Crypto regulation needs global approach to tackle organized crime

Wider adoption of FATF travel rule urgent

Image from Wikimedia Commons.

The expansion of illicit crypto-currency flows linked to organized crime means that global co-ordination in crypto-currency regulation is essential.

The figures published in the 2025 Crypto Crime Report from the Chainalysis blockchain analysis firm are stark. Their current estimate for illicit crypto flows in 2023 is $46.1 billion. The report says that its final figure for 2024 is likely to exceed that.

So if we take $46 billion as a conservative estimate of global annual illicit crypto flows, we are talking about more than the annual GDP of Latvia, or Estonia, or Paraguay, or Senegal.

Much of the growth in recent years, Chainalysis says, is due to the activities of Huione, a financial-services conglomerate based in Cambodia.

Huione, Chainalysis finds, essentially operates as a one-stop shop for the cyber-scam industry. The group operates as a hub for human trafficking, which is needed to provide the labour power for the cyber-scam compounds.

These compounds are concentrated in Southeast Asia, in Cambodia and Myanmar, and to a lesser extent in Laos and the Philippines. Huione also facilitates the technology used to carry out online scams, and provides services to launder the proceeds.

No-one seriously doubts that Huione, and therefore the cyber-scam industry, operates in Cambodia with the protection of the Cambodian government. Prime Minister Hun Manet’s cousin Hun To is a director of Huione Pay.

No-one has ever been arrested for running a cyber-scam compound in Cambodia. Human trafficking victims who thought they had been rescued by the police have found themselves being sold by the police to other compounds.

FATF Travel Rule

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) at the start of May moved to curtail Huione’s access to the US financial system.

That, in a sense, is the easy bit. The only surprise is that it took the US so long.

The hard bit is that there are many avenues for Huione to keep operating.

The US Department of the Treasury says its action is likely to cause financial institutions and regulators to take their own action to mitigate the risks posed by Huione Group.

But the Treasury statement adds that, beyond the removal of Huione’s license by Cambodia’s national bank, FinCEN is not aware of any other country or multilateral group imposing similar action against Huione.

Wider adoption of the “Travel Rule” issued by the Financial Action Task Force (FATF) is an obvious way forward.

The FATF is the global money laundering and terrorist financing watchdog. Since 2019, its Travel Rule has required Virtual Asset Service Providers (VASPs) to collect and transmit information about the originators and beneficiaries of crypto transactions.

The FATF said in July 2024 that Travel Rule adoption has been insufficient, with 75% of jurisdictions either partially or non-compliant. That figure was unchanged since April 2023.

Nearly a third of respondents to an FATF survey, including some who assessed their VASPs as high risk, were yet to pass legislation implementing the Travel Rule.

“Even among jurisdictions who have passed legislation implementing the Travel Rule, supervision and enforcement remains low,” the FATF said

Organized crime groups such as Huione will not stand still while countries dither over implementing basic steps such as the Travel Rule. Shutting the front door to Huione, as the US has done, is all well and good. But countless back doors remain open, and it will take global co-ordination to close them.