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The BIS Innovation Hub Nordic Centre Project Aurora will investigate the use of advanced technologies, such as privacy-enhancing technologies, machine learning methods, network analysis, and the use of additional data sources and machine-readable typologies (to represent money laundering patterns in a machine-readable format) in a proof of concept that aims to show how information could be shared in a private, secure and compliant way to detect suspicious transactions across financial institutions and borders.

The Financial Action Task Force (FATF) has agreed on an action plan to drive the "timely implementation" of its global standards for crypto. The FATF noted that many countries have failed to implement its norms, including the "travel rule," which requires virtual asset services providers (VASPs) to collect and share information of crypto transactions. FATF published its updated standards for crypto in 2019, but last June, it said only 11 of 98 surveyed jurisdictions were enforcing the travel rule and urged them to act faster. In that regard the FATF's plenary agreed to a road map to strengthen implementation of FATF standards on virtual assets and VASPs, which will include a stocktaking of global current levels of implementation to e published in the first half of 2024.

Members of the European Parliament from the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties adopted their position on draft legislation strengthening European Union rules against money laundering and terrorist financing. Under the new requirements, all transfers of crypto-assets would have to include information on the source of the asset and its beneficiary, information that is to be made available to the competent authorities. The rules would also cover transactions from unhosted wallets.

European lawmakers have adopted legislation imposing a €1,000 cap on anonymous cryptocurrency transactions, as part of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) package. The draft bill also seeks to cap anonymous cash transactions above €7,000 when it is not possible to identify the sender. The bill had an overwhelming majority of 99 votes in favor, eight against and six abstentions. The European parliament will start negotiations on the final text of the AML/CFT package after a plenary session in April. https://www.europarl.europa.eu/news/en/press-room/20230327IPR78511/new-eu-measures-against-money-laundering-and-terrorist-financing

"By limiting large cash payments, the EU will make it harder for criminals to launder dirty money. An EU-wide maximum limit of €10.000 is set for cash payments. Member states will have the flexibility to impose a lower maximum limit if they wish."

The New York Department of Financial Services reached a $100 million settlement with Coinbase over issues regarding the company's compliance programs. Coinbase will be required to pay $50 million as a penalty and invest an additional $50 million to bolster its abilities to comply with financial regulations, such as transaction monitoring and know your customer (KYC) rules. The department said it found "significant failures" in Coinbase's compliance program that violated New York Banking Law and state regulations regarding virtual currencies, money transmitting, transaction monitoring, and cybersecurity.

The majority of the European Union (EU) Parliament's lead committees have approved new legislative to ban anonymous crypto payments. This comprehensive package of anti-money laundering measures also includes significant restrictions on cash transactions. Anonymous cash payments in commercial transactions are limited to amounts under €3,000, with a complete prohibition on cash transactions exceeding €10,000 in business contexts. Also any crypto transaction via "hosted wallets" (i.e., managed by service providers) must be fully traceable, eliminating anonymity for even the smallest transactions.

The Brookings Institute published a paper by Timothy Massad, U.S. Commodity Futures Trading Commission (CFTC) , on how blockchain-based stablecoins could undermine the global financial system plumbing that has been exploited by U.S. authorities to protect national security interests (e.g., by implementing sanctions). He discusses various regulatory and legislative options, and finds them either insufficient or disrespecting reasonable privacy expectations. Mr. Massad suggests that, at minimum, stablecoin issuers should be required to engage in enhanced monitoring of blockchains for suspicious transactions and consider when the issuer must "freeze" stablecoins.

On August 19, the U.S. Treasury Department withdrew a contentious 2020 Financial Crimes Enforcement Network (FinCEN) proposal that would have required banks and money service businesses to submit reports and verify the identity of customers in transactions involving convertible virtual currency or digital assets held by crypto wallet software. These wallets are managed directly by individuals without third-party intermediaries. The proposal faced widespread opposition from the U.S. crypto industry, which argued that the rule was unfeasible.

The Institute of Electrical and Electronics Engineers (IEEE) published a paper that presents HybCBDC, a central bank digital currency (CBDC) system design that tackles the tension between offering payments with cash-like confidentiality while allowing for enforcement of financial integrity regulations. HybCBDC offers cash-like confidential payments and means to enforce regulations. HybCBDC builds on a hybrid access model for using monetary items of a CBDC and combines an account-based and an unspent transaction output (UTXO)-based subsystem to record payments. Each subsystem is operated based on different but interoperable DLT subsystems.

The Federal Reserve Bank of New York (NY Fed) published a study of the impact and effectiveness of regulation in decentralized systems, using sanctions imposed in 2022 by the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) on the Tornado Cash (TC) crypto-asset mixer. It documented an immediate and lasting negative impact on TC following the sanction announcement. This conclusion was based on tracking Ethereum block proposers and the builders responsible for selecting transactions for settlement. Many large builders cooperated with the sanctions. A couple of builders who did not comply with the sanctions, acting for philosophical reasons rather than monetary motives, were responsible for most of the ongoing TC transactions. https://www.newyorkfed.org/research/staff_reports/sr1112.html

JP Koning writes that, before anti-money laundering laws arrived in Switzerland, anyone could walk into a Swiss bank and open an account without showing any ID. The bank would then issue you a bearer savings book. Ownership of the savings book was considered by the bank to be proof of ownership of the underlying funds in the account. The person who opened the account could keep the book or, if they wanted to, pass it on to someone else without notifying the bank, at which point this second person was now entitled to the underlying funds, who could pass the book on to a third person, etc. In essence, Swiss banks were issuing their own version of cash or stablecoins.

Wallet, a third-party cryptocurrency wallet app on Telegram, will impose stricter know your customer (KYC) rules to access all features. Before the update, users did not need to complete any KYC, but they will have to provide their name, birthdate and phone number for "basic" transaction limit levels. "Extended" access will require the user's national identification, and providing the residential address remove all transfer limits. https://wallet.helpscoutdocs.com/article/239-identity-verification

The Bank for International Settlements (BIS) and its central bank partners demonstrated that regulatory compliance can be embedded in cross-border transaction protocols. Project Mandala, which has reached proof-of-concept stage, aims to automate compliance procedures, enhance transparency of country-specific policies and provide real-time reporting and monitoring for regulators and supervisors. This architecture integrates a peer-to-peer messaging system, rules engine and proof engine. It ensures that all necessary compliance checks have been completed before the payment instruction is initiated, after which the system automatically generates a compliance proof, which accompanies any digital settlement asset or payment instructions across borders.

Chainalysis projects that the total volume of illicit crypto transactions for 2024 could surpass $51 billion, of which 63% involved stablecoins. This is part of a broader ecosystem trend in which stablecoins also occupy a sizable percentage of all crypto activity, due to their wide array of practical use cases in a range of markets. The upside from a financial integrity perspective, is that stablecoin issuers can and do freeze funds if they are made aware of their use by illicit actors. For example, Tether has frozen addresses of concern linked to scams, terrorist financing, and sanctions evasion, which can make stablecoins a poor tool for the transfer of value by illicit actors. Nonetheless, despite these ecosystem-wide trends, some forms of crypto crime, such as ransomware and darknet market sales, remain BTC-dominated. https://www.chainalysis.com/blog/2025-crypto-crime-report-introduction/