Criminals move billions through crypto, exploiting regulatory gaps, watchdog warns

Organized crime groups are leveraging the cryptocurrency sector to launder billions of dollars in illicit proceeds, exploiting weaknesses in global regulation, a new report from the Financial Action Task Force (FATF) warns. The Paris-based intergovernmental group, which sets standards for anti-money laundering and counter-terrorist financing, identified crypto-enabled crime as becoming more "complex and interconnected" over the past year.

Financial institutions, crypto companies, and national regulators face "significant and ongoing challenges" in their efforts to detect and disrupt money-laundering activities stemming from scams and investment fraud networks. The FATF report indicates that while progress has been made, with 51 out of 149 assessed jurisdictions now considered "largely compliant" with FATF's crypto standards as of April 2026 (up from 29% the previous year), these improvements are not translating into concrete actions.

"Significant gaps" persist in translating risk assessments into practical steps to curb crypto crime. The report also notes an alarming increase in the use of stablecoins by illicit actors. Some criminal networks have even developed their own stablecoins, designed to resist freezing or seizure by authorities, further complicating enforcement efforts.

The FATF's findings underscore the urgent need for more robust and coordinated regulatory frameworks to address the evolving landscape of financial crime in the digital asset space. The increasing sophistication of criminal methods, including the development of custom stablecoins, presents a growing threat that requires continuous adaptation from global watchdogs.