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FATF cautions about the dangers associated with offshore cryptocurrency services., 2026/03/13 09:25:00
The Financial Action Task Force (FATF) has indicated that offshore crypto service providers pose risks related to money laundering, evasion of sanctions, and other illicit financial activities.
The FATF clarified that offshore virtual asset service providers (oVASPs) refer to companies registered in one jurisdiction—such as those benefiting from tax incentives for crypto businesses—but offering services to clients in other nations.
This model enables crypto services to operate internationally, ostensibly complying with the laws of their registration country while being subject to minimal oversight. According to the FATF, oVASPs may exploit these regulatory gaps to evade customer identification procedures (KYC) and anti-money laundering (AML) requirements, creating a “grey area” for criminal activities.
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The organization noted that in the absence of a legal presence of crypto services in a particular country, authorities may have limited information regarding the operations of such companies and the transactions they conduct. This complicates the monitoring of suspicious activities and compliance with regulatory standards.
To mitigate these risks, the FATF urged governments to enhance oversight of crypto companies serving their citizens, even if those companies are registered abroad. The organization recommends that regulators require oVASPs to register and obtain licenses to operate in the national market.
The FATF also called for closer collaboration between international regulators and law enforcement agencies.
“oVASPs create ‘blind spots’ that criminals exploit to deceive unsuspecting individuals and finance terrorism globally. I urge all countries and the private sector to take action. Given that virtual assets can move across borders in seconds, strict adherence to legislation and cooperation among international regulators will help reduce these risks,” stated FATF President Elisa de Anda Madrazo.
Last week, the FATF also warned that stablecoins and non-custodial wallets could circumvent anti-money laundering control mechanisms, as transactions occur without the involvement of regulated intermediaries.
