Global: EBA Flags Heightened Money Laundering Risks in Fintech and Regtech Sectors

The European Banking Authority (EBA) has raised the alarm over increasing money laundering (ML) and terrorist financing (TF) risks in Europe’s rapidly digitalising financial ecosystem, particularly within the fintech and regtech sectors.

In its 2025 Opinion on Emerging Illicit Financing Risks, the EBA warned that digital transformation, while enhancing financial inclusion and innovation, has simultaneously exposed the EU’s financial system to significant vulnerabilities.

According to the report, 70% of national competent authorities (NCAs) across the EU have observed either high or rising ML/TF risks in the fintech space, driven largely by weak implementation of anti-money laundering (AML) and counter-terrorist financing (CFT) controls.

The EBA also expressed concern about the regtech sector, citing that over half of serious compliance breachesstemmed from the misuse or inadequate deployment of regulatory technology solutions.

“Despite its potential to strengthen compliance, regtech often falls short due to poor implementation, insufficient oversight, and a lack of technical expertise,” the Authority stated.

Crypto assets were also singled out as a growing area of concern. While the number of authorised crypto asset service providers in the EU nearly tripled between 2022 and 2024, the EBA noted that many operators continue to lack effective AML/CFT systems, or in some cases, actively circumvent regulatory scrutiny.

The Authority further highlighted how criminal actors are increasingly leveraging artificial intelligence to automate money laundering networks and evade detection—outpacing the capabilities of many financial institutions.

In addition to digitalisation risks, the EBA flagged ongoing challenges with the complexity of EU sanctions regimes, noting that many financial entities still lack adequate systems to ensure full compliance with evolving requirements.

To address these systemic weaknesses, the EBA is advocating for the harmonisation of compliance standards across the bloc and the consistent implementation of the EU’s new legal framework on AML/CFT.

“The effective and uniform application of the revised EU legal framework will be essential in mitigating emerging financial crime risks,” the EBA stressed.

The Authority is expected to intensify its supervisory coordination efforts and may issue further guidance to ensure that both traditional and technology-driven financial actors align with evolving regulatory expectations.