Global Cooperation Essential for Crypto Regulation to Combat Organized Crime

Global coordination in cryptocurrency regulation is urgently needed to tackle illicit financial flows linked to organized crime.

This requires a unified framework that ensures transparency, enforces compliance, and promotes accountability across jurisdictions. By fostering international collaboration, governments can close regulatory gaps, deter criminal activities, and build trust in the digital asset ecosystem while supporting innovation and economic growth.

According to the 2025 Crypto Crime Report, illicit crypto transactions in 2023 amounted to $46.1 billion, with expectations that the 2024 figure will exceed that. A significant portion of this activity is attributed to Huione, a financial conglomerate based in Cambodia, which operates as a hub for cyber scams, human trafficking, and money laundering.

The Financial Action Task Force (FATF) Travel Rule, introduced in 2019, requires Virtual Asset Service Providers (VASPs) to collect and transmit transaction details to enhance transparency. However, adoption has been insufficient, with 75% of jurisdictions either partially or non-compliant. The article argues that organized crime groups like Huione will continue exploiting regulatory gaps unless countries coordinate efforts to enforce stricter regulations.

The U.S. Department of the Treasury recently restricted Huione’s access to the U.S. financial system, but the article warns that many loopholes remain, allowing illicit actors to continue operations. It stresses that closing these loopholes requires global cooperation rather than isolated national actions.

This requires collaborative efforts among governments, financial institutions, and international organizations to establish standardized frameworks. Such frameworks should aim to enhance transparency, ensure compliance, and mitigate risks while fostering innovation within the cryptocurrency ecosystem.

How effective are current regulations like the FATF Travel Rule?

The FATF Travel Rule, introduced in 2019, aims to enhance transparency in virtual asset transactions by requiring Virtual Asset Service Providers (VASPs) to collect and share sender and receiver details. However, its effectiveness has been limited due to slow global adoption and regulatory inconsistencies.

According to the 2023 FATF update, only 58 jurisdictions had passed legislation to implement the Travel Rule, up from 29 in 2022. Despite this progress, many countries remain non-compliant, creating loopholes that organized crime groups exploit. The Sunrise Issue, where the rule is not uniformly enforced across jurisdictions, makes compliance difficult for VASPs.

While technological solutions exist to facilitate compliance, interoperability issues between different systems hinder full implementation. The FATF continues to urge countries to accelerate enforcement to mitigate financial crime risks.

Exploited vulnerabilities by organized crime groups

Compliance gaps create loopholes that organized crime groups exploit, weakening financial security. When regulations like the FATF Travel Rule are not uniformly enforced, criminals can move illicit funds across jurisdictions with minimal oversight. This is known as the Sunrise Issue, where inconsistent adoption allows bad actors to operate in less-regulated regions.

According to financial crime experts, money laundering networks increasingly use cryptocurrencies and shell companies to bypass weak compliance measures. In 2023, an estimated 5% of global GDP was linked to laundered money. Criminal enterprises also diversify their operations, engaging in cyber fraud, human trafficking, and illegal trade. Without strong compliance frameworks, financial institutions struggle to detect and prevent these activities.

Regulatory bodies emphasize that enhanced data-sharing and automation can improve compliance. However, many firms lack the resources to implement advanced fraud detection systems, leaving them vulnerable. Strengthening compliance across borders is crucial to disrupting organized crime networks and safeguarding financial systems.