FATF and OECD report digitalization of hawala networks
Traditional informal financial networks, including hawala and other similar service providers, are increasingly using virtual assets and fintech platforms to conceal illicit funds. This is stated in a joint report by the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD), Dawn reports.
The study is based on information from around 45 jurisdictions and organizations, including India and Pakistan. More than 80% of respondents identified underground banking systems and similar service providers as among the main channels or methods of professional money laundering. In some of the cases reviewed, more than €500 million was laundered through such schemes over several months.
Social media and e-wallets
The report cites an example of a hawala network that used social media and mobile transfers for operations involving Pakistan. The Central Bank of Oman received information through a whistleblower channel about individuals suspected of operating an unlicensed cross-border transfer service to Pakistan.
During the inspection, the regulator discovered a WhatsApp group called “XX Money Exchange,” where foreign nationals advertised currency exchange and money transfer services for expatriate communities in Oman. According to the report, clients handed over money in cash or through mobile transfers, while operators sent screenshots confirming payment via an electronic wallet in the destination country. Omani authorities identified six individuals believed to be a connected network of hawaladars; transactions worth approximately $72,293 were recorded over one year.
More current news is available on the UA.News Telegram channel Telegram.
Spread of digital hawala
Nearly 70% of respondents reported the integration of new technologies and a shift toward so-called digital hawala. Its operators coordinate transactions through encrypted messengers WhatsApp, Telegram, and Signal, while clients initiate transfers through bank accounts, mobile wallets, fintech applications, and instant payment systems. Virtual assets, including stablecoins, may be used for settlements between operators.
FATF and the OECD also noted the use of artificial intelligence-based tools and the development of dedicated hawala applications. According to the report’s authors, such technologies increase the efficiency of professional money laundering schemes, facilitate the concealment of illicit money, and expand the geographical reach of networks.
The document states that the criminal use of such systems is no longer limited to proceeds from smuggling or drug trafficking. They are used to launder funds from fraud, cybercrime, illegal gambling, and transnational organized crime, as well as to finance terrorism. At the same time, the report emphasizes that providing underground banking services or unregistered services of this type is generally a criminal offense in most countries; FATF standards recommend requiring such providers to be licensed or registered.
