Written by André Fouque

Introduction

The rise in popularity of cryptocurrency has been met with enthusiasm not just from ordinary citizens, but also from international criminals and terrorist organizations.¹Rezaul Karim, Stablecoins: The New Epicenter of Crypto Fraud, Int’l Compliance Ass’n (Mar. 3, 2025), https://www.int-comp.org/insight/stablecoins-the-new-epicentre-of-crypto-fraud/ (on file with American University International Law Review). Transnational criminal organizations (TCOs) launder hundreds of billions of dollars through cryptocurrency every year to finance terrorism, child exploitation, and narcotics.²See id. Despite this, the international community, specifically the United States, has only recently enacted legislation to address the rise in cryptocurrency and its use in illegal activities.³See Guiding and Establishing National Innovation for U.S. Stablecoins Act, 12 U.S.C §§ 5902–5916 (2025).

While legislation on cryptocurrency is fresh, the international community has not been devoid of actors whose mission is to combat money laundering generally and, accordingly, remedies need not start from a blank sleight. The Financial Action Task Force (FATF), an intergovernmental body established in the 1980s to combat money laundering, issues recommendations that states can adopt to combat money laundering.⁴History of the FATF, Fin. Action Task Force, https://www.fatf-gafi.org/en/the-fatf/history-of-the-fatf.html (on file with American University International Law Review) (last visited, Oct. 19, 2025). Recently the U.S. enacted the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act)–the first piece of legislation directed at the regulation of cryptocurrency.⁵See Guiding and Establishing National Innovation for U.S. Stablecoins Act, 12 U.S.C §§ 5902–5916 (2025).

This piece examines how the GENIUS Act’s domestic requirements conform to FATF Recommendations One and Ten to ultimately combat and reduce international money laundering through the use of cryptocurrency. Specifically, this piece takes the position that the GENIUS Act scrutinizes the practices of domestic cryptocurrency issuers in line with the FATF’s anti-money laundering recommendations to inhibit TCOs’ ability to commit money laundering violations.

Background

The FATF was established in 1989 by the G7 and joined by the U.S. in 1990.⁶See History of the FATF, supra note 4. Its goal is to combat money laundering through the examination of money laundering techniques and to recommend actions that member states can take to respond to FATF examinations.⁷Id. These recommendations are not legally binding, but are rather international standards informed by risk assessments that member states should implement and apply.⁸Michael Pucci, FATF Recommendations: Becoming Soft Law, 37 Mich. J. Int’l Law (2016). https://www.mjilonline.org/fatf-recommendations-becoming-soft-law-2 (on file with American University International Law Review). Each state is then evaluated by other states on its proactive steps to conform to FATF recommendations, a process known as mutual evaluation.⁹Mutual Evaluation, Fin. Action Task Force, https://www.fatf-gafi.org/en/topics/mutual-evaluations.html (on file with American University International Law Review) (last visited Oct. 27, 2025).

In 2025, the FATF issued a number of recommendations based on recent risk assessments.¹⁰See The FATF Recommendations, Fin. Action Task Force (Oct. 2025), https://www.fatf-gafi.org/content/dam/fatf-gafi/recommendations/FATF%20Recommendations%202012.pdf.coredownload.inline.pdf?nocache=true (on file with American University International Law Review). Recommendations One and Ten are relevant to this piece’s argument. Recommendation One provides that countries should identify, assess, and understand the money laundering and terrorist financing risks for their country, and take action aimed at ensuring the risks are mitigated effectively.¹¹See id. at 10. Recommendation Ten provides that financial institutions should be prohibited from keeping anonymous accounts, or accounts in obviously fictitious names, and be required to undertake further customer due diligence measures.¹²Id. at 14–15.

In the same year, the GENIUS Act came into effect in the U.S.¹³See 12 U.S.C. §§ 5902–5916 (2025).     Section 5903 treats stablecoin (a type of cryptocurrency backed by the U.S. dollar) issuers as financial institutions under the Bank Secrecy Act, requiring issuers to maintain effective customer identification programs.¹⁴Id. § 5903.   Section 5908 essentially instructs the Secretary of the Treasury to scrutinize the source of illicit activity and how the existing framework can be improved.¹⁵Id. § 5908.

Analysis

FATF Recommendation One

Beginning with a comparison between Recommendation One and Section 5908 of the GENIUS Act, the Recommendation advances the proposition that states should identify, assess, and understand how terrorists are financed through money laundering, and an assessment should be aimed at ensuring their dismantling.¹⁶See Fin. Action Task Force, supra note 10, at 10.  Answering this call, Section 5908 of the GENIUS Act calls on the Secretary of the Treasury to conduct risk assessments and consider the source of illicit activity, how existing methods are flawed, the existing regulatory frameworks, and foreign countries that may aid and abet such illicit activity.¹⁷12 U.S.C. § 5908. At first glance, the GENIUS Act appears to mirror the FATF recommendation, but to what extent will it practically work to inhibit international money laundering?

