FATF Warns Enforcement Gap Widening in Global Crypto Markets

The Financial Action Task Force (FATF) has issued its seventh report card on global cryptocurrency markets, highlighting rising risks and increasing concerns over enforcement.

The report emphasizes that while legal frameworks for virtual assets are expanding, actual enforcement lags behind. Chainalysis reported that 86% of surveyed jurisdictions have completed virtual asset risk assessments, up from 76% in 2025, but only 13 out of 139 countries fully meet FATF standards.

The report identifies a growing preference for prohibition over action: 23% of jurisdictions now ban Virtual Asset Service Providers (VASPs), compared to 11% in 2023. However, these bans are not matched by more robust enforcement.

A notable case highlighted by the FATF involves a Cambodia-based conglomerate that laundered over $4 billion through organized fraud and blockchain transactions between August 2021 and January 2025. The group used a USD-pegged token marketed as 'freeze-resistant' to evade authorities, while terrorist organizations increasingly rely on stablecoins for transfers and fundraising.

The FATF warns of the increasing challenges posed by AI-driven crypto crime and decentralized finance (DeFi) structures, which remain largely unregulated. As part of future compliance expectations, best practices now include blockchain analytics, wallet screening, and blacklisting tools in AML and CFT frameworks.