The UK may struggle to satisfy global anti-money laundering assessors on crypto enforcement when the Financial Action Task Force reviews the country in 2027, according to a taskforce convened by the Royal United Services Institute.

In a report published Friday, the London-based security think tank said Britain will still be transitioning into its new statutory crypto framework when FATF evaluators arrive in June 2027. Because FATF assessments focus on whether rules work in practice, the taskforce said the UK could face questions about whether it can demonstrate effective action against crypto-related money laundering before the mandatory regime starts on October 25, 2027.

Crypto becomes a central test in the next UK review

The 2027 mutual evaluation will be the first time FATF formally examines the UK's approach to crypto. The Paris-based standard setter uses these peer reviews to judge not only whether countries have the right legal framework, but also whether enforcement and supervision are producing results.

RUSI's taskforce described crypto as a "material risk" for the UK. Its report cited City of London Police figures indicating that 66% of investment fraud in the country involves crypto, and noted that the UK's 2025 National Risk Assessment raised crypto money laundering to high risk from medium in 2020.

Rules are advancing, but the timetable may work against the UK

Crypto businesses were first brought within the UK's money laundering regime in 2020. More recently, legislation passed in February created a statutory crypto regime, after which the Financial Conduct Authority set out the activities it plans to regulate in April and finalized its rulebook in June.

Even so, the new mandatory framework will not come into force until late 2027. The taskforce said that timing creates a problem for the FATF visit scheduled for June of that year, because assessors are likely to ask for evidence that the regime is already being implemented effectively. The report also said the UK has moved more conservatively than jurisdictions including Hong Kong, the European Union and Singapore.

Taskforce sees uneven enforcement and pressure on investigators

The report pointed to the Metropolitan Police's major crypto seizure as evidence of what British authorities can achieve when sufficient capability is available. But taskforce members said that result has not been replicated across enough cases and argued that the UK has only begun to confront the scale of crypto laundering.

According to the report, FATF is likely to compare enforcement outcomes with the level of risk rather than give much weight to a single high-profile success. RUSI also highlighted likely weaknesses in the resourcing of the UK Financial Intelligence Unit and in wider economic crime capacity across law enforcement.

Risk may shift beyond the regulator's reach

Another concern raised by the taskforce is that the UK's model, which it said resembles the EU's Markets in Crypto-Assets Regulation, concentrates on identifiable crypto firms. In RUSI's view, that approach could leave some of the highest-risk activity outside the Financial Conduct Authority's perimeter and force police and investigators to pursue assets the regulator cannot directly reach.

The report used Tether's USDT as an example, citing a Treasury report from July 2025 that said the stablecoin had been "extensively exploited" by Russian-speaking laundering networks. While the taskforce praised the UK's international cooperation, including Operation Destabilise against networks converting street cash into crypto, it questioned whether law enforcement has the capability and resources to keep pace with threats outside the formal regulatory boundary.

What FATF is expected to examine next

RUSI's assessment suggests the UK's crypto regime may face its biggest test before it is fully operational. When FATF evaluators arrive in June 2027, the key issue is expected to be whether British authorities can show practical supervision, investigations and disruption that match the level of identified risk.

The next confirmed milestone is the start date of the mandatory crypto regime on October 25, 2027. Until then, the report indicates that enforcement capacity, financial intelligence resourcing and the handling of activity beyond the FCA's perimeter are likely to remain central issues for the UK's FATF review.

Source: decrypt.co