rise of "digital hawala"
Nearly 70% of respondents pointed to the integration of new technologies and a shift towards what the report calls "digital hawala." That includes operators coordinating via encrypted messaging apps such as WhatsApp, Telegram, and Signal; customers sending funds through bank transfers, mobile wallets, fintech apps, and instant payment systems; and operators settling balances between themselves using virtual assets, including stablecoins. The task force has been separately reworking the rules that govern those transfers, opening public comment on guidance for its revised Travel Rule.
FATF also identified the use of AI-based tools, including purpose-built "hawala apps." Together, it says, these developments make laundering faster and easier to hide, and extend the geographic reach and resilience of underground banking and HOSSP-based schemes.
No longer just drug money
The report stresses that the criminal use of these systems is no longer confined to cash-based crime such as drug trafficking or smuggling. Criminals are now using them to launder proceeds from a broader range of activity, including fraud, cyber-enabled crime, terrorist financing, illegal gaming and gambling, and transnational organised crime. Through a series of operational case studies, FATF shows networks moving proceeds from large-scale cross-border drug trafficking and, in one instance, using a digital hawala network to finance members of a terrorist organisation. The structure it describes, specialist layers operating as a business across borders, is recognisable from the way Chen Zhi's lieutenants built their cross-border scam network.
"This emergence of sophisticated, commercially operated cross-border money laundering networks is a serious risk multiplier, making it easier for criminals to cover up their activities that harm people and communities around the world. Whether through dedicated coordination channels or innovative investigative tools, I urge public and private partners around the world to put the good practices identified in this report into action to detect and disrupt this infrastructure that is sustaining organised crime."
Giles Thomson, President, Financial Action Task Force
What FATF wants done
The report sets out good practices to help jurisdictions and the private sector detect, investigate, prosecute and disrupt the infrastructure behind professional money laundering. It calls for targeted prevention and enforcement to be combined with proportionate financial inclusion measures, supported by legal clarity, stronger detection capabilities, public-private feedback loops, domestic coordination and international cooperation.
The work builds on earlier FATF studies, including a 2013 report on the role of hawala and other similar service providers in money laundering and terrorist financing, and a 2018 report on professional money laundering. Its evidence base rests on the FATF Global Network, whose reach the task force has been widening through its Guest Initiatives programme. The full report, Investigating Professional Money Laundering, Underground Banking, and the Use of Hawala and Other Similar Service Providers, is available on the FATF website.
