Daily Compliance Brief — FATF Maps Professional Money Laundering Through Underground Banking

September 4, 2026

Signal

The Financial Action Task Force (FATF) published a new report on September 3, 2026, examining the use of underground banking, hawala, and other similar service providers (HOSSPs) in professional money laundering. According to the FATF report, more than 80% of reporting jurisdictions identified these systems among principal professional money laundering channels or techniques.

The assessment finds that these networks are increasingly operated through sophisticated, commercially structured cross-border models. FATF also identified growing connections with banks, fintech platforms, payment service providers, virtual IBANs, prepaid cards, and virtual asset wallets.

The report highlights the emergence of “digital hawala”, including the use of encrypted messaging, mobile wallets, instant payments, stablecoins, and purpose-built applications to coordinate and settle value transfers.

Why it matters

Firms should reassess exposure to informal value-transfer networks where customer activity involves unexplained cross-border settlements, third-party payments, or connections to HOSSPs.

Monitoring frameworks may require stronger links between transaction patterns, virtual asset activity, payment intermediaries, and customer or counterparty risk indicators.

Risk assessments should also account for professional money laundering networks that operate across both informal and regulated financial infrastructure, particularly where multiple channels are used to move or settle value.