FATF Warns Criminals Are Increasingly Using Stablecoins for Illicit Finance

The Financial Action Task Force warned that criminals are increasingly exploiting stablecoins for illicit finance, with most identified onchain criminal activity now involving dollar-pegged cryptocurrencies. According to Cointelegraph, the global anti-money laundering watchdog said in its latest report published Thursday that criminal networks have also begun developing proprietary stablecoins designed to resist freezing and asset seizures. The FATF urged jurisdictions to accelerate implementation of crypto AML standards as illicit actors continue to take advantage of regulatory gaps across the sector. The findings came from the FATF’s latest annual review of countries’ implementation of its AML standards for cryptocurrencies. According to Cointelegraph, 83% of surveyed jurisdictions have adopted the Travel Rule into law, up from 73% a year earlier, but the FATF said many have yet to turn those legal frameworks into effective supervision and enforcement. The Travel Rule requires financial institutions and virtual asset service providers to share sender and receiver information for cross-border payments and crypto transactions above a set threshold, with a baseline of $1,000 or 1,000 euros, to help combat money laundering and terrorist financing. The report also said jurisdictions continue to struggle with offshore crypto service providers and with assessing risks tied to DeFi, which it described as a potential growing regulatory blind spot.