MONEY LAUNDERING GOES PROFESSIONAL: FATF WARNS CRIMINAL NETWORKS ARE BUILDING A GLOBAL LAUNDERING INDUSTRY

Money laundering is becoming a professionalised service industry, with criminal networks increasingly turning to underground banking, hawala and other informal payment systems to move illicit funds beyond the reach of conventional financial controls, the Financial Action Task Force has warned.

In its latest report, FATF said more than 80 per cent of reporting jurisdictions identified underground banking and hawala type networks among the principal channels or techniques used by professional money launderers.

The warning points to a major evolution in organised financial crime. What was once often dependent on individual money launderers is increasingly being delivered through specialised networks that provide laundering services to multiple criminal clients for a fee.

FATF said underground banking and other similar service providers have become increasingly sophisticated, scalable and commercially organised. Some networks can move significant volumes of value across borders rapidly and at competitive commission rates, creating an alternative financial infrastructure for organised criminals.

The threat is also expanding beyond traditional cash-based crime. FATF identified the use of these networks in handling proceeds from fraud, cybercrime, terrorist financing, illegal gambling and wider organised crime.

In some cases, the scale is enormous. Recent cases examined by FATF involved more than €500 million being laundered through underground banking and hawala based arrangements within periods of only a few months.

The report also raises concerns about the professional services surrounding illicit finance. Lawyers, accountants, auditors, notaries, company formation agents, financial consultants, real estate professionals, casinos and junket operators can all become potential facilitators when legitimate services are exploited to conceal criminal proceeds.

The growing sophistication of these networks creates a direct challenge for banks and financial intelligence units. A suspicious transaction may represent only one fragment of a much larger settlement network operating outside the regulated banking system.

FATF has therefore called for stronger identification, registration and oversight of underground banking and similar service providers. Its findings reinforce the need for governments and private sector institutions to improve information sharing and pursue the networks that provide laundering services, rather than focusing exclusively on the criminals who generate the underlying proceeds.

The development also carries particular significance for jurisdictions where informal value transfer systems play an important legitimate role in commerce and remittances. The compliance challenge is not simply to eliminate informal channels, but to distinguish legitimate financial activity from networks deliberately designed to conceal criminal money.

FATF’s latest warning effectively reframes the threat. Professional money laundering is no longer merely a technique criminals use after committing a crime. Increasingly, it is becoming a service that criminals can outsource.

The criminals are not just laundering money. They are building the financial infrastructure to make laundering a business.

Compliance takeaway

Financial institutions need to look beyond individual transactions and assess the networks, counterparties, intermediaries and settlement mechanisms connecting suspicious activity. Enhanced monitoring of informal value transfer exposure, beneficial ownership, professional intermediaries, cross border payment patterns and links to virtual assets is increasingly important. Regulators and financial intelligence units also face pressure to disrupt the professional laundering networks themselves, rather than treating each suspicious transaction as an isolated event.