- FATF said most identified onchain criminal activity now involves stablecoins.
- Some criminal networks are developing proprietary stablecoins designed to resist freezes and asset seizures.
- FATF urged jurisdictions to accelerate crypto AML supervision and enforcement.
Stablecoin crime is at the center of a new warning from the Financial Action Task Force, which says criminal networks are increasingly using dollar-pegged cryptocurrencies for illicit finance. In its annual review of global crypto regulation and anti-money laundering standards, the watchdog said most identified onchain criminal activity now involves stablecoins. It also warned that some illicit actors are developing proprietary tokens intended to resist freezing and asset seizures. FATF linked the growth of stablecoin crime to uneven implementation of crypto AML rules, arguing that many jurisdictions have adopted legal frameworks without building the supervision and enforcement needed to make those rules effective.
Stablecoin crime in the FATF review
FATF said the findings form part of its annual assessment of how jurisdictions are implementing anti-money laundering and counter-terrorist financing standards for virtual assets. According to the review, stablecoins now account for most identified onchain criminal activity, making them an increasingly important concern for regulators, exchanges and other virtual asset service providers. Their use in illicit finance reflects both their wide availability and the ability to transfer dollar-linked value across borders through crypto networks.
The report also identified a more specialized development within stablecoin crime. FATF said some criminal groups are creating proprietary stablecoins designed to make freezing, tracing and asset seizure more difficult. This indicates that illicit actors are not merely increasing their use of widely available tokens. They are also adapting the underlying tools to reduce the effectiveness of enforcement measures and preserve access to funds when authorities or issuers attempt to intervene.
FATF calls for action on stablecoin crime
FATF urged jurisdictions to accelerate the practical implementation of crypto AML standards as criminals continue to exploit regulatory and enforcement gaps. The watchdog said stablecoin crime can expand when countries pass laws but fail to establish effective licensing, monitoring, supervision and enforcement systems. It therefore called for faster action that moves beyond formal legal adoption and produces consistent oversight of crypto businesses operating within or across national borders.
The review reported that 83% of surveyed jurisdictions have introduced the Travel Rule into law, compared with 73% a year earlier. FATF described that increase as progress but said legal adoption alone is not enough. Many jurisdictions have yet to translate their frameworks into effective supervision and enforcement, creating weaknesses that criminal networks can exploit when moving funds through stablecoins, offshore providers or service providers operating across multiple jurisdictions.
Stablecoin crime and Travel Rule gaps
The FATF Travel Rule requires financial institutions and virtual asset service providers to obtain and share identifying information about the originator and beneficiary of qualifying transfers. The report said the baseline threshold is $1,000 or €1,000. By requiring this information to accompany covered transactions, the rule is intended to improve traceability and support efforts to detect money laundering, terrorist financing and other forms of illicit financial activity.
FATF said implementation remains uneven despite the growing number of jurisdictions that have adopted the rule. Some countries still lack the supervisory capacity or enforcement mechanisms needed to ensure that crypto businesses comply consistently. These gaps can weaken cross-border coordination and allow stablecoin crime to continue through service providers that face limited scrutiny, incomplete reporting requirements or inconsistent obligations in different markets.
Offshore providers and DeFi risks
Beyond stablecoin crime, FATF highlighted continuing difficulties involving offshore virtual asset service providers. These businesses can serve customers in multiple countries while operating from jurisdictions with weaker oversight or limited enforcement capacity. That structure makes it harder for national regulators to identify responsible entities, apply licensing requirements and coordinate action when suspicious transactions or compliance failures involve more than one legal system.
The watchdog also said jurisdictions need to assess risks associated with decentralized finance. FATF warned that DeFi could become a growing regulatory blind spot when activities resemble financial services but do not fit neatly within existing supervisory structures. The concern extends the report’s findings beyond stablecoins and shows that weaknesses in crypto AML implementation may affect a wider range of digital asset products, platforms and cross-border transaction models.
Conclusion
FATF’s annual review presents stablecoin crime as a growing pressure point for global crypto regulation. The watchdog said most identified onchain criminal activity now involves stablecoins and warned that some criminal networks are developing proprietary versions designed to resist freezes and asset seizures. It also found that jurisdictions are still struggling to turn AML laws into effective supervision and enforcement, even as Travel Rule adoption increases. Alongside stablecoin crime, FATF highlighted unresolved challenges involving offshore service providers and DeFi risk assessment, reinforcing its call for faster and more consistent implementation of crypto AML standards.
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