MONEYVAL 2025–2026 Typologies Report: Virtual Assets Under the AML/CFT Lens

The Council of Europe’s MONEYVAL Committee has released its 2025–2026 Typologies Report, focusing on the misuse of virtual assets (VAs) and virtual asset service providers (VASPs) for money laundering (ML), terrorist financing (TF), sanctions evasion, and proliferation financing.

Rather than a technical mutual evaluation, the report offers a practical and forward-looking risk analysis. It examines how criminal actors exploit digital ecosystems, identifies systemic weaknesses in supervision and enforcement, and highlights areas where implementation of FATF standards remains insufficient.

A Sector Still Catching Up with Risk

A central message of the report is clear: while regulatory frameworks for virtual assets have expanded rapidly, effective implementation lags behind.

Many jurisdictions have introduced licensing regimes and AML/CFT obligations for VASPs, yet compliance with FATF Recommendation 15 remains uneven. Gaps persist in:

• Risk-based supervision of VASPs
• Effective licensing and registration controls
• Enforcement mechanisms for non-compliant operators
• Monitoring of cross-border virtual asset flows

The report notes that a significant proportion of assessed jurisdictions demonstrate only partial compliance with the international standards governing virtual assets.

Evolving Criminal Typologies

MONEYVAL identifies several dominant misuse patterns in the virtual asset ecosystem:

Sanctions Evasion
Virtual assets are increasingly used to bypass traditional financial controls, enabling sanctioned individuals or entities to move value across jurisdictions with reduced transparency.

Fraud and Scam Proceeds Laundering
Investment scams, online fraud schemes, and cyber-enabled crimes generate large volumes of illicit proceeds that are quickly converted into virtual assets to obscure audit trails.

Proliferation Financing Risks
Emerging evidence suggests that digital asset channels may be leveraged to fund networks linked to sanctioned goods and weapons proliferation.

Operational Law Enforcement Challenges
Authorities often face technical barriers in tracing wallets, freezing assets, or seizing digital holdings—particularly in decentralised or cross-jurisdictional settings.

Supervisory and Reporting Weaknesses

The report also highlights structural issues affecting AML/CFT effectiveness:

• Inconsistent suspicious activity reporting by VASPs
• Limited supervisory expertise in blockchain analytics
• Fragmented cross-border cooperation
• Insufficient use of financial intelligence in virtual asset investigations

Without stronger supervisory coordination and technical capacity, the regulatory perimeter risks being undermined by rapidly evolving digital threats.

Good Practices and the Way Forward

Despite these challenges, the report identifies promising approaches in certain jurisdictions, including:

• Comprehensive sectoral risk assessments specific to virtual assets
• Dedicated supervisory units with technical expertise
• Enhanced public-private information sharing
• Integration of blockchain analytics tools into investigative workflows

The overarching recommendation is not merely regulatory expansion, but regulatory effectiveness. Implementation quality—not legislative volume—will determine whether AML/CFT frameworks remain resilient in the digital era.

Implications for Compliance and Risk Management

For compliance professionals, the report reinforces several priorities:

• Strengthened customer due diligence and beneficial ownership verification in the virtual asset sector
• Enhanced sanctions screening and transaction monitoring capabilities
• Robust risk assessments tailored to digital asset exposure
• Cross-border coordination where virtual asset flows intersect multiple jurisdictions

The trajectory is clear: virtual assets are no longer a peripheral risk category—they are central to modern financial crime risk frameworks.

Conclusion

The MONEYVAL 2025–2026 Typologies Report underscores a critical inflection point. Regulatory structures are in place, but operational effectiveness remains uneven. As digital finance continues to evolve, supervisory agility, technological capability, and cross-border collaboration will be decisive in safeguarding the integrity of the financial system.