FATF Flags P2P Stablecoin Transfers as Major Money Laundering Threat, Citing USDT and USDC Use

The Financial Action Task Force (FATF) said in its latest report that peer-to-peer transfers of stablecoins, especially via unhosted wallets without regulated intermediaries, have become a key money laundering risk in the crypto sector, BlockBeats reports on March 5. The watchdog noted that stablecoins are now the most commonly used virtual assets in illicit crypto activity and, citing Chainalysis data, reported that about 84% of the $154 billion in illegal crypto transactions in 2025 involved stablecoins. The FATF recommended that jurisdictions require stablecoin issuers to be able to freeze, destroy, or blacklist assets tied to suspicious addresses and to build allowlists and denylists into smart contracts, highlighting that Tether (USDT) and USD Coin (USDC) are increasingly used by criminal networks compared with more volatile assets such as Bitcoin and Ethereum. The report also said North Korea-linked hacker groups and Iran-associated entities are using stablecoins to launder cybercrime proceeds through over-the-counter dealers or peer-to-peer platforms, and called for tighter oversight of issuers along with wider deployment of blockchain analytics and anti-money laundering tools including the Travel Rule.