By Staff Reporter
KARACHI: Criminal networks moved more than €500 million through underground banking channels in just a few months in some cases documented by global financial watchdogs — a sign of how far hawala operators have evolved from informal, trust-based money changers into commercial laundering operations rivaling legitimate fintech firms.
That’s according to a joint report from the Financial Action Task Force and the Organisation for Economic Co-operation and Development, based on input from roughly 45 jurisdictions including India and Pakistan. More than 80% of jurisdictions surveyed identified underground banking as among the primary tools used for professional money laundering — no longer confined to cash-heavy crimes like drug trafficking, but now financing everything from cyber fraud to terrorism.
The shift is playing out case by case. In Oman, a tip to the central bank’s whistleblower hotline led investigators to a WhatsApp group called “XX Money Exchange,” run by foreign nationals offering Pakistan-bound remittances at rates that undercut the formal market — fees waived, referrals rewarded. Customers paid in cash or by mobile transfer; operators sent back screenshots as proof funds had landed in a corresponding e-wallet in Pakistan. The trick: routing transfers through Pakistan’s fee-free Raast payment system and pocketing the exchange-rate spread. Investigators eventually tied six people to the network, with transaction flows near $72,293 over a year — modest by global standards, but a template for how the model works.
In India, the money trail ran through online gambling. Authorities uncovered a laundering scheme tied to an illegal betting platform that used a decentralized web of “panel operators” — handling deposits and withdrawals through UPI transfers, mule accounts, and identities lifted through fraud — to keep the platform itself insulated from its cash flows. Proceeds were converted to cash, shipped abroad through hawala channels, then funneled back into India dressed up as foreign investment from the UAE.
A Service Industry for Criminals
What ties these cases together, the FATF and OECD argue, is professionalization. Hawala networks that once ran on personal trust between operators now function as scalable businesses, undercutting formal remittance services on price while moving large sums across borders fast — a dynamic the report frames as the rise of “money laundering as a service,” where laundering itself has become a specialty for hire rather than something criminal groups handle in-house.
That professionalization has pulled in a wider cast of enablers: lawyers, accountants, notaries, real estate agents, even casino and junket operators, according to the report. It’s also blurred the line between underground and formal finance, with launderers increasingly routing money through bank accounts, prepaid cards, virtual IBANs and crypto wallets to exploit regulatory gaps.
Digital Hawala
Nearly 70% of respondents pointed to a broader move toward what the report calls “digital hawala” — coordination via Telegram, Signal and WhatsApp, transfers initiated through mobile wallets and instant-payment apps, and balances settled between operators using stablecoins. The report also flagged early use of AI tools and dedicated “hawala apps” built to run these networks — developments that make the money harder to trace and the operations more resilient to enforcement.
The report draws on evidence from more than 50 jurisdictions and input from FATF members, Europol, Interpol and the UN Office on Drugs and Crime. Its authors call for pairing enforcement with financial-inclusion efforts — so crackdowns don’t just push legitimate users further underground — alongside clearer legal standards, better detection tools, and tighter coordination between governments and the private sector.
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