Purpose The purpose of the study is to examine the available literature to comprehend what the underground banking system is, for what purposes this method is used and how policymakers should proceed to address this issue. Design/methodology/approach The approach involved conducting this study and combining it with a critical analysis of the available literature as well as the available historical data. The sources the study has explored include government documents, public hearings, academic articles, case studies and articles available on the internet. Findings The study revealed prevention of illegal proceeds is critical, still regulating one entity, is a phenomenon of Boyle’s law, “squeezing the balloon”. If one end of the balloon is squeezed, making the volume smaller, the pressure inside increases, making the un-squeezed part of the balloon expand out. The real issue is not how criminals transfer their illegal earnings; it is the criminals themselves. Hence, the policy decision on this issue needs to be carefully considered. Research limitations/implications Due to the complexity of the operating system of Undiyal, this study had a number of limitations, as do many others. Firstly, there are no records of the Undiyal agents or the volumes of transactions publicly available. However, comprehending the scope of the underground operation that exists in the country is quite difficult. Practical implications The study contributes to the academic researchers grasping what type of future research should be focused on in this area according to the study. Social implications From the point of view of its practical application, the study seeks to resolve social issues that the middle-class population experiences on a daily basis and that have a huge and adverse impact on GDP. Originality/value To the best of the authors’ knowledge, this is an original contribution.