FATF Highlights Illicit Finance Risks in Underground Banking

Key developments include:

➡️ Professional Money Laundering: Underground banking and HOSSPs are increasingly organised as sophisticated, scalable and commercially operated cross-border professional money laundering networks;

➡️ Formal Financial Sector Integration: Professional money launderers increasingly use bank accounts, fintech platforms, payment service providers (PSPs), virtual International Bank Account Numbers (vIBANs), prepaid cards and virtual asset wallets as entry and exit points; and

➡️ Digital Hawala: Nearly 70% of respondents identified the integration of new technologies, including encrypted messaging, instant payments, virtual assets and stablecoins, AI-based tools and purpose-built ‘Hawala apps’.

✅ Firms should review their transaction and behavioural monitoring rules against their most recent business-wide risk assessment (BWRA) scrutinising whether their exposure to the ML and TF typologies highlighted by the FATF are sufficiently controlled for given their risk exposure.

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