FATF Flags Crypto Risks

The international anti-money laundering body, the Financial Action Task Force (FATF), has warned of the growing use of cryptocurrencies in illicit financial activities. During its fifth plenary session held on February 20 under Mexico’s presidency, the organization adopted new reports addressing risks linked to digital assets.

FATF approved two documents focused on the crypto sector. The first examines threats stemming from the misuse of stablecoins and so-called unhosted wallets—crypto wallets not tied to a regulated financial institution—and outlines measures to mitigate these risks. The second report highlights supervisory challenges related to foreign crypto asset service providers and presents best practices for effective oversight.

In addition, the organization adopted mutual evaluation reports assessing anti-money laundering systems in Austria, Italy, and Singapore. The evaluations reviewed both the legal frameworks in place and the effectiveness of their implementation.

Against the backdrop of geopolitical risks, FATF reaffirmed that Iran remains on its blacklist. The decision reflects ongoing concerns over terrorism financing and weapons proliferation. The organization called on all countries to apply enhanced due diligence measures, including tighter controls on banking relationships, digital asset transactions, and business cooperation involving Iran.

FATF also announced that its ministers will meet in April in Washington, D.C. to set strategic priorities for the next two years. Starting in July, the presidency of the organization will be taken over by the United Kingdom.

In its statement, FATF emphasized that while digital assets play an important role in innovation and economic development, the sector must be properly safeguarded against abuse. Later this year, the United States will undergo its own mutual evaluation to assess compliance with FATF standards at both the federal and state levels.