FATF report warns of professionalized global hawala and underground banking networks

A new report from the Financial Action Task Force (FATF) highlights the growing global threat of underground banking and hawala networks. These systems are increasingly being used as a professionalized ‘money laundering as a service’ model, where laundering functions are outsourced to sophisticated, scalable, and commercially operated cross-border networks.

The FATF found that over 80% of reporting jurisdictions identified these informal systems as primary channels for professional money laundering. In some instances, individual operations have processed more than €500 million in illicit cash over eight-month periods, while other schemes have laundered over ₹4,500 crores in just a few months.

Intelligence sources indicate these networks are heavily exploited to channel funds to terrorist organizations, including ISIL and Da'esh, across various global hubs and conflict zones. The infrastructure often involves shell companies, forged KYC records, and manipulated trade documents. The report warns of increasing involvement from professionals such as lawyers, accountants, and real estate agents in facilitating these schemes, as well as the integration of these illicit flows with the formal financial sector through fintech platforms and virtual IBANs.