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The use of stablecoins by North Korean agents, terrorist financiers, drug traffickers and other illicit actors has grown over the past year, and “most on-chain illicit activity now involves stablecoins,” FATF said in a Thursday press release outlining findings from its latest report on the global implementation of anti-money laundering and counterterrorist financing (AML/CFT) focused on VAs and virtual asset service providers (VASPs).
“Mass adoption of stablecoins or VAs more broadly could amplify illicit finance risks, particularly with uneven application of the FATF Standards for VAs/VASPs,” the release said.
FATF is a global organization targeting money laundering, terrorist and proliferation financing, according to its website.
Highlighting other emerging risks in this space, the organization said in the release that only 3.8% of the $1.46 billion stolen by North Korea in a hack of cryptocurrency exchange Bybit has been recovered and that there has been a “significant uptick” in the use of VAs in fraud and scams.
FATF called on jurisdictions around the world to step up their work on licensing and registration, identifying people who conduct VASP activities, mitigating the risk of offshore VASPs, and ensuring transparency of information around cross-border payments.
“With virtual assets inherently borderless, regulatory failures in one jurisdiction can have global consequences,” the release said.
It was reported in April that cryptocurrency thefts surged by 303% during the first quarter to $1.67 billion, primarily driven by the hack on the Bybit exchange in February. There were 197 hacks during the first quarter, six more than the previous quarter.
“The fallout from Bybit’s breach has since sent shockwaves throughout the industry, raising urgent questions about security measures at centralized exchanges, with many regulators and security firms calling for stronger protective measures,” blockchain security firm CertiK said in the April report.
