ISLAMABAD: The Financial Action Task Force (FATF) has raised serious concerns over the increasing misuse of virtual assets, including cryptocurrencies and stablecoins, for money laundering, terror financing, and proliferation-related activities. The global watchdog has urged immediate and coordinated regulatory action across jurisdictions.
In its latest report, FATF noted that while some progress has been made, the overall pace of compliance with its standards on virtual assets remains slow. As of April 2025, only 40 out of 138 jurisdictions were assessed as “largely compliant” with FATF’s recommendations—up from 32 a year earlier.
The report highlights that nearly $51 billion in illicit funds were channelled through crypto-related addresses in 2024 alone. Stablecoins, in particular, have become a preferred medium for illicit actors due to their ease of use and lack of transparency.
Key Observations from FATF:
- The misuse of stablecoins is increasing, with these assets being used by terrorist organisations, drug cartels, and sanctioned entities.
- In a notable case, a North Korean-linked group stole $1.5 billion from a major cryptocurrency exchange in February 2025—the largest known theft involving virtual assets.
- FATF warned that weaknesses in any country’s virtual asset regulatory framework can create systemic risks due to the borderless nature of digital financial systems.
Urgent Call for Compliance
The FATF has reiterated the need for countries to implement Recommendation 15, which mandates licensing and regulatory oversight of Virtual Asset Service Providers (VASPs). It also called for full implementation of the “Travel Rule,” requiring the exchange of originator and beneficiary data in cross-border transactions involving virtual assets.
FATF further stated that even jurisdictions where crypto trading is restricted must ensure effective monitoring and supervision of digital asset activity to prevent the emergence of shadow markets.
Pakistan’s Regulatory Response
Pakistan has taken initial steps to align with global standards. In April this year, the federal government announced the country’s first comprehensive policy framework to regulate virtual assets and VASPs under its anti-money laundering and counter-terrorism financing regime.
The proposed framework includes:
- Licensing and registration of all VASPs
- Compliance with the FATF Travel Rule
- Institutional oversight by the FIA, SBP, SECP, and FMU
The government is currently working towards the formal enactment of legislation aimed at bringing Pakistan’s digital financial ecosystem into full FATF compliance.
Looking Ahead
Experts stress that with the rapid evolution of virtual asset technologies—including decentralised finance (DeFi) and anonymous peer-to-peer platforms—Pakistan must act decisively to ensure that regulatory gaps do not expose the country to financial crime risks.
This story has been reported by PakTribune. All rights reserved.
