FATF urges stronger controls for offshore VASPs
VASP supervisors must close offshore-provider licensing and supervision blind spots
FATF
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Change
FATF published good practices for detecting, licensing, supervising and sanctioning offshore VASPs used to evade regulatory oversight.
Why it matters
The report turns offshore VASP activity into a supervisory-coverage problem. Jurisdictions and VASP compliance teams must address offshore providers serving local users, nested relationships, cross-border wallet layering and multi-chain obfuscation where licensing boundaries fail to capture activity-based risk.
Implications
- — Virtual-asset supervisors must detect offshore VASPs that serve local clients and bring them into licensing, registration or supervisory coverage where activity-based rules apply.
- — VASPs must identify nested relationships where offshore or unlicensed providers access services through private-individual customer accounts.
- — Crypto transaction-monitoring teams must build controls for offshore VASP typologies including layered intermediary wallets, dispersed victim funds and multi-chain or bridge-based obfuscation.
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