The ongoing digitalization of financial services has escalated the risks of money laundering (ML) and terrorist financing (TF), according to the European Banking Authority (EBA).
In its 2025 opinion paper on illicit financing risks facing the EU’s financial sector, the EBA highlighted that approximately 70% of regulators within the EU reported high or increasing ML and TF risks within the fintech industry, largely due to ineffective anti-money laundering (AML) and counter-terrorist financing (CTF) measures.
The EBA also criticized the regtech market, noting that more than half of significant compliance failures stemmed from the improper use of regtech tools. “Despite its potential to enhance compliance, regtech is often poorly implemented due to a lack of expertise and oversight,” the EBA stated.
Additionally, the crypto assets market was identified as a significant risk area. The number of authorized crypto asset service providers has nearly tripled from 2022 to 2024; however, many of these providers lack effective AML or CFT systems and may attempt to evade regulatory oversight.
The situation is further complicated by criminals’ increasing use of AI to automate money laundering schemes, outpacing the capacity of financial institutions to detect these sophisticated methods. Moreover, the complexity of EU sanctions regimes leads to “compliance challenges,” as many institutions lack adequate systems to implement these measures effectively.
To address these issues, the EBA is considering the introduction of a new legal framework for the EU to harmonize compliance standards. “The consistent application of the new EU legal framework will be key to addressing these risks,” emphasized the EBA.