The Financial Action Task Force (FATF) has issued a warning highlighting the increased use of stablecoins and peer-to-peer (P2P) transactions as a primary method for circumventing international sanctions. In its latest update, the global money laundering watchdog noted that the decentralized nature of P2P transfers allows sanctioned entities to bypass traditional Virtual Asset Service Providers (VASPs), which are typically subject to rigorous Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. The FATF expressed concern over the use of unhosted wallets, which enable users to transfer stablecoins directly without oversight. To counter these vulnerabilities, the FATF is urging member jurisdictions to accelerate the implementation of the ‘Travel Rule’ and to enhance their monitoring of decentralized finance (DeFi) activities. The report emphasizes that without global regulatory consistency, digital assets will continue to pose a significant risk to the integrity of the international financial system.
Source: FATF flags stablecoin P2P transfers as sanctions evasion risk
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