By Binod Anand
- What is hawala and why does FATF flag it?
- How does UPI help fight money laundering?
- What is the JAM trinity?
- What did FATF’s 2026 report say about financial inclusion?
The global money-laundering watchdog has told the world how to shrink the shadow economy of hawala: expand safe, affordable, formal finance until the informal channel loses its reason to exist. India did not need the memo. We wrote it in practice a decade ago — and the results are now the reference point others are being asked to reach.
Every so often an international body publishes a document that, read carefully, is less a warning to a country than a vindication of it. The Financial Action Task Force (FATF) — the inter-governmental authority that sets the global standard for anti-money-laundering and counter-terrorist-financing policy — has just done exactly that for India.
In September 2026, FATF released Investigating Professional Money Laundering, Underground Banking, and the Use of Hawala and Other Similar Service Providers. India sat on the 22-member core project team, one of 46 jurisdictions whose evidence shaped it. The report’s headline concern is real: hawala and other informal value-transfer systems remain a favoured tool of professional launderers, flagged as a money-laundering risk in more than 60 percent of national risk assessments surveyed and named among the principal laundering channels by over 80 percent. That is the problem statement.
But the report’s most consequential passage is its prescription — and this is where India should feel a quiet pride. FATF’s answer to the hawala problem is not merely harder policing. It is inclusion. And the inclusion it describes is, almost line for line, the architecture India has already built.
The prescription reads like a description of India
Read the report’s remedy and it reads almost like a description of India’s last decade of financial architecture. FATF recommends expanding access to safe, affordable and efficient formal services — digital payment platforms, lower-cost remittance products, tiered customer due diligence, and simplified onboarding — precisely so that the demand-side pull of illegal hawala weakens on its own. For the first time with this clarity, the world’s foremost integrity body treats financial inclusion not as a soft development goal in tension with security, but as a risk-mitigation strategy in its own right.
That is the doctrine India adopted years before it became global consensus. Where FATF now tells other nations they should build these rails, India can simply point to the ones already carrying billions of transactions a month.
UPI and the JAM trinity: the model the world is chasing
Begin with the foundation. The JAM trinity — Jan Dhan bank accounts, Aadhaar digital identity, and near-universal Mobile connectivity — brought hundreds of millions of previously unbanked Indians into the formal financial system in a single decade. This was not incremental reform. It was the fastest expansion of financial access in human history, and it accomplished precisely what FATF now prescribes: it gave the ordinary citizen a formal, traceable, low-friction alternative to the informal channel.
Then came the instrument that turned access into habit. The Unified Payments Interface (UPI) did something no hawaladar’s ledger could match — it made the formal channel faster and cheaper than the informal one. A vegetable vendor, a migrant construction worker, a farmer at the mandi gate can now settle value in seconds, at near-zero cost, from a basic smartphone, with every rupee leaving a digital trail. FATF’s report identifies the classic attractions of hawala as speed, low cost, convenience and reach into remote areas. UPI meets each of those on the informal system’s own terms — and then adds the one thing hawala can never offer: transparency and traceability.
This is the decisive point. Enforcement can raid a network; it cannot remove the demand that regenerates it. India attacked the demand. By making the legitimate rail the easier rail, it stripped the informal channel of its competitive advantage among honest users — which is exactly the outcome FATF now urges the world to pursue. The India Post Payments Bank, the business-correspondent model, and Aadhaar-enabled payment systems carried that same logic into the last mile, where bank branches had never reached.
The cooperative extension: inclusion that reaches the last field
The rural dimension of this story is still under-told, and it is where India’s model goes further than most. The nationwide computerisation of Primary Agricultural Credit Societies (PACS), the strengthening of the cooperative credit structure, and the broader Sahkar Se Samriddhi agenda are not only prosperity programmes for the countryside. They are financial-integrity infrastructure.
A digitised PACS becomes a full-service village node — handling credit, deposits, procurement payments and remittances on a single traceable platform. In doing so it accomplishes what no enforcement drive ever can: it removes the very reason a farmer or small trader would reach for an informal channel. Where the cooperative reaches, the shadow network retreats. This is the demand-side solution FATF describes, delivered into precisely the corridors the report identifies as highest-risk: remittance-heavy, cash-intensive, trade-linked rural economies. India’s cooperative movement is uniquely placed to complete this task, and in doing so it converts a global compliance obligation into a domestic development win.
