FATF Urges Faster AML Action as Stablecoin Crime Rises

The Financial Action Task Force, the global anti‑money‑laundering body, warned in a report published Thursday that criminals are increasingly using dollar‑pegged stablecoins for illicit finance and are developing proprietary stablecoins designed to resist freezing and asset seizures.

The FATF’s annual review found that most identified onchain criminal activity now involves dollar‑pegged stablecoins. The report found criminal networks are creating coins and transaction methods intended to frustrate law enforcement efforts.

The review reported that 83% of surveyed jurisdictions have written the FATF Travel Rule into law, up from 73% a year earlier. Many countries have not converted those laws into active supervision or enforcement. The Travel Rule requires financial institutions and virtual asset service providers to share sender and recipient information for cross‑border payments and crypto transactions above a baseline threshold of $1,000 or 1,000 euros.

The report highlighted two recurring operational challenges. Offshore crypto service providers remain difficult for national authorities to assess and supervise because they often operate across multiple legal systems or relocate frequently. Decentralized finance platforms raise assessment and oversight difficulties that could become a regulatory blind spot, with risks from DeFi protocols, smart contracts and non‑custodial services.

The FATF urged jurisdictions to move from adopting legal rules to building functioning supervisory regimes for virtual asset service providers, to improve international information sharing and to ensure service providers can implement effective compliance controls. The report called attention to new technical measures criminals use, including stablecoins with features intended to make accounts and reserves harder to trace or seize.

The FATF’s review covers national practices and provides a benchmark of how well jurisdictions are meeting standards designed to reduce the abuse of virtual assets for criminal purposes. The FATF is an intergovernmental body that sets global standards to combat money laundering, terrorist financing and proliferation financing.