FATF calls for stronger AML action on virtual assets

On 26 June 2025, the Financial Action Task Force (FATF) released its sixth update on how countries are applying anti-money laundering and counter-terrorism financing (AML/CTF) rules to virtual assets (VAs) and virtual asset service providers (VASPs).

The update shows that many jurisdictions, especially those with large crypto sectors, have made progress over the past year. More countries now have laws in place that reflect FATF’s Recommendation 15 and its 2019 Interpretative Note, which sets out how AML/CTF rules should apply to the crypto sector. Some countries are also taking more action on supervision and enforcement.

However, FATF says there is still important work to do. Licensing and registration of VASPs remains inconsistent, and many jurisdictions continue to face difficulties identifying the individuals and companies that are behind VASP activities. Offshore VASPs also remain a challenge, especially for risk management purposes.

FATF reports that 99 jurisdictions have either adopted or are in the process of adopting the “Travel Rule,” which requires key information to be shared with cross-border crypto transfers. To help with this, FATF has also recently published new guidance with examples of good supervision practices.

The report also includes updated data from the top 20 largest jurisdictions in terms of their crypto-asset activity. FATF notes that getting full compliance from these countries (which make up around 98% of global crypto activity) would significantly reduce global risks in the sector. Several blockchain analytics firms, including Chainalysis, TRM Labs, Lukka, and Merkle Science, helped inform the report.

FATF additionally highlights some of the risks relating to the criminal abuse of crypto-assets. These include an increase in the use of stablecoins by nefarious actors. In particular, stablecoins have been used more often in activity linked to North Korea, terrorist financing, and drug trafficking. Interestingly, it appears that criminals are shifting away from other crypto-tokens to stablecoins for their illegal transactions.

FATF also refers to the widely reported heist by the North Korean regime, stealing $1.46 billion in crypto from the exchange ByBit. With only 3.8% of the stolen funds being recovered so far, this serves as an unfortunate but prime example of the need for robust international cooperation.

Finally, the report warns of the growing role of crypto-assets in scams and fraud. FATF notes that in 2024, there was an estimated USD $51 billion worth of fraud-related crypto activity. FATF stresses the need for both governments and private companies to respond to these threats, particularly as scams become more sophisticated.

Blockchain technology offers useful tools for transparency, but there must be consistent global rules to keep the system secure. This rules should nevertheless be fit for purpose for digital assets, focusing on the specific risk vectors and considering how new technologies can more efficiently help reduce illicit finance. The latest FATF update is a reminder that these threats continue to evolve and that regulators will need to remain agile in targeting the harms caused by financial crime. Australia is currently taking steps to implement its own VASP framework which is expected to come into force in March 2026.

The FATF update can be accessed here.

Written by Steven Pettigrove and Luke Higgins