FATF Guidance on Virtual Assets Tightens, VASP Selection for Risk-Sensitive Clients

In 2025, the Financial Action Task Force (FATF) will escalate its global campaign to regulate virtual assets and Virtual Asset Service Providers (VASPs). With cryptocurrencies, tokenized assets, and decentralized finance increasingly integrated into mainstream financial markets, FATF has issued tighter standards that reshape how regulators, banks, and clients interact with the digital asset economy. 

These measures focus on strengthening anti-money laundering (AML) safeguards, enforcing the travel rule globally, and holding service providers accountable for client due diligence.

For risk-sensitive clients, including high-net-worth individuals, family offices, and internationally active entrepreneurs, these changes represent both a challenge and an opportunity. 

On one hand, associations with non-compliant providers can now trigger reputational harm, de-banking, or regulatory inquiries. On the other hand, selecting compliant VASPs aligned with FATF standards can unlock stable banking relationships, preserve cross-border mobility, and demonstrate proactive governance.

Amicus International Consulting has observed that while some jurisdictions are aligning closely with FATF guidance, others remain inconsistent. For clients, the priority is not simply adopting digital assets but choosing providers strategically to balance innovation with compliance.

FATF’s 2025 Virtual Asset Updates

The FATF’s latest recommendations sharpened expectations for VASPs in several critical areas:

• Travel Rule Enforcement: VASPs must ensure that originator and beneficiary information accompanies transactions above set thresholds, mirroring bank wire requirements. FATF now expects jurisdictions to enforce this consistently, closing loopholes exploited by non-compliant providers.

• Enhanced Due Diligence (EDD): Clients categorized as higher risk, such as politically exposed persons (PEPs), cross-border investors, or those using a layered structure, are subject to more frequent reviews and stricter scrutiny.

• Accountability for DeFi: Platforms claiming decentralization are not exempt. If they exercise effective control, they may be classified as VASPs and required to implement AML and CFT safeguards.

• Cross-Border Coordination: FATF urges member states to share data more actively, preventing clients from exploiting jurisdictional arbitrage.

• Sanctions and Blocklisting: VASPs operating in jurisdictions that fail to meet FATF standards risk losing global access as regulators and banks block them.

These updates have made anonymity-based strategies obsolete. For risk-sensitive clients, provider selection now directly affects their ability to interact with the broader financial system.

Why VASP Selection Matters for Risk-Sensitive Clients

High-net-worth individuals and family offices often maintain complex financial arrangements across multiple jurisdictions. For them, banking access depends on perceived compliance. If a client’s chosen VASP is flagged as high-risk, banks may question the client’s broader activity. This can lead to account freezes, enhanced inquiries, or reputational harm, even if the client has acted lawfully.

Entrepreneurs and investors also face heightened vulnerability. A VASP under regulatory investigation can delay transactions, complicate cross-border deals, or expose clients to collateral scrutiny. The stakes are particularly high for families managing intergenerational wealth, where digital assets are increasingly part of long-term planning.

Case Study 1: Family Office Adjusting to FATF Travel Rule

A European family office with crypto holdings spread across Asia and the Middle East discovered that one of its providers had not fully implemented FATF’s travel rule. The office faced questions from its EU bank about incomplete transaction data. By migrating assets to a Swiss-regulated VASP with robust travel rule systems, the office restored credibility with its bank. The proactive shift allowed the family to avoid being classified as a compliance risk and preserved their cross-border investment mobility.

Case Study 2: Entrepreneur Facing De-Banking After VASP Inquiry

A UK-based entrepreneur realized their banking access was at risk when their primary VASP was named in a FATF compliance review. Although the entrepreneur had no wrongdoing, the association triggered enhanced due diligence from their bank, resulting in delays and reputational risk. By moving assets to a fully licensed EU VASP with strong AML reporting, the entrepreneur regained trust with their financial partners and ensured continued liquidity for business operations.

Core Criteria for VASP Selection

Amicus International Consulting recommends that risk-sensitive clients evaluate VASPs based on five key factors:

1. Regulatory Licensing: Is the VASP authorized in a respected jurisdiction with robust AML frameworks? Examples include Switzerland, Singapore, Luxembourg, and Japan.

2. Travel Rule Compliance: Does the VASP participate in recognized travel rule implementation systems and share required information across borders?

3. Banking Connectivity: Does the VASP maintain stable correspondent banking relationships, ensuring clients can exit into fiat without disruption?

4. Jurisdictional Alignment: Is the VASP domiciled in a country aligned with FATF, EU, and OECD standards, or in one at risk of being gray-listed?

5. Tailored Services: Does the provider offer specialized services for family offices, such as reporting packages, dedicated compliance officers, or custodian integrations?

