FATF: Stablecoin Peer-to-Peer Transfer Identified as Key Money Laundering Risk, Recommends Issuers to Implement Freezing and Blacklisting Mechanisms

BlockBeats News, March 5th, the global anti-money laundering organization Financial Action Task Force (FATF) pointed out in its latest report that stablecoin peer-to-peer (P2P) transfers have become a key money laundering risk in the cryptocurrency ecosystem, especially when users transact directly through non-custodial wallets. Due to the lack of regulated intermediaries, such activities are more challenging to trace and regulate.

FATF stated that stablecoins have now become the most commonly used virtual asset in illicit cryptocurrency transactions. According to Chainalysis data, around 84% of the estimated $154 billion in illicit cryptocurrency transactions in 2025 involved stablecoins.

The report suggests that jurisdictions should require stablecoin issuers to have the technical capability to freeze, burn, or blacklist assets associated with suspicious addresses when necessary, and embed compliance features such as allow-list and deny-list in smart contracts.

FATF pointed out that compared to the high price volatility of Bitcoin and Ethereum, stablecoins such as Tether (USDT) and USD Coin (USDC) are increasingly being used by criminal networks for fund transfers and money laundering due to their price stability, high liquidity, and ease of cross-border movement.

In addition, the report also mentioned that North Korean hacker groups and entities related to Iran are using stablecoins to launder illicit funds and exchanging them for fiat currencies through over-the-counter traders or peer-to-peer platforms. FATF called for enhanced regulation of stablecoin issuers and advocated for broader adoption of blockchain analysis tools and anti-money laundering measures such as the "Travel Rule" in the crypto industry.