In brief
- A taskforce convened by think tank RUSI says crypto is a material risk for the UK ahead of its 2027 Financial Action Task Force evaluation.
- The UK's full crypto regime takes effect in October 2027, after assessors from the global anti-money laundering standard-setter are due to visit in June.
- Members warned that UK rules could push the riskiest crypto activity beyond the regulator's reach and leave it to law enforcement.
Britain's new crypto rules will still be in transition when global anti-money laundering assessors arrive next year. The country will be judged on whether it can enforce against crypto laundering, a taskforce convened by the Royal United Services Institute has warned.
The report, published on Friday, outlines the issues that the London-based defense and security think tank's taskforce expects to dominate the UK's 2027 evaluation by the Financial Action Task Force (FATF). The Paris-based body sets global standards against money laundering and terrorist financing. Its peer reviews, known as mutual evaluations, assess whether countries' rules work in practice.
The UK's report is due to be agreed at FATF's February 2028 plenary. The taskforce, comprising experts from the private sector, law enforcement and civil society, met in September. Its discussions are not attributed to individual members.
A first test for crypto
This will be the first UK evaluation in which FATF considers crypto, and the taskforce was clear that crypto is a "material risk" for the UK. According to the report, the City of London Police assesses that 66% of investment fraud in the UK involves crypto. The UK's 2025 National Risk Assessment rated crypto money laundering high risk, up from medium in 2020.
The UK brought crypto firms under its money laundering rules in 2020, and legislation passed in February established a statutory crypto regime. The Financial Conduct Authority set out the crypto activities it will regulate in April and finalized its rulebook in June, but the mandatory regime does not take effect until October 25, 2027.
The taskforce doubted the UK could demonstrate adequate implementation by the time FATF visits in June, and said the UK had taken a more conservative approach than Hong Kong, the EU and Singapore.
Members unanimously said assessors would examine this issue. They pointed to over-the-counter brokers, which the National Crime Agency estimated in the 2025 risk assessment are likely to launder hundreds of millions of dollars a year.
Enforcement gaps
The taskforce cited the Metropolitan Police's £5.5 billion (about $7.3 billion) crypto seizure, linked to a Chinese professional money launderer sentenced in 2025, as an encouraging example of what the UK criminal justice system can achieve when it has the capacity. But one member said there had not been enough similar successes and that the UK had barely scratched the surface of crypto laundering. FATF is expected to assess whether results match the risk, rather than relying on one high-profile case, the report said.
The taskforce also warned that the UK's regime, which resembles the EU's Markets in Crypto-Assets Regulation, focuses on identifiable crypto firms and risks pushing the highest-risk activity beyond the FCA's remit. Law enforcement would then have to trace assets beyond the regulator's reach, such as Tether's USDT. The taskforce pointed to a July 2025 Treasury report that flagged the stablecoin as having been "extensively exploited" by Russian-speaking laundering networks. Members doubted that law enforcement had the capacity and resources to keep pace.
The taskforce praised the UK's international cooperation, including Operation Destabilise, which targeted Russian-speaking networks converting street cash into crypto. But it identified the resourcing of the UK Financial Intelligence Unit and law enforcement's economic crime capacity as likely vulnerabilities.
FATF has been pressing countries more broadly on crypto enforcement. In July, it said nearly 93% of the jurisdictions it surveyed had yet to apply its standards to qualifying DeFi platforms.
RUSI has previously argued that banning crypto privacy tools would be counterproductive. In August, it reported that North Korea increasingly launders stolen crypto through criminal networks. The taskforce will meet again this month to examine trends from recent evaluations.
