FATF reports enforcement gaps as AI‑driven crypto crime surges and Travel Rule adoption expands

The Financial Action Task Force’s seventh targeted update shows that 83% of surveyed jurisdictions have enacted Travel Rule legislation for virtual asset service providers, up from 73% a year earlier. However, only about 40% of those jurisdictions have taken supervisory or enforcement actions, highlighting a widening gap between law on the books and practical policing.

The report also notes that 86% of 147 jurisdictions have completed virtual‑asset risk assessments and that AI‑enhanced scams and "freeze‑resistant" stablecoins are increasingly used to evade controls. Bans on VASPs have risen to 23% of jurisdictions, though licensing and inspection practices remain uneven.

In India, the parliamentary finance committee has responded to similar concerns by proposing an interim self‑regulatory organisation (SRO) to oversee crypto assets and virtual digital assets. The SRO would operate under the supervision of the Reserve Bank of India or the Securities and Exchange Board of India, aiming to improve investor protection, governance standards, fund segregation and complaint handling until a comprehensive legal framework is enacted.