Swiss Regulator Warns of Stablecoin Risks in Illicit Finance

Switzerland’s financial regulator, the Swiss Financial Market Supervisory Authority (FINMA), has issued a cautionary statement about the growing risks associated with stablecoin cryptocurrencies being used in illicit financial activities.

The warning came as part of FINMA’s annual *Risk Monitoring Report*, which outlines the primary risks and supervisory priorities for the Swiss financial sector. The report emphasized an increasing concern over the misuse of stablecoins, digital currencies designed to maintain a value pegged to a reference asset, such as the U.S. dollar. Tether, the largest stablecoin, aims to keep each token equivalent to $1.

“Alongside the money laundering risks in cross-border asset management, risks in the crypto space are becoming increasingly apparent,” said FINMA in the report.

The regulator highlighted that cryptocurrencies, including stablecoins, are frequently used in cyberattacks and as payment methods for illegal transactions on the dark web. Furthermore, it referenced its own research conducted in June, which noted a “big rise in the use of stablecoins for illicit transactions, particularly in relation to sanctions evasion.”

The June findings pointed to the Financial Action Task Force (FATF) and its observations on the potential risks posed by stablecoins. Among the cited concerns were their use in anonymous transfers via self-managed wallets, making them well-suited for the “layering stage in the money laundering process.”

In addition to crypto-related concerns, FINMA addressed the issue of “politically exposed persons” (PEPs) engaging with Swiss financial institutions. It reported an intensified focus during on-site inspections on how financial institutions manage and tolerate risks associated with politically exposed clients.

“FINMA has completely overhauled the audit programme for supervisory audits by audit firms to bring the audits into line with changing risk profiles and make them more effective,” the regulator stated.

These developments underline FINMA’s continued vigilance in adapting its oversight mechanisms to emerging threats in the financial sector, particularly as digital assets evolve and interact with traditional financial systems.

By fLEXI tEAM