This Week in Global Compliance — Enforcement and AML Norms Tighten Amid Escalating Crypto Crime

January 16, 2026 — Week of 10–16 January

Executive Summary

The second reporting window of January closed with heightened enforcement actions and compliance expectations across traditional and digital finance. Record levels of illicit crypto activity in 2025 and ongoing fraud networks have underscored gaps in transaction monitoring, sanctions screening, and identity controls.

Law enforcement actions in South Asia and Europe dismantled complex crypto fraud and investment scam networks, signaling operational prioritization of digital asset crime. Concurrently, compliance frameworks tightened as multiple jurisdictions implemented stricter AML/KYC protocols for virtual asset service providers (VASPs), particularly enhancing user identity verification during onboarding.

Emerging data also indicates that illicit crypto flows reached record levels in 2025, with nation-state sanctioned activity a principal driver. These developments reinforce the imperative for compliance teams to align crypto AML controls, sanctions screening, and fraud typologies with evolving global risk dynamics.

Top Signals

1. Illicit crypto activity hits record levels, driven by sanctions evasion

Blockchain analytics data show that illicit cryptocurrency flows reached an estimated $154 billion in 2025, a significant year-on-year increase, largely attributable to sanctioned actors leveraging digital assets to circumvent restrictions.

Why it matters:
Scale and sophistication of illicit activity require institutions to enhance cross-chain monitoring, sanctions screening tied to wallet behavior, and evidence trails capable of surfacing state-linked evasion tactics.

2. India enforces stricter AML/KYC for crypto user onboarding

India’s Financial Intelligence Unit introduced enhanced AML/KYC requirements for cryptocurrency platforms, including mandatory live selfie and geo-location verification for users, aiming to strengthen identity assurance and traceability in digital transactions.

Why it matters:
Expanded user identification expectations will raise baseline compliance obligations for VASPs and their institutional counterparties, reinforcing the need for robust identity proofing and data integration within AML programs.

Deep Dives

1. Enforcement — Major crypto fraud networks dismantled in Asia and Europe

Authorities in India reported the takedown of a crypto scam network involving unregistered platforms, with arrests and asset seizures across digital and fiat holdings. Separately, European prosecutors announced the disruption of a coordinated €600 million cryptocurrency investment fraud network exploiting fake platforms and social engineering to launder proceeds.

Practical impact:

Update fraud typologies to include hybrid schemes combining social manipulation with crypto rails
Integrate cross-jurisdictional law enforcement indicators into monitoring alerts
Conduct scenario testing for onboarding, transaction, and withdrawal red flags tied to investment fraud

2. Regulation — Strengthened identity verification and AML norms for VASPs

India’s enhanced AML/KYC regime for crypto users reflects a broader trend toward tightening regulatory expectations for VASPs, with explicit focus on onboarding identity, geo-data capture, and ongoing user authentication to mitigate misuse for money laundering or sanctions evasion.