FATF Urges Stronger Action on Crypto Illicit Finance

The Financial Action Task Force (FATF), a worldwide entity focused on combating financial crime, has urged nations to enhance measures against illicit financial activities involving crypto assets. The organization emphasized that regulatory shortcomings could trigger widespread international consequences.

The Paris-based watchdog noted that while advancements have occurred since 2024 in regulating virtual assets, numerous regions still need to bolster their efforts to counter potential risks.

As of April 2025, assessments revealed that only 40 out of 138 jurisdictions were “largely compliant” with FATF’s crypto standards, a rise from 32 the previous year.

In a released statement, FATF asserted that given the inherently borderless nature of virtual assets, regulatory lapses in a single jurisdiction could result in global repercussions.

According to Chainalysis, a blockchain analytics firm, illicit crypto wallet addresses may have been the recipients of as much as $51 billion in 2024.

FATF indicated that countries are still encountering obstacles in ascertaining the identities of those behind virtual asset transactions.

This report highlights growing apprehension among financial regulatory bodies regarding crypto-related threats to the financial structure.

EU Concerns

Earlier this year, the EU’s securities watchdog cautioned that the expanding crypto sector might present risks to overall financial stability, especially as its connections with traditional markets become more intertwined.

Stablecoins and Illicit Activity

FATF also voiced worries regarding the utilization of stablecoins, a type of cryptocurrency linked to fiat currencies, by various illegal entities, including North Korea, terrorist financiers, and drug traffickers. The organization stated that the majority of illicit crypto activity currently involves stablecoins.

The FBI has previously stated that North Korea perpetrated the theft of virtual assets worth approximately $1.5 billion from the crypto exchange ByBit in February, which is considered the largest crypto theft recorded. North Korea consistently denies any involvement in cyber hacking or crypto heists.