EBA’s rising concern over the increased financial crimes in fintech, payment and crypto

The European Banking Authority (EBA) has reported the rising risk of money laundering and terror financing in its latest report 2025 Opinion on ML/TF. The authority emphasized on the urgent need of compliance in fintech, payment and crypto sector.

The European banking watchdog warned that the poor practices and lack of expertise to comply with AML and CTF are increasing the risk of financial crimes.

As per the report, 70% of the highly reputed authorities noted the rising risk of ML and TF at fintechs. This is due to the Firms’ poor governance and obsession with growth and customer acquisition while ignoring the compliance mechanism.

The report also highlighted the improper use of RegTech (Regulatory technology) as the reason for more than half of compliance failures. Although EBA recognized RegTech’s strong potential to resolve compliance failures and minimize human error, the problem remains with its responsible implementation.

It stressed on the need to promote RegTech, but it must be met with complete oversight and should align with  firms’ requirements.

Moreover, EBA highlighted crypto as a high risk area. It noted the increasing number of authorized crypto-asset service providers (CASPs) which have grown more than two fold in 2024 compared to 2022.

It warned that many CASPs don’t even meet the basic regulatory threshold which gives room to fraudsters for committing financial crimes. As a solution,  EBA pressed on the urgent need to deploy AI along with robust governance and oversight mechanisms.

Apart from that, the report also highlighted that the crypto and payment sector lacks the effective sanction screening leading to more compliance failures. “Challenges arise in the screening of SEPA instant credit transfers, which may expose PSPs to a heightened risk of breaching restrictive measures that are not targeted financial sanctions, such as sectoral sanctions,” said the report.

On a more positive note, the EBA observed increased supervisory engagement across the EU. This included more targeted inspections and improved regulatory guidance, which has contributed to lower residual risks in traditional banking and financial markets.

However, the payments and crypto sectors remain under strain, especially in new firms. The EBA stressed that effective implementation of the EU’s new Anti-Money Laundering Authority (AMLA) will be critical in eradicating financial fraud.

It concluded that while awareness of ML/TF risks is improving, compliance remains inconsistent and in need of stronger regulatory alignment

In the light of the above news, it is clear that compliance is not just an option but it is rather foundational. In order to stay ahead of growing regulatory demands, leveraging trusted identity verification and AML solutions in fintech, crypto sector and payment services, sign up to Shufti: an AI tool designed for real time compliance and reduced exposure to financial crimes.