Global Financial Crime Watchdog Urges Stronger Action Against Crypto Risks
By Elizabeth Howcroft | June 27, 2025
PARIS — The Financial Action Task Force (FATF), the global watchdog charged with combating financial crime, has issued a strong call for countries to intensify efforts in tackling illicit finance risks associated with crypto assets. Speaking from its Paris headquarters, FATF warned that significant regulatory gaps in the virtual asset sector could reverberate globally, given the inherently borderless nature of cryptocurrencies.
While some progress has been made since 2024 to regulate virtual assets, FATF highlights that many jurisdictions remain inadequately prepared to manage the risks posed by this rapidly evolving market. Out of 138 jurisdictions assessed as of April 2025, only 40 were deemed "largely compliant" with FATF’s crypto standards—an improvement from 32 jurisdictions the previous year, but still reflecting considerable room for improvement.
“Regulatory failures in one jurisdiction can have global consequences,” FATF emphasized in its statement, noting that cryptocurrencies do not respect national boundaries and illicit activities exploiting weak oversight can spread internationally.
Blockchain analytics firm Chainalysis reported that illicit crypto wallet addresses may have received up to $51 billion in 2024 alone, underscoring the scale of the challenge. A key difficulty noted by the FATF involves the identification of individuals behind virtual asset transactions, which hampers law enforcement and regulatory efforts.
The report mirrors increasing concerns among financial authorities about the systemic risks posed by cryptocurrencies. In April 2025, the European Union’s securities watchdog warned that the expanding crypto sector might threaten broader financial stability, especially as crypto markets become more interconnected with traditional financial systems.
A particular focus of FATF’s concerns is the growing use of stablecoins—cryptocurrencies pegged to fiat currencies—by illicit actors. These include North Korea, terrorist financiers, and drug traffickers. The watchdog cautioned that “most illicit crypto activity now involves stablecoins,” signaling a shift in tactics among criminal enterprises.
Highlighting these dangers, the FBI recently attributed the largest-ever cryptocurrency theft—approximately $1.5 billion worth of virtual assets—from the crypto exchange ByBit in February to North Korean hackers. Requests for comment from North Korea’s United Nations mission in New York were not answered.
FATF’s renewed call to action urges governments worldwide to tighten regulations and adopt stronger measures for transparency and enforcement within the virtual asset industry to stem these criminal abuses.
Elizabeth Howcroft reports on finance and technology, covering Europe’s fintech landscape and cryptocurrencies. She was part of the award-winning team that reported on the collapse of crypto exchange FTX in 2022.
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