Informal money-transfer systems such as hawala have grown more organised and now lean heavily on digital tools to hide criminal proceeds, a Financial Action Task Force (FATF) report concludes.
Drawing on information from about 45 countries and organisations, including Pakistan and India, the Paris-based body found that these networks—often called hawala and other similar service providers—are no longer simple cash-based operations.
They have become scalable businesses that move large sums quickly and cheaply across borders.
More than 80 percent of the jurisdictions that contributed said underground banking ranks among the main methods used by professional money launderers.
In some documented schemes, operators moved more than €500 million in only a few months.
The report stresses that while such services can meet legitimate remittance needs, running them without a licence is illegal in most places and runs counter to FATF standards that call for registration and oversight.
One case from Oman illustrates the shift.
The Central Bank of Oman learned through a whistle-blower that unlicensed operators were sending money to Pakistan.
Investigators joined a WhatsApp group advertising cheap transfers, watched social-media activity, and traced payments made in cash or via mobile wallets.
Operators then forwarded screenshots of e-wallet credits in the destination country.
They exploited fee-free corridors such as Pakistan’s Raast system and small exchange-rate gaps offered by digital wallets, generating profit while undercutting official channels.
Authorities identified six people linked to roughly $72,000 in recorded flows over a year.
A separate Indian investigation showed illegal online gambling profits being cleaned through a similar structure.
A betting platform used a loose network of “panel operators” who accepted deposits through UPI, bank transfers, digital wallets and accounts opened with stolen identities.
Part of the money was turned into cash and sent abroad via hawala; it later re-entered India disguised as foreign investment from the United Arab Emirates.
The FATF describes this pattern as “money laundering as a service”—specialists who sell concealment to organised-crime groups.
Networks now routinely tap banks, fintech platforms, virtual IBANs, prepaid cards and crypto wallets as entry and exit points.
Nearly 70 percent of respondents noted the rise of “digital hawala”: encrypted apps such as WhatsApp, Telegram and Signal for coordination; instant payment systems and mobile wallets for customer transfers; and stablecoins or other virtual assets for settling balances among operators.
Some groups are already testing purpose-built hawala apps and AI tools.These methods no longer serve only traditional cash crimes such as drug trafficking.
They now handle proceeds from fraud, cyber-enabled offences, illegal gambling, terrorist financing and other transnational crime.
The report also flags growing involvement of lawyers, accountants, real-estate agents and casino operators who help disguise the flows.
FATF experts from 32 jurisdictions, plus Europol, Interpol and the UN Office on Drugs and Crime, argue that countries must pair enforcement with clearer licensing rules, better detection technology, public-private information sharing and international cooperation.
At the same time, they urge proportionate measures that do not shut legitimate users out of the formal financial system. The overall picture is of an underground industry that has adapted to the digital age and now operates at a scale that demands coordinated global response.
