FATF Warning: Offshore Crypto Companies May Create Money Laundering and Sanctions Regulatory Gaps

Odaily Planet Daily reports that the global anti-money laundering regulatory body, the Financial Action Task Force (FATF), has released a new report indicating that offshore virtual asset service providers (oVASP) pose risks of money laundering, sanctions evasion, and other illegal financial activities. The report states that some offshore crypto companies exploit regulatory and oversight gaps, making it difficult for authorities to effectively monitor transactions and enforce AML and counter-terrorism financing laws. Because many offshore crypto firms operate across multiple jurisdictions—such as different registration locations, infrastructure countries, and customer bases—regulators find it challenging to clarify oversight responsibilities, and international cooperation is limited. FATF recommends that even when providing services to foreign companies, countries should require registration or licensing and strengthen cross-border regulatory and law enforcement collaboration. Additionally, FATF previously warned that peer-to-peer stablecoin transactions and non-custodial wallets could weaken AML oversight, requiring nations to assess risks and establish protective measures. (Cointelegraph)