The European Union (EU) has identified crypto assets and artificial intelligence (AI) as emerging high-risk factors for money laundering and terrorism financing within its financial sector. The European Banking Authority (EBA) and the newly operational Anti-Money Laundering Authority (AMLA) have released comprehensive assessments and opinions underscoring these threats, alongside challenges posed by digital transformation and regulatory complexities in 2025.
Crypto Assets: A Persistent High-Risk Sector
The EU’s concern about cryptocurrency and related assets stems from rapid industry growth and regulatory challenges. Between 2022 and 2024, there was a 2.5-fold increase in authorized crypto-asset service providers (CASPs), signaling booming interest but also expanding vulnerabilities.
Despite the forthcoming Markets in Crypto Assets Regulation (MiCA), which became fully applicable by the end of 2024, many CASPs lack robust anti-money laundering (AML) and counter-terrorism financing (CFT) systems. Some providers deliberately attempt to bypass regulatory oversight, raising red flags for authorities.
Key risks associated with crypto include:
- Weak Customer Due Diligence (CDD): Supervisory inspections revealed that over half of competent authorities report serious deficiencies in verifying customer or beneficial ownership identities within CASP AML programs.
- Use of Privacy Coins and Anonymous Wallets: These features hinder traceability. From July 2027, crypto platforms in the EU will be mandated to block anonymous wallets and provide authorities with direct, real-time access to account data.
- Cross-Border Complexity and Lack of Transparency: Transactions across jurisdictions with divergent regulatory standards complicate the detection of illicit flows. The use of peer-to-peer (P2P) platforms and self-hosted wallets excludes many crypto transactions from conventional financial surveillance.
- Stablecoins and E-Money Tokens (EMTs): Their relative price stability and ease of international transferability make them attractive to criminals for terrorist financing and money laundering.
- Fraud Schemes and “Rug Pulls”: Fraudulent token sales where investors are scammed pose growing risks, along with unregulated crypto payment integration creating complex laundering pathways.
Bruna Szego, Chair of AMLA, emphasized the need for strong regulatory frameworks and supervision to prevent the crypto sector from becoming a conduit for illicit financial activities, warning that technological features and anonymity present significant challenges.
Artificial Intelligence: A Double-Edged Sword
The rise of AI introduces novel tactics that criminals exploit to facilitate money laundering and terrorism financing:
- Automation of Laundering Schemes: AI helps criminals automate complex laundering processes, making detection harder and schemes more scalable.
- Document Forgery and Deepfakes: AI-generated fake documents and synthetic identities complicate Know Your Customer (KYC) and customer due diligence measures.
- Evasion of Detection: Financial institutions struggle to keep pace with sophisticated AI-driven attacks, creating significant gaps in monitoring and prevention.
The EBA stresses the importance of responsible AI deployment in the financial sector, recommending enhanced governance, staff training, and real-time monitoring to keep up with evolving threats.
Regulatory Landscape and Challenges
The EU’s AML framework is evolving to meet these challenges. The EBA’s 2025 Opinion and AMLA’s strategy represent coordinated efforts to harmonize standards and strengthen supervision:
- EBA’s Role: The EBA provides biannual Opinions on ML/TF risks to inform the European Commission and competent authorities. It highlights significant gaps in AML controls due to firms prioritizing growth over compliance, especially in FinTech and crypto sectors.
- AMLA’s Role: Operational since July 1, 2025, AMLA oversees enforcement of AML regulations across the 27-member EU. It plans to directly supervise roughly 40 high-risk financial institutions, including crypto service providers, by 2028.
- Regulatory Harmonization: Diverging national implementations of EU rules like MiCA create risks of uneven enforcement and compliance complexity, potentially fostering weak spots for criminal exploitation.
- Sanctions and Restrictive Measures: The EU’s complex sanctions regimes are difficult for institutions to implement consistently, further complicating AML efforts.
Expert Opinions and Industry Impact
Legal experts note that fragmented supervision across EU member states may undermine the EU’s AML/CFT objectives by increasing legal uncertainty and compliance costs for cross-border crypto firms. There is a highlighted need for Europe to thoroughly vet the beneficial ownership of crypto service providers to prevent their use as fronts for illicit actors.
Notably, major crypto firms such as Binance have come under investigation by European authorities for possible breaches related to money laundering and terrorism financing laws, demonstrating increased regulatory scrutiny on the sector.
Summary of Key Points
| Topic | EU’s Findings and Measures |
|---|---|
| Crypto Assets | High growth with weak AML controls, risks from anonymity, cross-border transactions, stablecoins, and crypto frauds |
| AI in Financial Crime | AI facilitates laundering automation, forgery, and evasion; calls for responsible use and advanced monitoring |
| Regulatory Framework | MiCA fully effective since late 2024; AMLA operational since mid-2025; ongoing harmonization efforts and supervisory challenges |
| Supervisory Challenges | Fragmented national approaches cause compliance inconsistencies and risks |
| Enforcement Focus | Direct AMLA supervision planned for 2028; emphasis on beneficial ownership scrutiny and sanction implementation |
The EU’s focus on these emerging risks underscores its commitment to safeguarding the financial sector from evolving threats posed by rapid technological innovation and sophisticated criminal tactics. Effective supervision, consistent application of regulatory frameworks, and responsible deployment of new technologies are critical to countering money laundering and terrorism financing risks in the coming years.