Case Study 3: High-Net-Worth Client Balancing Privacy and Compliance

A Gulf-based client sought to preserve privacy while complying with FATF expectations. By selecting a Singapore-regulated VASP that had implemented cutting-edge privacy-preserving compliance tools, the client achieved lawful transparency without exposing unnecessary personal details. This choice reduced the risk of account restrictions at their UK and EU banks while preserving discretion.

Global Jurisdictional Divergence

FATF provides guidance, but national implementation varies.

• European Union: MiCA (Markets in Crypto-Assets) aligns closely with FATF, requiring strict compliance from VASPs and mandating reporting across all EU states.

• United Kingdom: The FCA enforces rigorous licensing, with several firms removed from the register in 2025. Associations with unregistered VASPs can lead to de-banking.

• United States: A patchwork remains, with federal enforcement actions targeting exchanges while state-level licensing persists.

• Asia: Singapore and Japan maintain gold-standard frameworks, while Hong Kong is tightening controls. Other regional hubs remain under FATF review.

• Middle East: Dubai and Abu Dhabi have pioneered regulated VASP environments, but FATF monitoring continues due to regional risks.

• Africa and Latin America: Regulation is uneven, with some countries advancing compliance while others lag, creating inconsistent risk profiles for clients.

For clients, choosing the wrong jurisdiction can expose them to blocklisting, even if their immediate provider appears competent.

Case Study 4: Multi-Generational Family Portfolio

A Luxembourg-based family trust diversified into tokenized assets. Their private bank requested details of all VASP relationships during a compliance review. 

By engaging a Luxembourg-regulated custodian VASP integrated with EU reporting frameworks, the family demonstrated transparency while preserving estate planning objectives. This alignment reassured regulators and ensured the long-term sustainability of the family’s digital asset strategy.

Multi-VASP Strategies: Building Digital Resilience

Just as families and entrepreneurs adopt multi-bank strategies, multi-VASP structures are emerging as a compliance best practice. These include:

• Dual Provider Engagement: Maintaining relationships with at least two licensed VASPs in different jurisdictions.

• Functional Segregation: Using one VASP for custody and another for transactions, reducing single-point exposure.

• Reporting-Friendly Providers: Selecting VASPs that generate detailed transaction and ownership reports for banks and tax authorities.

• Narrative Preparedness: Preparing clear documentation of source-of-funds and source-of-wealth to present during bank inquiries.

Case Study 5: Entrepreneur Managing Tokenized Assets

A global entrepreneur invested in tokenized real estate and securities across several platforms. Reconciling reporting across jurisdictions proved challenging. 

By consolidating activities under two FATF-compliant providers, one in the EU and another in Asia, the entrepreneur simplified compliance, reduced costs, and reassured their banks that all transactions were transparent and reportable.

How Amicus International Consulting Supports Clients

Amicus International Consulting advises clients on lawful, risk-sensitive participation in virtual asset markets. Services include:

• Mapping FATF-compliant jurisdictions for VASP operations.

• Conducting due diligence on providers’ licensing, travel rule adoption, and banking connectivity.

• Designing multi-VASP strategies to reduce exposure.

• Drafting compliance narratives tailored to banks, regulators, and tax authorities.

• Coordinating between advisors to ensure consistency across jurisdictions.

Risks of Poor VASP Selection

Clients who fail to align with FATF-compliant providers risk:

• De-Banking: Associations with non-compliant VASPs can lead to frozen accounts.

• Reputational Harm: Regulators and counterparties may treat clients as high-risk.

• Transaction Disruptions: Transfers can be blocked when counterparties refuse non-compliant data.

• Legal Exposure: Using blocked VASPs could trigger investigations, even when assets are legitimate.

Looking Ahead

FATF will continue to refine its guidance as new digital asset models emerge. Tokenization, decentralized finance, and stablecoins will all face evolving rules. For clients, the trend is irreversible: compliance is now the foundation of participation. By proactively selecting aligned VASPs, families and entrepreneurs can navigate the digital asset economy with confidence.

Conclusion

FATF’s tightened guidance marks a decisive moment in the evolution of digital assets. For risk-sensitive clients, the choice of VASP now determines not just investment outcomes but also banking access, reputation, and legal security. Compliant multi-VASP strategies, combined with careful jurisdictional selection, allow clients to embrace innovation without compromising transparency.

Amicus International Consulting remains committed to guiding clients through this transformation. By combining regulatory insight, case study experience, and structured planning, we help clients maintain lawful, resilient, and forward-looking digital asset strategies.

Contact Information

Phone: +1 (604) 200-5402
Email: info@amicusint.ca
Website: www.amicusint.ca