On 3 March 2026, the Financial Action Task Force (FATF) published a targeted report on recommended practices for jurisdictions and the private sector to adopt to mitigate the misuse of stablecoins.

Overview

Compared to the FATF’s previous targeted update which focused on virtual assets more broadly, this targeted report focuses on stablecoins and their increasing use for money laundering (ML), terrorist financing (TF) and proliferation financing (PF), particularly when transferred on a peer-to-peer (P2P) basis via unhosted wallets.

The FATF highlights that the characteristics of stablecoins compared to other virtual assets such as price stability and ample liquidity offer a relatively stable medium for moving proceeds for illicit uses and are thus more likely to be used in P2P transactions, exacerbating vulnerabilities in primary and secondary markets. The targeted report notes that it is therefore important for jurisdictions and relevant stakeholders to continue to closely monitor whether stablecoins are increasingly used for purchases without reliance on traditional on-and-off ramps and the extent to which accurate data on the scale and proportion of P2P transactions can be obtained.

Good practices and recommendations

In response to these risks and vulnerabilities, the targeted report focuses on providing good practices and recommendations to mitigate the misuse of stablecoins including for P2P transactions that can be implemented by wider jurisdictions and the private sector.

These include:

  • fully implementing recommendation 15 of the FATF standards (on new technologies) to ensure all relevant participants in stablecoin arrangements are subject to clear obligations in relation to ML and TF;
  • establishing comprehensive legal frameworks in compliance with the FATF Standards;
  • imposing a clear AML/CFT obligations on stablecoin issuers, intermediaries and custodians;
  • assessing risk and implementing risk mitigation measures for transactions involving unhosted wallets; and
  • leveraging advanced technology-based tools.

In addition, the targeted report demonstrates several jurisdictions that have adopted innovative approaches such as requiring issuers to embed programmable controls in stablecoin smart contracts, to support freezing, deny-listing or other risk mitigation actions in secondary markets. It also emphasises the need for further coordination among national competent authorities and across borders as well as the importance of providing technical assistance to jurisdictions that have not yet adequately implemented regulatory and supervisory frameworks for stablecoins.