EBA warns of money laundering risk in fintech sector

Editorial

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The warning was part of the EBA’s 2025 opinion paper on illicit fimancing risks facing the EU’s financial sector. 

As many as 70% of regulators within the EU reported high or rising ML and TF risks within the fintech sector as a result of weak anti-money laundering (AML) and counter-terrorist financing (CTF) measures. 

The regtech market also came in for criticism from the EBA. More than half of serious compliance failures came as a result of the improper use of regtech tools. 

“Despite its potential to enhance compliance, regtech is often poorly implemented due to lack of expertise and oversight,” stated the EBA.

Unsurprisingly, the crypto assets market was also highlighted as an area of risk. The number of authorised crypto asset service providers has nearly trebled between 2022 and 2024, however, many of them lack effective AML or CFT systems or else try to bypass regulatory oversight, according to the EBA. 

The risk has been exacerbated by criminals increased use of AI to automate their laundering schemes and evade detection, while financial institutions have failed to keep pace with these sophisticated schemes. 

In addition, the complexity of EU sanctions regimes poses “compliance challenges” and institutions often lack the systems rto implements these measures effectively.

To counteract this complexity, the EBA is looking to introduce a new legal framework for the EU and to harmonise the various standards around compliance.  

“The consistent application of the new EU legal framework will be key to addressing these risks,” stated the EBA.