FATF Urges Governments to Bring DeFi Controllers Under AML Rules

Decentralized finance uses smart contracts to offer trading, lending and other services without traditional intermediaries, but governance tokens, upgrade keys, front-end websites and fee flows often remain controlled by developers, funders or large holders. The Financial Action Task Force, the Paris-based standard setter whose rules guide more than 200 jurisdictions, says any identifiable person with “control or sufficient influence” should be treated as a virtual asset service provider, closing gaps that criminals can exploit for money laundering and sanctions evasion.

In a report published on July 21, 2026, FATF said DeFi’s total value locked had reached $86.6 billion, about 85% above 2023 levels, while the 12 largest protocols held more than 60%. Nearly 93% of surveyed jurisdictions had never applied FATF standards to a qualifying DeFi arrangement; only 26 of 142 had assessed the risks, four had licensing rules and two had registered or licensed a platform. FATF urged built-in sanctions and know-your-customer checks, oversight of stablecoin issuers, exchanges and front ends, and, as a last resort, bans on platforms that refuse to cooperate.