Financial Action Task Force Highlights Red Flag Indicators Associated With Virtual Assets

The Financial Action Task Force has published a report on red flag indicators of money laundering and terrorist financing in virtual assets. The FATF highlights that although virtual assets have the potential to create efficiencies and enhance innovation, they can also be used by money launderers and terrorist financers to launder proceeds or finance illicit activities. The FATF recognizes that virtual assets may be used outside of the regulated financial system and to hide the origins or destination of funds. These factors make it harder for financial entities and regulators to identify suspicious activities. The report is therefore intended to assist financial institutions, virtual asset service providers, regulators and authorities to overcome these challenges.

The report sets out red flag indicators of suspicious virtual asset activities or attempts to avoid law enforcement detection in relation to the size and frequency of transactions, transaction patterns, anonymity, unusual behaviors of senders or receivers of virtual assets, source of funds and geographical risk. Alongside the report, the FATF has published separate handouts for the financial sector, VASPs and the public sector.

View the FATF’s report.

View the Financial and Non-Financial Sectors Handout.

View the VASPs Handout.

View the Public Sector Handout.

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