FATF warned on March 12 that offshore-based cryptocurrency service providers may widen regulatory gaps by facilitating money laundering and sanctions evasion. The Financial Action Task Force said that without stronger registration or licensing of offshore crypto firms and enhanced cross-border cooperation among regulators, AML and terrorist financing enforcement could be hampered, and urged governments to take these steps. The group highlighted multi-jurisdictional operating models where a firm is incorporated in one country but hosts servers in others to serve customers worldwide, leaving supervisory responsibility unclear. It noted that regulators may struggle to identify offshore providers lacking a local legal entity and flagged peer-to-peer stablecoin transfers as an additional AML risk.
On March 12, the Financial Action Task Force warned that offshore-based cryptocurrency service providers may widen regulatory gaps by facilitating money laundering and sanctions evasion. It said that without stronger registration or licensing of offshore crypto firms and enhanced cross-border cooperation among regulators, AML and counter-terrorist financing enforcement could be hampered. The FATF highlighted multi-jurisdictional operating models where a firm is incorporated in one country but hosts servers in others to serve customers worldwide, leaving supervisory responsibility unclear. The watchdog urged governments to take steps, including mandating registration and strengthening cross-border cooperation, to close regulatory gaps and improve enforcement against illicit financing.
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