Global Watchdog Says DeFi Becoming Haven For Money Laundering, Fraud
By CU Today Staff —
PARIS— The Financial Action Task Force (FATF) is warning that decentralized finance (DeFi) is becoming an increasingly attractive tool for fraudsters, ransomware operators, professional money laundering networks and sanctions evaders, while finding that most countries have yet to implement global anti-money laundering standards governing the fast-growing sector.
In a new report, FATF said approximately 93% of the 143 jurisdictions it surveyed have not yet implemented its standards for qualifying DeFi arrangements, and only two jurisdictions have licensed or registered a DeFi platform in practice. While DeFi offers opportunities for financial innovation, FATF said features such as permissionless access, automated smart contracts, cross-border transactions and limited user identification make the sector vulnerable to criminal exploitation.
The report concludes that many DeFi platforms marketed as decentralized continue to have centralized control through governance token concentration, administrative privileges, software upgrades and developer influence. FATF said those arrangements generally fall within its virtual asset standards when a person or entity exercises sufficient control, and urged financial institutions and virtual asset service providers (VASPs) to apply customer due diligence and other anti-money laundering requirements—or avoid interacting with platforms that cannot comply.
FATF also highlighted growing evidence of criminal abuse, noting that two cyberattacks attributed to North Korea in April 2026 accounted for roughly 76% of all virtual asset hacking losses this year, with more than $570 million stolen. The report also pointed to fraud schemes such as SafeMoon and Forsage, where operators allegedly retained hidden control over DeFi platforms to manipulate operations and divert investor funds.
"We must stop emerging technologies being exploited by criminals trying to launder dirty money, whilst also supporting their wider adoption for legitimate purposes," FATF President Giles Thomson said in a statement.
FATF urged jurisdictions with significant DeFi activity—particularly in North America and Europe, which account for about 60% of global DeFi transactions—to strengthen oversight, expand cooperation with law enforcement and the private sector, and focus regulatory efforts on the largest and most systemically important DeFi protocols.
Originally reported by CU Today.