FATF Warns of Rising Illicit Virtual Asset Activities Despite Stricter Regulations

A new FATF report highlights that while more countries have legislated to regulate virtual assets, implementation gaps still exist, allowing organized crime to exploit these vulnerabilities. The report calls for enhanced global cooperation and regulation, particularly against evolving threats like stablecoins and decentralized finance.

The latest report from the Financial Action Task Force (FATF), published Thursday, reveals that more countries are legislating to regulate virtual assets, yet practical implementation remains inconsistent. Organized crime groups continue to exploit these regulatory gaps, channeling billions in illicit funds through the sector.

According to FATF's seventh targeted update on global anti-money laundering (AML) and counter-terrorist financing (CFT) measures for virtual assets and service providers, 83% of jurisdictions have implemented the Travel Rule. However, enforcement and supervision struggles persist, especially with offshore virtual asset service providers (VASPs) and decentralized finance platforms.

FATF President Giles Thomson emphasized that criminal networks still misuse virtual assets to evade sanctions and launder money. He urged governments and private sectors to close regulatory gaps and enhance cross-border cooperation, adapting safeguards to match technological advancements and criminal evolution.