RUSI Taskforce Calls Crypto Laundering a 'Material Risk' for UK Ahead of FATF Review

Crypto money laundering is a "material risk" for the UK, an expert taskforce convened by the Royal United Services Institute (RUSI) has concluded, warning that the country may not demonstrate adequate implementation when the Financial Action Task Force (FATF) conducts its next evaluation.

The UK's mutual evaluation report is due to be agreed at FATF's February 2028 plenary, according to the RUSI report. It will be the first UK assessment in which FATF considers crypto, and the taskforce — made up of private sector, law enforcement and civil society experts who met in September — was unanimous that assessors will scrutinize the area closely. Its discussions are not attributed to individual members.

How big is the UK's crypto laundering problem?

The numbers are stark. The City of London Police assesses that 66% of investment fraud in the UK involves crypto, according to the report. The UK's 2025 National Risk Assessment rated crypto money laundering high risk, up from medium in 2020.

Over-the-counter brokers are a particular concern. The National Crime Agency estimated in the 2025 risk assessment that OTC desks are likely to launder hundreds of millions of dollars a year.

Will the UK be ready in time?

The taskforce doubted it. The UK brought crypto firms under its money laundering rules in 2020, and legislation passed in February created a statutory crypto regime. The Financial Conduct Authority set out which 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.

That leaves a tight window. The taskforce doubted the UK would be able to show adequate implementation by the time FATF visits in June, and said the UK had moved more conservatively than Hong Kong, the EU and Singapore.

What does enforcement look like so far?

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 sign of what the UK criminal justice system can do when it has the capacity.

But one member said the success had not been repeated in enough cases, and that the UK had barely scratched the surface of crypto laundering. FATF is expected to test whether results match the risk rather than rest on one headline case, the report said.

The taskforce also warned about a structural gap. Because the UK regime, which resembles the EU's Markets in Crypto-Assets Regulation, focuses on identifiable crypto firms, it risks pushing the highest-risk crypto activity outside the FCA's perimeter. That would leave law enforcement to trace assets the regulator cannot 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 law enforcement had the capability and resources to keep pace.

The report did praise UK international cooperation, including Operation Destabilise, which targeted Russian-speaking networks converting street cash into crypto. It still flagged resourcing of the UK Financial Intelligence Unit and law enforcement's economic crime capacity as likely vulnerabilities.

What is FATF doing globally?

FATF has been pressing jurisdictions on crypto enforcement more broadly. In July, it said nearly 93% of the jurisdictions it surveyed had yet to apply its standards to qualifying DeFi platforms. RUSI has separately argued that banning crypto privacy tools would be counterproductive, and reported in August that North Korea increasingly launders stolen crypto through criminal networks.

The taskforce meets again this month to examine trends from recent evaluations, ahead of a June FATF visit that will show whether the UK's October 2027 deadline leaves any room to prove implementation.