FATF, the intergovernmental body that sets global standards for tackling money laundering and terrorist financing, has published a new report warning that underground banking, hawala and other similar service providers, referred to as HOSSPs, are increasingly being exploited by professional criminal networks.
The report found that more than 80% of reporting jurisdictions now identify underground banking and HOSSPs as among the principal channels or techniques used for professional money laundering. In some instances, cases involved more than €500m laundered through underground banking and hawala-based schemes over just a few months.
Beyond the scale of the problem, the report details how these networks have become increasingly professionalised, with the emergence of “money laundering as a service” models that see criminal groups outsource laundering functions to specialists offering lower commission rates and rapid cross-border movement of funds.
FATF also flagged a growing role for lawyers, accountants, auditors, notaries, corporate formation agents, financial consultants, estate agents, and casino and junket operators in facilitating these schemes, alongside deeper integration with the formal financial system through bank accounts, fintech platforms, payment service providers, virtual IBANs, prepaid cards and virtual asset wallets.
FATF is the global policymaking body responsible for setting international standards to combat money laundering, terrorist financing and proliferation financing, and it monitors how jurisdictions implement these standards.
This latest report draws on evidence from more than 50 jurisdictions across the FATF Global Network and its partners, and it sets out good practice examples intended to help governments and the private sector detect, investigate and disrupt the infrastructure that underpins organised crime, corruption, fraud and terrorist financing.
Nearly 70% of respondents pointed to a shift towards so-called “digital hawala”, with operators coordinating through encrypted messaging platforms such as WhatsApp, Telegram and Signal, while customers initiate transfers via bank transfers, mobile wallets, fintech apps or instant payment systems. The report also highlights the use of virtual assets, including stablecoins, to settle balances between operators, along with AI-based tools and purpose-built hawala apps.
FATF noted that the criminal use of these systems has broadened well beyond cash-heavy crimes like drug trafficking, now extending to fraud, cyber-enabled crime, terrorist financing, illegal gambling and transnational organised crime, with case studies illustrating how digital hawala networks have been used to help finance terrorist organisations.
FATF President Giles Thomson said, “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.”
Copyright © 2026 RegTech Analyst
Copyright © 2026 RegTech Analyst
