AML Regulatory Trends for 2025: What to Expect

Last year, a prominent international bank faced scrutiny for its approach to managing financial crime risks.

Instead of implementing a specific, nuanced and risk-based AML strategy, the bank decided to opt for a simple solution. It cut ties with an entire category of clients.

The de-risking approach it adopted mitigated anti-money laundering risks for some time, but it came with a huge catch. The bank also lost access to legitimate business and compelled launderers to opt for alternative money laundering and terror financing methods.

According to the United Nations Office on Drugs and Crime, around $800 billion-$2 trillion– around 2-5% of global GDP is laundered each year.

Over the years, crimes have become more sophisticated. The rise of AI and the advancement in technology has allowed criminals to escape the matrix and go for more subtle ways of laundering money.

The financial action task force along with other supra and national bodies, have adopted some AML regulations to prepare the businesses to comply with the additional risks. Still, more is expected to be done in 2025.

In this document, we highlight the top 10 AML Regulatory trends to look out for.

Top 10 AML Regulatory Trends for 2025

1. AML Budgets Can Not Remain Static in 2025

You can’t have the cake and eat it too.

This adage perfectly explains the dilemma faced by financial institutions in 2025. The recent TD Bank case involving a settlement of $3 million highlights a critical flaw within the compliance industry: the AML budgets remain low despite the growth in the risk environment.

The bank, like many other financial institutes, enforced a ‘flat cost paradigm’ that froze its compliance spending regardless of how much the risk of money laundering surged.

This led to an ineffective AML program, allowing criminals tied to the sales to exploit the system. Considering this, there has been an increase in regulators who are pushing for financial institutions to scale their budgets and adopt a proactive risk management approach when it comes to AML.

2. Proposed Changes to Jargon used for AML Compliance

The FATF has recognized that its terminology and jargon can be quite complex, so it’s considering revisions to Recommendations 10 and 15 in its glossary.

If finalized in 2025, these changes will:

• Simplify the language and understanding of compliance measures
• Make penalties more proportional
• Assist greater financial inclusion

Additionally, these revisions will help countries, regulators, and financial institutions feel more confident when implementing AML compliance measures. It will ensure that the process is clearer and more effective for everyone involved.

Here are some recommendations that it has proposed.

3. Robust Trust Frameworks for Identity Verification Tech

Non-face-to-face customer identification and transactions are often seen as higher-risk situations for money laundering.

The update acknowledges that in many countries, interacting with financial institutions remotely has become the normal way of doing business. Technology is making these interactions safer.

However, the new guidelines suggest adding a qualification: “unless appropriate risk mitigation measures have been implemented.” This means that if the right security measures, like advanced digital identity systems, are in place, the risks can be reduced.

4. Greater Inclusivity Across Different Jurisdictions

Cross-border transactions often fall victim to the complexities of cultural and societal nuances, making it easier for illicit activities like money laundering, terrorism financing, and proliferation financing to slip through the cracks.

Different regulations and understandings across borders create loopholes that criminals exploit to move money seamlessly across different jurisdictions.

In response, the FATF plenary 2024 has taken significant steps towards greater inclusivity and diversity, inviting, for the first time, 2 jurisdictions, the Cayman Islands and Senegal, to participate in its Working Groups.

This move reflects FATF’s commitment to broadening perspectives and addressing global risks in a more collaborative and comprehensive way.

By incorporating more diverse viewpoints in 2024, FATF aims to

• Refine its standards
• Tackle emerging threats in cross-border payment systems
• Prevent the misuse of its requirements against NPOs in 2025.

5. AML Standards for The Metaverse: The Growing Threat of Money Laundering

As the Metaverse market continues to grow, projected to reach a value of US$103.6bn by 2025, so does the risk of money laundering in the metaverse. Criminals are increasingly using digital assets like NFTs and virtual currencies to launder illicit funds, making it harder to trace the origins of the money.

These digital assets, once bought with dirty money, can be sold for clean funds, creating a significant challenge for regulators.

Additionally, the Metaverse opens the door for copyright infringement and counterfeiting. Criminals can copy and sell Non-Fungible Tokens for copyrighted work. This not only complicates money laundering efforts but also disrupts the virtual economy.

To address these growing threats, blockchain forensics ,and cryptocurrency analytics will become important in identifying and tracking the origins of illicit money.

By analyzing transaction records, wallet addresses, and the flow of funds, investigators are able to gather digital evidence and combat the rise of Metacrimes.

