Cryptocurrencies and illicit finance: International report highlights escalating risks

The Financial Action Task Force (FATF) warned on Thursday that criminals are exploiting regulatory loopholes in the virtual asset sector to launder billions of dollars in proceeds from illicit activities through cryptocurrencies.

The group, an intergovernmental body concerned with combating money laundering and terrorist financing and based in Paris, said in its latest review of the role of virtual assets in illicit finance that crimes related to cryptocurrencies have become more complex and interconnected over the past year.

The report explained that regulators, financial institutions, and crypto asset companies around the world face significant and ongoing challenges in tracking money laundering flows linked to fraud gangs and investment fraud networks, as well as limiting their use in illegal activities.

The report noted a limited improvement in the level of countries’ commitment to implementing the Financial Action Task Force’s recommendations on crypto assets, with 51 out of 149 jurisdictions assessed as of April 2026 being largely compliant with the group’s standards, representing about 34%, compared to 29% a year earlier.

Despite this progress, the group stressed that the world still faces significant gaps in translating risk assessments into practical and effective measures to reduce crimes associated with crypto assets.

The report also noted the increasing use of stablecoins by illicit actors over the past year, pointing out that some criminal networks have developed their own stablecoins, making them more resistant to freezing or confiscation measures taken by authorities.

The Financial Action Task Force (FATF) stressed that rapid developments in the virtual asset sector require enhanced international cooperation and a higher level of regulatory oversight to ensure that modern financial technologies are not exploited for money laundering and financing illicit activities.