- The Financial Action Task Force (FATF) has warned that sanctioned countries are increasingly exploiting cryptocurrencies to bypass international controls
- North Korea and other “rogue regimes” have been identified as major offenders using crypto to fund weapons programs and evade restrictions
- The FATF has expressed concern over the slow global enforcement of anti-money laundering rules for digital assets
The global financial watchdog, the Financial Action Task Force (FATF), has raised the alarm over growing misuse of cryptocurrencies by rogue states to sidestep sanctions and funnel money into prohibited programs. Countries like North Korea have ramped up crypto-based operations to launder money and finance weapons development, while many jurisdictions remain behind in implementing the watchdog’s travel rule requirements. The FATF’s findings highlight a widening gap between fast-moving digital finance and sluggish regulatory responses, with countries fighting hard to keep up with the ever-changing tactics used by state-level actors.
North Korea Most Visible Abuser
In its June 2025 report, the Financial Action Task Force (FATF) warned that “high-risk jurisdictions” are turning even further to crypto to bypass global sanctions and fund illicit activities, particularly nuclear weapons programs. “Rogue states and their proxies are increasingly exploiting vulnerabilities in the crypto ecosystem,” the FATF said, emphasizing the urgency of implementing its so-called Travel Rule, which requires virtual asset service providers to share identifying information about users during transactions; the report notes that, as of mid-2024, only 31 out of over 200 jurisdictions had fully implemented the rule.
North Korea remains the most visible example, with state-backed hacking groups allegedly stealing more than $3 billion in crypto in recent years:
Recent reports raise serious concerns about the Democratic People’s Republic of Korea’s (DPRK) theft and laundering of billions of dollars’ worth of virtual assets for financing the proliferation of weapons of mass destruction, enabling an unprecedented number of recent launches of ballistic missiles.
Much of this stolen value, the FATF warns, has been funneled through decentralized exchanges, mixers, and peer-to-peer networks, making it difficult to track.
FATF Criticizes Slow Global Response
While the FATF sets global standards, it lacks enforcement power, relying instead on member nations to implement its recommendations. However, many countries have failed to keep pace with the growth of digital assets, leading to a patchwork of regulatory frameworks and gaps exploited by illicit actors. The watchdog warned that the slow adoption of compliance measures has effectively opened the door for bad actors to abuse crypto for cross-border money laundering and terror financing, leading to the organisation urging stronger international coordination and technical support for developing countries that may lack the resources to enforce compliance. “The technology is evolving rapidly,” the agency summarized, “but regulatory frameworks are not.”
Without urgent action, the FATF warned, crypto could become a safe haven for states already under heavy international scrutiny, undermining the the legitimate global adoption taking place globally.
