FATF raises alarm over rising illicit crypto use globally, urges stronger regulation
{Financial} crime watchdog, the {Financial} Motion Process Drive (FATF), has raised an alarm over the rise of illicit finance via cryptocurrencies, warning that this might have dire penalties for the worldwide {financial} market.
Because of this, the physique calls on nations to speed up the implementation of anti-money laundering (AML) and counter-terrorist financing (CFT) measures within the quickly evolving digital asset (VA) sector.
In its sixth focused replace on international AML/CFT compliance associated to digital property and digital asset service suppliers (VASPs), launched Thursday, the FATF reported progress in regulatory growth, however highlighted main gaps in supervision, enforcement, and cross-border coordination.
“With digital property being inherently borderless, regulatory failures in a single jurisdiction can have international penalties,” the group warns.
Stablecoins as rising excessive threat
The FATF highlighted stablecoins—a category of digital property usually pegged to fiat currencies—as an rising high-risk channel for cash laundering, terrorism financing, and cybercrime.
In keeping with the group, most illicit on-chain exercise in 2024 concerned stablecoins.
- The group famous that the Democratic Folks’s Republic of Korea (DPRK) actors this 12 months carried out the biggest single digital asset theft in historical past, stealing $1.46 billion from the VASP ByBit.
- It added that solely 3.8% of the stolen funds have been recovered, highlighting the necessity to tackle asset restoration challenges and enhance worldwide co-operation.
- The FATF additionally famous the numerous uptick in the usage of digital property in fraud and scams, with one trade participant estimating that there was roughly $51 billion in illicit on-chain exercise regarding fraud and scams in 2024.
Uneven regulation persists
The FATF stated that whereas progress has been made since 2024 in regulating digital property, many jurisdictions nonetheless have work to do to fight dangers.
- As of April 2025, solely 40 of 138 jurisdictions assessed have been “largely compliant” with FATF’s crypto requirements, up from 32 a 12 months earlier.
- The FATF highlights the necessity for additional work on licensing and registration, noting that nations proceed to face difficulties in figuring out pure or authorized individuals that conduct VASP actions.
“Jurisdictions have additionally reported challenges with mitigating the danger of offshore VASPs,” it added.
The FATF emphasised that jurisdictions representing 98% of the worldwide digital asset market should totally implement its requirements to meaningfully scale back international dangers.
What you need to know
In Nigeria, the place nearly all of its digital native youths proceed to take part actively within the digital asset market, the Securities and Alternate Fee (SEC) is making efforts to manage the crypto house via its Accelerated Regulatory Incubation Program (ARIP).
Underneath this system, the Fee licensed two crypto exchanges, Quidax and Busha, final August to check the waters of its crypto regulation.
The Investments and Securities Act (ISA 2025), lately signed by President Tinubu, additionally empowers the market watchdog to manage the commerce and use of digital property within the nation.
