Criminal networks have also begun developing their own stablecoins designed to resist freezing and asset seizures, according to the latest report by the global anti-money laundering authority published on Thursday. FATF has called on countries to step up enforcement of crypto money laundering standards as illicit actors exploit regulatory loopholes.
The findings come from the FATF's annual assessment of how countries apply anti-money laundering standards for cryptocurrencies. Although 83 percent of countries surveyed have enacted the Travel Rule, this rate was 73 percent a year ago. According to FATF, many countries have not yet been able to translate these legal frameworks into effective supervision and implementation.
FATF's Travel Rule requires financial institutions and virtual asset service providers to share sender and recipient information for cross-border payments and crypto transactions above a certain threshold. The rule sets a floor of $1,000 or 1,000 euros to combat money laundering and terrorist financing.
Although most of the countries surveyed have enacted this rule, the FATF emphasized that there is a serious gap in the implementation of the legal framework. According to the organization, these rules should not remain on paper but turn into actual control.
The report also warned that countries continue to have difficulty tackling overseas crypto service providers. FATF stated that it has become difficult to evaluate the risks of decentralized finance (DeFi) and that this area may turn into a growing regulatory blind spot.
According to the organization, criminals' use of stablecoins and their own tokens, combined with the varying speed of inspection from country to country, opens up space for illegal finance. To close this situation, FATF called on countries to implement standards in a coordinated and rapid manner.