Recommendation One recognizes the consequential role that domestic actors play in international money laundering.¹⁸See Fin. Action Task Force, supra note 10, at 10. Examples showing how an individual in one country can fund the horror in another demonstrate how Section 5908 will aid to impede international money laundering. In Germany, an individual employed cryptocurrency to send approximately USD 1,700 to the Islamic State of Iraq and Syria (ISIS).¹⁹Category Deep-Dive: Use of Crypto in Terrorist Financing Expanded in 2024, TRM (Mar. 5, 2025), https://www.trmlabs.com/resources/blog/category-deep-dive-use-of-crypto-in-terrorist-financing-expanded-in-2024 (on file with American University International Law Review). In Turkey, authorities seized crypto wallets belonging to ISIS.²⁰Id. TRM has identified thousands of transactions from an individual in the United Kingdom linked to the Islamic State Khorasan Province (ISKP).²¹Id. In the U.S., a Virginia teen pleaded guilty to providing material support to ISIS by instructing people on how to use Bitcoin to funnel support to the group.²²Blockchain and Bloodshed: The Role of Cryptocurrencies in Terrorist Financing, The Soufan Center (Oct. 16, 2024), https://thesoufancenter.org/intelbrief-2024-october-16 (on file with American University International Law Review).

These examples provide a glimpse of cryptocurrency’s role in TCO financing. While the GENIUS Act applies only to the U.S., any legislation that conforms to the recommendations advanced by the FATF, which seeks to disrupt these transactions, can have potentially consequential global effects.²³See id. It could mean preventing the financing or a terrorist attack, a large narcotics sale, or an arms deal by someone comfortably seated at a desk thousands of miles away. By following the recommendation of the FATF and empowering the Secretary of the Treasury to conduct assessments on the ways TCOs are conducting illicit transactions, the U.S. is playing its part in ensuring that domestic cryptocurrency issuers are not able to fund international terrorism.

FATF Recommendation Ten

The FATF’s Recommendation Ten speaks to the issue of fictitious names and the need for due diligence.²⁴See Fin. Action Task Force, supra note 10. The GENIUS Act’s Section 5903 brings cryptocurrency issuers under the Bank Secrecy Act, requiring them to comply with customer identification programs and due diligence procedures, including the identification and verification of account holders and appropriate enhanced due diligence.²⁵12 U.S.C § 5903.    These measures include know your customer (KYC) verification, monitoring and screening of both blockchain and fiat transactions, risk scoring methodologies tailored to users, and governance updates that reflect new product risks and regulatory expectations.²⁶Preparing for Stablecoin Oversight Under the GENIUS Act, Guidhouse (Sept. 9, 2025), https://guidehouse.com/insights/financial-services/2025/stablecoin-oversight-genius-act (on file with American University International Law Review).

While the GENIUS Act has domestic application in requiring customer due diligence–requires cryptocurrency issuers to know who is buying from them–its effects can be international.²⁷See Hoguet infra note 30. Indeed, the U.N. Office on Drug and Crime emphasized that the anonymity and accessibility of stablecoin are what drive criminal organizations to engage with this type of cryptocurrency.²⁸See Karim, supra note 1. In 2024, stablecoins accounted for sixty-three percent of illicit transactions internationally.²⁹Id.  It is easy to see the appeal to cryptocurrency; it allows for fast transactions where the one soliciting the funds can remain anonymous.³⁰Tyler Hoguet, Preventing Terrorist Financing Through Regulation, The Regul. Rev. (June 20, 2024), https://www.theregreview.org/2024/06/20/hoguet-preventing-terrorist-financing-through-regulation (on file with American University International Law Review). The GENIUS Act brings issuers of this new currency under a regulatory microscope, ensuring that a stablecoin issued by someone in Seattle is not going to an account based in Iran and preventing a boy in Virginia from raising funds for ISIS to be used for acts of terror.

Conclusion

Cryptocurrency has been and will remain a mechanism to launder money for international malicious actors as the days of saran wrapped cash being cut open by a police officer’s knife are dwindling. The digital world brings with it criminal complexities never before seen and to play its role, the FATF issues recommendations on how states can address contemporary international money laundering issues. The GENIUS Act is a first step on the part of the U.S. to comply with FATF recommendations and play its part in impeding, among other things, terrorist financing through cryptocurrency. While the recommendations are not legally binding, the principles underlying should be given weight. Like all things illicit, organizations that wish to do harm will continue their objectives, finding ways to curtail state legislation and enforcement. Therefore, it is incumbent upon the U.S. not to view the GENIUS Act as static, but as a fluid framework from which it can adopt strategies and enforcement to ensure safe and secure international transactions.