According to Foresight News , citing The Block, the Financial Action Task Force (FATF) has warned in its special report on stablecoins and non-custodial wallets that peer-to-peer transfers of stablecoins through non-custodial wallets pose a vulnerability in global anti-money laundering controls. The report emphasizes that issuing institutions should consider implementing smart contract functionality capable of "freezing, destroying, or blacklisting" assets to prevent illicit financial activities. It points out that stablecoin issuing institutions should adopt technical measures to prevent, freeze, and withdraw stablecoins at any time.
The report also points out that state-sponsored cybercrime groups, such as North Korea's Lazarus Group, have rapidly adopted stablecoins as their preferred method of money laundering, typically converting stolen funds into USDT and then cashing them out through over-the-counter brokers. Furthermore, Iran has also used stablecoins for financing to circumvent sanctions. The FATF recommends that jurisdictions consider requiring stablecoin issuers to conduct customer due diligence during exchanges, implement transaction limits, and establish 24/7 law enforcement contact points for rapid asset freezes. The report also encourages regulators to develop technical expertise in smart contract functionality and cross-chain transaction mechanisms.
