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Anti-Money Laundering / Countering the Financing of Terrorism Division
Notices from the Registrar

FATF Report: Investigating Professional Money Laundering, Underground Banking, and the use of HOSSP

12 October 2026

Underground banking and hawala and other similar service providers may be misused by professional money launderers. Dealers should remain vigilant to relevant risk indicators and report suspicious transactions where there are grounds to suspect ML/TF/PF.

Dear Regulated Dealer,

The Financial Action Task Force (“FATF”) has published a report on professional money laundering (“PML”), underground banking, and the use of hawala and other similar service providers (“HOSSP”).

The FATF report highlights how underground banking and HOSSP may be exploited by PML networks to facilitate illicit financial activity. It underscores the need for regulated entities to remain vigilant to the money laundering, terrorism financing, and proliferation financing (“ML/TF/PF”) risks that these typologies pose.

What are these channels and their underlying ML/TF/PF risks?

Underground banking and HOSSPs are long-standing value-transfer and other financial service systems which function as informal, decentralised networks. Their defining feature is the transfer of value without the physical cross-border movement of funds, with obligations settled through subsequent compensation. These channels may be exploited by criminal actors, including professional money launderers, to facilitate illicit financial activity.

International cases examined in the FATF report have identified the following practices:

Use of third-party transfers through unconnected third parties: Rather than HOSSPs settling directly with one another, outstanding balances between HOSSPs may be settled by arranging or directing payments of invoices or other commercial obligations conducted by third parties.

Settlement through precious metals and stones and luxury goods: Gold or high-value luxury goods may be used to transfer value and settle outstanding balances between HOSSPs, including through the repurchase and resale of luxury goods.

Hybrid settlement models involving virtual assets (“VA”) and precious metals and stones: In some regions, value transferred through underground banking and HOSSPs is settled through VA transactions backed by gold or other high-value commodities. In these hybrid structures, gold functions both as a reserve asset underpinning VA settlement balances, and as a high-value medium used to settle outstanding obligations between HOSSPs.

What can you do?

Regulated Dealers are encouraged to:

Remain alert to potential risk indicators including the use of third-party payments, and transactions or patterns of transactions which are inconsistent with the customer’s profile.

Take appropriate mitigation measures in line with the applicable anti-money laundering, countering the financing of terrorism, and counter proliferation financing (“AML/CFT/CPF”) requirements,  such as reporting suspicious transactions where there are grounds to suspect ML/TF/PF.

Click here (opens in new tab) for the FATF report. The publication is also uploaded at the ACD website https://go.gov.sg/minlawacd (opens in new tab) in the “Compliance” section, under “AML/CFT/CPF Resources”.

Anti-Money Laundering/Countering the Financing of Terrorism Division (“ACD”)
Ministry of Law