As digital belongings proceed to combine into the worldwide monetary system, the Financial Action Task Force (FATF) is urging international locations to take sooner, extra decisive motion towards their misuse. In its sixth focused replace on the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) guidelines for digital belongings (VAs) and digital asset service suppliers (VASPs), the worldwide watchdog identifies extreme gaps in enforcement which can be permitting illicit finance to flourish throughout sectors, together with on-line gaming.
The report evaluates jurisdictions’ compliance with FATF Recommendation 15 and its Interpretative Note. These tips, revised in 2019, lengthen AML/CFT tasks to VASPs. While 99 jurisdictions have carried out or are engaged on related legal guidelines, FATF warns that inconsistency and weak enforcement stay crucial considerations. “Jurisdictions continue to face difficulties in identifying natural or legal persons that conduct VASP activities,” the report said.
Travel Rule Progress Uneven and Mostly Unenforced
A serious focus of the report is the standing of the Travel Rule—a FATF requirement for VASPs to gather and transmit figuring out information concerning the originator and recipient in digital asset transfers. As of this replace, 73 p.c of surveyed jurisdictions (85 out of 117) have enacted laws aligned with the rule. However, the FATF emphasised that laws alone is inadequate. Most international locations haven’t but enforced these legal guidelines, nor have they issued compliance directives or penalties for non-compliance.
To assist higher implementation, the FATF additionally revealed a companion information: Best Practices on Travel Rule Supervision. This new useful resource provides sensible frameworks to assist regulators design sturdy supervisory techniques. Still, the FATF warned, “With virtual assets inherently borderless, regulatory failures in one jurisdiction can have global consequences.”
Stablecoins and Hacks Drive New Threats
The report expresses explicit concern concerning the rising use of stablecoins—cryptocurrencies pegged to fiat currencies—for illicit exercise. These tokens supply velocity, liquidity, and anonymity, making them interesting to professional customers and felony networks alike. According to the FATF, “most on-chain illicit activity now [involves]
stablecoins.”
One of probably the most alarming circumstances this 12 months concerned North Korean-affiliated hackers who stole $1.46 billion from the crypto alternate ByBit. Only 3.8 p.c of the stolen belongings have been recovered. The FATF famous this as the most important digital asset theft ever recorded and an instance of the pressing want for stronger worldwide cooperation and more practical asset restoration frameworks.
Crypto Scams and Sophisticated Fraud Schemes Surge
The report additionally sheds mild on the rising scale of fraud and rip-off exercise involving digital belongings. According to estimates cited by the FATF, roughly $51 billion in illicit on-chain exercise in 2024 stemmed from scams and fraud. These schemes have gotten more and more refined and professionalized, with networks working globally.
The FATF references a number of rip-off varieties recognized by its Virtual Assets Contact Group (VACG), together with “pig butchering” funding frauds, deal with poisoning, and approval phishing. Fraudsters are additionally utilizing AI instruments and deepfake know-how to hold out romance scams and phishing assaults. These developments replicate what the FATF describes as a harmful professionalization of crypto-enabled crime.
Gaming Sector Emerges as a Laundering Channel
Cryptocurrencies are additionally taking part in a rising position in on-line gaming and playing. FATF experiences that these platforms—significantly these involving video games of likelihood or talent—are more and more linked to digital asset transactions. “There continues to be a link between VAs and gambling and games of chance/skill, and the ML/TF risk posed by those business models and delivery channels, including risks derived from illegal operators,” the report famous.
With crypto used for funds, in-game purchases, and peer-to-peer transfers, criminals have discovered new methods to launder funds and masks the supply of illicit features. FATF plans to proceed its evaluation of this convergence between gaming and digital belongings as a part of its broader danger monitoring efforts.
Compliance Lagging Despite Legal Advances
Despite some indicators of progress, the report reveals that full compliance stays uncommon. Only one jurisdiction has been deemed absolutely compliant with Recommendation 15. About 29 p.c had been discovered to be “largely compliant,” whereas 49 p.c had been “partially compliant,” and 21 p.c not compliant in any respect.
The FATF highlights ongoing challenges, together with weak licensing and registration techniques, difficulties regulating offshore and decentralized finance (DeFi) platforms, and the lack to determine entities or people behind VASP actions. In some circumstances, jurisdictions are requiring offshore suppliers or DeFi preparations to be licensed, however gaps in oversight persist.
The group famous that roughly 98 p.c of worldwide digital asset exercise takes place inside its Global Network of jurisdictions, a lot of which nonetheless lack the required instruments, political assist, or experience to totally operationalize AML/CFT protections.
The FATF’s replace features a complete desk detailing jurisdiction-by-jurisdiction progress and credit business contributors such as Chainalysis, TRM Labs, Lukka Inc., and Merkle Science for information that knowledgeable its findings.
Sources:
Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers, fatf-gafi.org, June 26, 2025.