Detection, not just prevention
India’s system does not only prevent — it detects. FATF’s own report cites, as a success, a March 2022 case in which Indian authorities identified a transnational laundering scheme built on shell companies, forged KYC, under-invoicing and circular trade. That India appears in the report as a jurisdiction that caught a sophisticated professional network, rather than one that missed it, is itself a marker of institutional maturity. The Financial Intelligence Unit, a tightening enforcement architecture, and a digitally legible financial system together give investigators the trail that informal cash networks are designed to erase.
Staying ahead, from a position of strength
Confidence is not complacency, and India leads best by continuing to lead. FATF flags the rise of “digital hawala” — the folding of virtual assets, payment service providers, virtual IBANs and mobile money into laundering chains. India’s advantage here is structural: because our inclusion rails are already digital and traceable, our monitoring can evolve on the same infrastructure rather than chase cash through the dark. The task is to keep supervision moving as fast as the rails themselves.
The next frontier is trade — and it sits closest to the rural economy. As India expands agricultural exports and modernises its standards-and-residue regime, the same invoicing routes that carry genuine produce can be misused to carry mispriced value. A farmer-centric foreign-trade policy should build financial-crime resilience into the commodity value chain from the outset. Here too, India is not starting from behind; it is extending a model that already works into its next natural domain.
A template for the Global South
There is a larger significance to all this. Much of the world that FATF is addressing — nations with large unbanked populations, heavy remittance dependence, cash-based rural economies and thin banking penetration — looks demographically far more like India than like the advanced economies whose systems dominate global standards. For those countries, abstract advice to “promote financial inclusion” is of limited use. A working, proven, population-scale example is worth immeasurably more.
India offers exactly that. The JAM trinity, UPI, the digital public infrastructure stack and the cooperative-inclusion model together form a template the Global South can adapt — a demonstration that a developing nation can achieve both deep financial inclusion and strengthened financial integrity at once, and that the two reinforce rather than oppose each other.
The BRICS moment: New Delhi has the stage
The timing could not be more fortuitous. India holds the BRICS chairship in 2026 and hosts the 18th BRICS Summit in New Delhi on 12–13 September — the grouping’s twentieth year — under the theme Building for Resilience, Innovation, Cooperation and Sustainability. Digital public infrastructure and financial cooperation have been running threads through India’s entire chairship. There could be no more fitting stage, and no more fitting moment, to place the Indian model of anti-money-laundering-through-inclusion before the world.
Consider the audience. The expanded BRICS now accounts for roughly 37 percent of global GDP and about 54 percent of the world’s population, and its membership — Egypt, Ethiopia, Iran, the UAE, Saudi Arabia and Indonesia alongside the founders — reads almost like a map of the very corridors FATF identifies as highest-risk: large unbanked populations, heavy remittance dependence, dense trade links and long diaspora histories. These are precisely the economies for which abstract advice to “promote financial inclusion” has always been far easier to prescribe than to deliver. India can offer them not a theory, but a working system operating at population scale.
The call, then, should be made without hesitation from the chair India occupies this September: the world must recognise, celebrate and adopt the Indian model of anti-money-laundering. Let the New Delhi summit be the platform from which the JAM trinity, UPI and India’s digital-public-infrastructure-led approach to financial integrity are commended to the Global South — as a shared public good, offered in the very spirit of “Humanity First” that India has placed at the heart of its BRICS presidency. FATF has, in effect, certified the destination. India, from the chair of BRICS, is uniquely placed to hand its partners the map.
The FATF report will be read in most capitals as a manual of what to do next. In India it should be read as confirmation of what we did first. The world is now being prescribed a medicine India has already taken — and thrived on. The last mile of banking and the last mile of anti-money-laundering, it turns out, are the same mile. India has walked it. The report simply invites everyone else to follow.
The author is Secretary General of the Confederation of NGOs of Rural India (CNRI) and Founder of the World Cooperative Economic Forum. He writes on cooperative economics, commodity value chains and financial-crime governance.
