Crypto Curbs Money Laundering Without Stifling Financial Freedom

In a broad reassessment of anti-money-laundering (AML) in crypto, Ana Carolina Oliveira, chief compliance officer at Venga, argues that crypto is not uniquely to blame for illicit flows—yet it cannot escape accountability. Traditional finance still experiences illicit activity at a rate that is at least twice as high, with estimates suggesting that more than 90% of such cases go undetected. Blockchain’s immutable ledger offers a potential advantage: when wrongdoing occurs, the trail is visible from end to end. The challenge, Oliveira argues, is not to demonize crypto but to evolve the AML system so it covers both CeFi and DeFi, across borders and regulatory regimes. The EU’s AML Regulation 2024/1624 is a meaningful step, but it is not a substitute for robust, practical guardrails across the industry.

Key takeaways

• Traditional finance still generates illicit flows at a higher rate than crypto, with estimates indicating AML activity is at least twice as prevalent in fiat systems and a sizable portion goes undetected.
• AML frameworks for crypto must move beyond checkbox compliance and toward ongoing, enforceable safeguards that cover both centralized and decentralized finance ecosystems.
• The Travel Rule envisions a SWIFT/IBAN-style identification regime, but implementation remains industry-led and costly due to multi-jurisdictional compliance requirements.
• Blockchain’s pseudonymity presents enforcement challenges, particularly when self-hosted wallets and mixers obscure origins; data-sharing across platforms and regions is crucial.
• Progress hinges on a balance: regulators and industry must collaborate to establish global standards and guardrails that preserve innovation while closing loopholes that criminals exploit.

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Market context: The ongoing regulatory push in the EU and other jurisdictions continues to shape the crypto landscape, with institutions seeking clearer risk-management frameworks and more predictable compliance pathways. As liquidity and risk sentiment shift, robust AML infrastructure could accelerate mainstream adoption by reducing friction and boosting user trust. At the same time, the debate over privacy versus transparency intensifies as onchain analytics mature and cross-border data-sharing norms emerge, influencing how firms design their compliance tools and workflows.

Why it matters

For users, coherent AML rules that are consistently enforced across borders reduce the friction associated with moving value between wallets, exchanges, and custodians. When compliance is predictable, consumers gain confidence that legitimate activity won’t be stymied by opaque processes or inconsistent regional rules. For builders and exchanges, the message is clear: interoperable, standards-based tools that can operate across CeFi and DeFi guardrails will be essential. Fragmented systems create choke points, raise costs, and invite circumvention as firms juggle divergent requirements from different regulators.

From a market perspective, credible AML measures can enhance the legitimacy of digital assets in the eyes of traditional financial institutions, insurers, and corporate treasuries. They also raise the bar for risk management, potentially attracting capital that was previously wary of regulatory ambiguity. Regulators, meanwhile, face the dual challenge of safeguarding the financial system while avoiding stifling innovation. The EU Regulation 2024/1624 offers a framework, but practical, cross-border enforcement will require continued dialogue and shared technical standards across jurisdictions.

Ultimately, the aim is to recast crypto compliance as a global, cooperative endeavor rather than a patchwork of national rules. By aligning on information sharing, screening, and verification standards—without eroding the permissionless and borderless nature of blockchain—regulators and industry players can reduce illicit activity without hamstringing legitimate activity. As the discourse evolves, the emphasis shifts from “doing something” to doing the right things consistently, everywhere, every time.

What to watch next

• Regulatory milestones around the EU AML Regulation 2024/1624, including guidance and enforcement timelines, expected in 2025–2026.
• Wider industry adoption of a crypto SWIFT-style information exchange as referenced in regulatory and industry discussions.
• Developments toward global AML standards for cross-border digital assets and increased inter-regulator cooperation to close jurisdictional gaps.
• Advances in onchain analytics, wallet screening, and real-time transaction monitoring that can be scaled across exchanges and custodians.

Sources & verification

• Regulation EU 2024/1624 — EU legal text and official summary.
• Travel Rule advisory — Financial Crimes Enforcement Network (FinCEN) advisory on cross-border crypto transfers.
• Crypto SWIFT system — discussion of a SWIFT-like data exchange for digital asset transfers.
• Universal blockchains buckling under real-world demands — Cointelegraph article on blockchain interoperability challenges.
• a16z to Senate drop the ancillary asset loophole — Cointelegraph article examining regulatory gaps and potential fixes.

Toward a global AML framework for crypto: aligning guardrails with the onchain reality

Crypto does not exist in a legal vacuum, and the AML challenge is not simply a matter of deploying sophisticated screening tools. It is about building a shared operating environment where information travels with the same speed and reliability as value. Oliveira highlights that while the Travel Rule provides a SWIFT/IBAN-style identification framework, its practical implementation has been left to industry participants navigating a maze of national and regional laws. The result is a fragmented approach that can create safety gaps. The EU’s Regulation 2024/1624 adds momentum, but it also underscores a larger truth: one-off regulations cannot by themselves close the door to illicit finance. Real progress will require disciplined, cross-border collaboration on data standards, technology interfaces, and governance protocols that tie together exchanges, wallet providers, and financial institutions alike.

At the core of the argument is the recognition that blockchain’s immutability can be a tool for uncovering illicit activity, not a justification for lax controls. Pseudonymity on-chain is a feature that complicates identity verifications, particularly when funds pass through self-hosted wallets or mixers designed to obfuscate provenance. The path forward, therefore, is not to dismantle privacy but to implement scalable, privacy-preserving analytics and screening that preserve legitimate user privacy while revealing illicit patterns. In this sense, the crypto sector’s AML posture must evolve from a narrow checklist to a holistic system—one that integrates continuous feedback loops, clearer typology mapping, and robust information sharing across exchanges and geographies.

Two recurring themes run through Oliveira’s analysis. First, the public sector cannot delegate all responsibility to private actors. While the industry must bear a large portion of implementation cost and technical work, regulators must set enforceable standards and provide clear guidance on how to achieve them. Second, a global, minimum-standard framework—implemented across jurisdictions—could reduce the cost of compliance and improve the effectiveness of anti-money-laundering efforts. The industry’s experience with multi-jurisdiction compliance will be a bellwether for whether such a framework can be realized in a way that respects the speed and openness that define digital assets. The discussion is no longer about whether crypto requires AML safeguards, but how to design safeguards that are comprehensive, interoperable, and enforceable worldwide without undermining innovation.

As the dialogue continues, industry participants must demonstrate the willingness to share information that proves problematic activity and to adopt best practices that reduce criminal adaptability. The overarching goal is to create a crypto space where legitimate users enjoy faster, cheaper, and more transparent transactions while criminals lose access to the same networks. In short, AML for crypto should be about clarity, cooperation, and consistency—an architecture that scales with global finance rather than one that fragmentizes it. If these principles are adopted, the market can move toward greater resilience and trust, enabling broader participation without compromising security.

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