6. Addressing the Gatekeepers: Strengthening Compliance to Prevent Money Laundering in Non-Financial Professions

FATF led a project that was to review some recommendations of compliance that were in regards to DNFPP which can play a role in enabling money laundering crimes. These non-financial professionals include

• Real Estates
• Notaries
• Lawyers
• Trust and Company Service Providers
• Independent legal professionals and Accountants

The review revealed that about 7 FATF countries scored below 50% on compliance with regulations for these gatekeepers. This highlights a significant vulnerability in the financial system. It concluded that non-financial professionals can unknowingly facilitate money laundering.

The FATF found that some fundamental obligations have not been fully implemented. Moving forward in 2025, these are crucial to closing the gaps and protecting the system from being exploited.

FATF will further urge those countries lagging behind to strengthen compliance measures for these gatekeepers and ensure that they align with FATF’s established guidelines.

7. Risk Based Approach be Effective, Proportional and Consistently Applied

In June 2024, FinCEN announced a new proposed rule that aimed to strengthen the risk-based approach for financial institutions. It thoroughly follows the de-risking strategy of the Treasury. Although institutes apply certain AML procedures, this would ensure that these rules be

According to FinCEN, “It has been an important priority for Treasury to issue this proposed rule that promotes a more effective and risk-based regulatory and supervisory regime…” The proposed rule would:

• Implement a risk-based approach with some minimum criteria (but should include a mandatory assessment of the risks)
• Review the AML and CFT requirements by their respective governments and incorporate them into their financial programs.
• Ensure there is a clear understanding and consistent application of the rules across a wide variety of financial institutes.
• Avoid a one-size-fits-all approach so that financial institutes do not decline services to entire groups.

8. Human Trafficking and Smuggling: The Dark Economy’s AML Challenge for 2025

Human trafficking and smuggling networks exploit diverse mechanisms to launder vast illicit proceeds, threatening the U.S. financial system. These crimes generate profits funneled through

• Real Estate purchases
• Wire Transfers
• Credit Cards
• Bulk Cash
• Virtual Assets

Digital currencies provide anonymity and global reach, making them prime tools for these criminal networks.

In 2024, two US Congress representatives introduced legislation to curb money laundering through predicate offenses. These, if approved, would help institutions identify and report suspected human traffickers to ensure their proper prosecution.

The year 2025 will see more such legislation come to light that will focus on red flags like

• Unusual real estate transactions
• Virtual asset activity linked to high-risk jurisdiction

9. Emerging Risks of Money Laundering in the DeFi and Online Gaming Sector

Online gaming- a growing industry is also facing the challenge of AML compliance. The 2024 National Money Laundering Risk Assessment (NMLRA) highlights how illicit actors are using DeFi to launder the proceeds from illicit money. These include

• Ransomware Cybercriminals
• Fraudsters
• State-sponsored entities like DPRK Cyber operatives

These decentralized platforms, often built on blockchain technology, provide anonymity and rapid transaction capabilities thus making them attractive for illegal financial flows.

Simultaneously, the online gaming sector, which has seen explosive growth in the United States, presents unique AML vulnerabilities.

But what’s causing this once-protected area to be infiltrated by money laundering? The answer is simple. The anonymity and real-time nature of in-game transactions allow criminals to move, obfuscate, and layer illicit funds effectively.

This trend is further compounded by the integration of digital assets like cryptocurrencies into gaming ecosystems. This creates complex channels for money laundering. For 2025, regulatory bodies are expected to intensify scrutiny on DeFi and online gaming.

10. Art and Antiques Market: AML Regulatory Trends of the New Age

When people think of the arts and antiques market, words like “aesthetic,” “cultural,” and “unique” often come to mind.

But now, there’s a new buzzword creeping in: Money laundering. The art market is being exploited by money launderers more than ever. This adds a darker twist to its once-glamorous reputation.

The art market’s rapid growth, from $441 billion to $579 billion in just a year, has amplified its appeal to money launderers. Two reasons that make art market an ideal platform for the transfer of illicit money include:

• The market’s opacity
• High-value transactions

Although the FATF is not very explicit when it comes to regulations in the market, the EU’s 6AMLD mandates strict controls for art market participants. It requires financial institutions to adopt a risk-based approach in order to spot high-risk transactions.

Additionally, in 2025, dealers will also be expected to play a key role. They should conduct adequate due diligence to verify buyer and seller identities.

Conclusion

2024 was an important year for AML Regulatory trends. It saw the rise in the metaverse, DeFi risks, and the continued trend of financial institutions de-risking customers. A lot of proposed and finalized resolutions and laws have emerged, especially from institutes like FinCEN and FATF, which compel countries to adopt a risk-based approach that is proportional to the risks involved.

The year 2025 will see how greater inclusivity by FATF and national bodies will help in creating a coherent framework for AML compliance.