Anti-Money Laundering Enforcement Risk Still Remains for Virtual Asset Services Providers

Despite the Trump administration’s generally favorable stance toward cryptocurrency and blockchain innovation, virtual asset services providers (VASPs) must remain vigilant in complying with anti-money laundering (AML) regulations. This is especially critical for financial services that intersect with the administration’s key enforcement priorities, such as combatting drug cartels, curbing illegal immigration, and addressing threats posed by Iran and terrorist organizations. Transactions or platforms perceived as facilitating illicit activity in these areas could attract heightened scrutiny from federal agencies, regardless of the broader pro-crypto rhetoric. As such, in conducting their annual risk assessment, VASPs should understand their vulnerability to threats prioritized by the administration and ensure that they have sufficient controls to mitigate the risk.

Key Indicators of AML Enforcement Focus

The recent actions and press releases from the Financial Crimes Enforcement Network (FinCEN) are key indicators of the areas of focus in AML enforcement going forward. Based on the level of control exercised by this and previous administrations over federal agencies, it is safe to assume that any actions or press releases issued on FinCEN’s website have undergone vetting by political appointees, or their delegates, to ensure that they fit within administration priorities. Under the new administration, beyond revising the Corporate Transparency Act, FinCEN’s actions have focused on drug cartels, undocumented workers, Iran and terrorist organizations such as ISIS.

FinCEN has intensified its actions against activities linked to drug cartels and unauthorized worker remittances. In February 2025, FinCEN imposed a $37 million civil monetary penalty on Brink’s Global Services USA, Inc. for willfully violating the Bank Secrecy Act (BSA). Brink’s failed to register as a money services business (MSB), lacked an effective AML program and did not file suspicious activity reports while facilitating hundreds of millions of dollars in bulk currency across the U.S.-Mexico border on behalf of high-risk entities. Subsequently, in March 2025, FinCEN issued a Geographic Targeting Order (GTO) requiring MSBs in 30 zip codes across California and Texas that are near the U.S.-Mexico border to file currency transaction reports (CTRs) for cash transactions exceeding $200. FinCEN stated that this measure aims to combat illicit activities of drug cartels, but the low dollar threshold and focus on MSBs suggests that undocumented worker remittances are also in the crosshairs. Further emphasizing this focus, FinCEN released an alert in March 2025 highlighting the tactics of Mexico-based transactional criminal organizations in leveraging bulk currency smuggling and repatriation to launder their ill-gotten gains.

Additionally, FinCEN’s recently announced “Iran Maximum Pressure and Counter Terrorism (IMPACT) Exchange” series and its advisory on the financing methods of ISIS underscore the agency’s focus on combating financial networks associated with Iran and terrorist organizations. On April 2, 2025, Treasury Secretary Scott Bessent led a public-private partnership event with 16 major global financial institutions and federal law enforcement agencies, aiming to deny Iran access to the global financial system. This inaugural session of the “IMPACT Exchange” series concentrated on Iran’s extensive global oil and “shadow banking” network, reflecting the U.S. commitment to apply economic pressure against Iran through a comprehensive sanctions campaign. Concurrently, on April 1, 2025, FinCEN issued an advisory to assist financial institutions in identifying and reporting suspicious activities related to the financing of ISIS. The advisory detailed how ISIS and its affiliates fund themselves, described typologies used to transfer money between affiliates and provided red flags to help financial institutions recognize related suspicious activities.

These coordinated actions underscore FinCEN’s commitment to ensuring that financial institutions implement AML controls designed to disrupt financial networks that support drug cartels, undocumented worker remittances and the financing networks of Iran and terrorist organizations.

Applicability to Cryptocurrency Exchanges and VASPs

Cryptocurrency exchanges and VASPs are increasingly vulnerable to facilitating illicit activities relating to these administration priorities.

• Cryptocurrency is increasingly being used by drug cartels to launder the proceeds of drug sales. For example, in November 2024, the Department of Justice (DOJ) released an indictment of nine individuals in the Southern District of Florida for conspiring to launder U.S. currency into cryptocurrency on behalf of drug cartels in Mexico and Colombia. According to the indictment, these individuals operated an unlicensed money transmitting business, converting bulk cash proceeds from drug sales into cryptocurrency to obfuscate the illicit origin of the funds.
• FinCEN has issued multiple advisories that have noted Iran’s use of virtual currency. In its October 2018 advisory, FinCEN highlighted that since 2013, Iran has conducted at least $3.8 million worth of bitcoin-denominated transactions annually. Additionally, in its May 2024 advisory, FinCEN noted that Hamas, an Iran-backed terrorist organization, uses virtual currency to solicit donations and conduct cross-border transfers of funds.
• Lastly, as detailed in FinCEN’s April 1, 2025 advisory, ISIS relies on cryptocurrency for both accepting donations to support its terrorist activities and to tactically provide funds to operatives involved in terrorist attacks.

Recommendations for Cryptocurrency Exchanges and VASPs

Given the increasing scrutiny from U.S. regulators and law enforcement, even with the favorable view of cryptocurrency under the Trump administration, exchanges and VASPs must proactively assess their vulnerability to illicit finance risks associated with drug cartels, undocumented worker remittance, Iranian shadow-banking and terrorist financing. Exchanges and VASPs must remain vigilant in implementing robust AML and counter-terrorist financing controls to ensure that they are not unknowingly facilitating prohibited or high-risk transactions that will increase enforcement risk. Cryptocurrency exchanges and VASPs should consider:

• Assessing the vulnerability of new products to the administration’s enforcement priorities, including the extent to which even low dollar thresholds can be exploited to facilitate such activity.
• Develop macro-level transaction rules to monitor the aggregate flow of funds to geographies linked to drug cartels or terrorist activity. In particular, the identification of unsubstantiated increases in the overall flow of funds to geographies associated with terrorist financing may be an indicator of a need to further analyze specific transactions.
• Monitor for changes in transactional activity that may be in response to government action. For example, although FinCEN’s Southwest border GTO focuses on cash transactions and may not directly apply to VASPs, drug cartels and illicit actors may shift their remittance patterns toward cryptocurrency to send funds to Mexico and other countries in Latin America.