FATF warns crypto rules are still outpacing enforcement
FATF says virtual-asset regulation is expanding, but major gaps remain in licensing, supervision, enforcement, and cross-border implementation.
What happened
FATF has published its seventh targeted update on the implementation of anti-money laundering standards for virtual assets and virtual asset service providers.
The report finds that more jurisdictions are introducing regulation and Travel Rule requirements. However, many still face difficulties putting those frameworks into practice.
FATF highlights gaps in licensing and registration, identifying businesses conducting VASP activity, supervising offshore providers, and applying effective enforcement. It also points to increasing risks involving stablecoins, unhosted wallets, decentralised finance, sanctions evasion, fraud, and cross-border money laundering.
Why it matters for KYB teams
The report shows that formal regulation is only one part of the control problem. Firms also need to understand who a virtual-asset business is, where it operates, whether it is licensed, who owns or controls it, and how its risk profile changes over time.
For KYB teams onboarding VASPs or businesses exposed to virtual assets, static company checks may not be enough. Jurisdiction, regulatory status, ownership context, service model, and offshore exposure can all affect the review path.
The operational challenge is to connect those signals to consistent decision logic, escalation rules, monitoring triggers, and reviewable evidence.
What teams should review
- Can the onboarding process distinguish regulated, unregistered, offshore, and prohibited VASP activity?
- Is licensing or registration status checked against the relevant jurisdiction?
- Are ownership, control, operating location, and service model considered together?
- Do higher-risk virtual-asset relationships trigger enhanced review or escalation?
- Can changes in regulatory status, jurisdiction exposure, or business activity trigger re-review?
- Is the evidence behind each decision preserved with the case?
