FATF report: effective AML controls required in crypto sector

Having anti-money laundering controls in the crypto sector is no longer enough. That is the core of the latest report from the Financial Action Task Force (FATF), which security firm SlowMist now goes into more deeply. The conclusion is clear: controls must not only exist, they must actually work.

From paper controls to real effectiveness

The FATF identifies a fundamental problem within the virtual asset industry. Many companies do have AML procedures, but in practice they are insufficient. The growth of stablecoins, the use of unhosted wallets and the increase in cross-chain transactions mean that traditional methods such as screening blacklists are no longer sufficient.

Fund flows on the blockchain are becoming increasingly complex. Money moves through multiple networks, entities and layers, so a simple address check no longer gives a complete picture. Anyone who really wants to understand where money comes from and where it goes needs deeper insights into transaction relationships, entity attribution and risk weighting across multiple chains.

How MistTrack helps with on-chain risk analysis

SlowMist explains in a detailed article which risk scenarios the FATF specifically addresses and how companies in the virtual asset sector can strengthen their on-chain risk detection. The analysis programme MistTrack serves as an example, a tool that provides visibility into complex on-chain environments.

The images accompanying this report show what such an analysis looks like in practice. A TRON wallet address receives an AML risk score of 36, which is assessed as average. 19 evidence points were found, including direct and indirect high-risk paths. The counterparty analysis shows that nearly half of the volume goes through Binance (49.3%), followed by OKX with 19.3%. Notably, HTX as a counterparty receives a label as a sanctioned entity. In addition to risk analysis, MistTrack supports 18 major stablecoins and 19 major blockchain networks, including Bitcoin, Ethereum, Solana and Tron.

This kind of detailed analysis is becoming increasingly relevant as regulators worldwide place more emphasis on demonstrable effectiveness of compliance. Polymarket also recently reported nearly 100 suspicious wallets to the police, which shows that pressure on platforms to actively enforce is increasing. More background on regulation in the crypto sector can be found in our regulation news overview.