FATF Flags Peer-to-Peer Stablecoin Transfers as Top Money Laundering Risk
The Financial Action Task Force (FATF) warns that peer-to-peer stablecoin transfers are a significant vulnerability for money laundering, terrorist financing, and sanctions evasion. Stablecoins, particularly when transferred between unhosted wallets outside regulated intermediaries, are increasingly used in illicit finance schemes. The FATF urges stablecoin issuers to implement technical controls such as blocking, freezing, or withdrawing tokens from non-approved wallets to disrupt illicit activity. By mid-2025, over 250 stablecoins were circulating globally, with a market cap of about $314 billion. Stablecoins' liquidity, price stability, and cross-border capabilities make them appealing to criminal networks, who use them in complex laundering chains and covert fund transfers. The report cites major illicit use by North Korean cyber groups for laundering cybercrime proceeds and by sanctioned Iranian actors for procuring equipment and supporting regional organizations. The FATF calls for stronger oversight, broader use of blockchain analytics, and compliance features like allow-lists and deny-lists to prevent misuse. It also highlights the need to enforce the “travel rule” requiring information-sharing on digital asset transfers.
