FATF warns: Offshore crypto companies could create regulatory gaps for money laundering and sanctions.

The Financial Action Task Force (FATF), the global anti-money laundering regulator, has released a new report highlighting the risks of money laundering, sanctions evasion, and other illicit financial activities posed by offshore virtual asset service providers (oVASPs). The report notes that some offshore crypto companies exploit discrepancies in regulatory and oversight coverage, making it difficult for authorities to effectively monitor transactions and enforce anti-money laundering (AML) and counter-terrorism financing regulations. Because many offshore crypto companies operate across multiple jurisdictions—for example, with different places of incorporation, infrastructure locations, and customer locations—regulators struggle to define clear supervisory responsibilities, thus limiting international cooperation. The FATF recommends that countries, even when providing services to foreign companies, should require them to register or hold licenses and strengthen cross-border regulatory and enforcement cooperation. Furthermore, the FATF previously warned that peer-to-peer stablecoin trading and non-custodial wallets could weaken AML regulation, necessitating national-level risk assessments and the establishment of protective mechanisms. (Cointelegraph)